New Neighborhoods–Preemptive Rights and Balcony Restoration

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New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Preemptive Rights and Balcony Restoration

Dear Poliakoffs,

My mom moved into an assisted living facility and was no longer able to pay her dues and assessments on her condominium.  She quit claimed the unit over to my brother. The condominium association will not acknowledge his ownership, even though it was a legal transaction. He continues to pay all his maintenance fees and assessments on time, even though they have told him that he cannot use the facilities (pool, golf course), as the board did not approve the transfer. He recently got the new coupons and asked that our mother’s name be changed to his and they refused to do so, unless the annual assessment is paid in full ($5,200)–then they would think about it. This condo is his inheritance. Do they have the legal right to say no to his inheritance? Why would they do so if he were not paying his assessments on time? Would they rather have no money, because our mother certainly can’t pay the dues?  Signed, S.A.

Dear S.A.,

Most condominiums have what is known as a “preemptive” right, or a right of first refusal. This means that they have the right to either approve the transfer of a unit or provide an alternative buyer under the same terms and conditions by which the owner sold the unit. The courts have consistently upheld these rights, ruling that it is not an unlawful restraint on the transfer of property rights (which, ordinarily, are held sacrosanct), as the seller is made whole. Of course, the association cannot use its right for discriminatory purposes, such as the denial of ownership based upon race, religion, sex, national origin, or familial status. That said, most condominium documents also make an exception when the transfer is to a spouse or an heir. So the first thing to do is to read the condominium documents to see if the association has the right to approve the transfer to your brother, and whether that right has any exceptions.

As an aside, if the condominium is a “community for older persons,” which precludes residency by an individual below the age of 55, then your brother might indeed have the right to own the unit but may not be allowed to occupy the unit until reaching age 55.

Now, the Condominium Act prohibits a condominium from collecting common expenses in excess of three months at a time, except in the case of certain delinquencies. So the association demanding that your brother pay a full year’s assessments in advance of the board making a decision is certainly against the law.  Assuming that this is just a dispute over transfer rights, we feel that the board should probably quit playing games and, given the circumstances, acknowledge your mother’s bequest and accept that your brother now owns the unit.

Dear Poliakoffs,

I bought my condo twelve years ago with a balcony enclosed by sliding windows.  We were just informed by our association that 90% of us are in violation of city code.  How could this be?  Well it seems that, twenty years before I purchased my unit, these balconies were open, and they were later changed to their current design.  How could these changes occur without building permits or compliance with building codes? The association refuses to take responsibility, instead telling us that we have to pay thousands of dollars to restore our balconies to their original condition.  I do not feel that I should be responsible for these changes, since I purchased my condo in good faith from the previous owner.  Do I have any recourse?  Signed, B.T.

Dear B.T.,

While statutes of limitations would preclude community associations from retroactively seeking to compel unit owners to restore their units after thirty years, municipalities are not similarly restricted.  If the enclosure of a balcony or patio was done without permits and not in compliance with local zoning and building codes, the governing municipality can compel unit owners, including those who purchased their unit with the unapproved alteration already in place, to restore the unit to an “as built” condition in accordance with the approved building codes.  Your only recourse would be against the person who sold you your unit, but then only if you reserved the right to do so in a purchase agreement which specifically stated that the right survived the closing; otherwise the provision of the purchase agreement merges into the deed, causing your rights against the seller to be extinguished.

As for the association, most balconies are either owned elements, or limited common elements for which the unit owner has sole maintenance responsibility.  It is not unusual or improper that you would have the responsibility to maintain and restore your balcony to its original condition.  Your real dispute is with the owner who made the modification without city approval.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Bylaws, Condo Associations, Condo Rules, Covenants, HOAs, Homeowner's Association, Property Maintenance Tagged , , ,

New Neighborhoods–Email Board Meetings and Temporary Shutter Rules

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New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Email Board Meetings and Temporary Shutter Rules

Dear Poliakoffs,

Is it considered a meeting of the board of directors if the president or another member of the board emails the other members of the board seeking a discussion about an issue to be brought before the board at an established board meeting occurring at a later date?  Signed, J.J.

Dear J.J.,

The issue you’ve raised is a very common one, and frankly we’ve heard different attorneys give different answers as to whether email discussions among directors in between board meetings are prohibited (though, frankly, we don’t think the answer is much in question).  The issue also indirectly raises some common misconceptions about condominiums and open meeting laws.

Many people seem to believe that condominiums in Florida need to abide by Florida’s Government-in-the-Sunshine Law.  They don’t.  The so-called “Sunshine Laws” apply to government organizations, and condominiums are private organizations (though they do have many pseudo-governmental features).  Instead, the Florida Condominium Act, Section 718, contains provisions that are similar to some of the open meeting requirements of the Sunshine Laws.  For example, meetings must be open to residents (with limited exceptions), must be noticed at least 48 hours in advance (if not longer) and a quorum of board members (usually half plus one) are prohibited from meeting and discussing association issues in private.

So generally, any gathering of a majority of the board to discuss any matter that may reasonably come before the board is deemed to be a board meeting and cannot be held without notice, posting of an agenda and the opportunity for the unit owners to be present and to speak on the agenda items.  It is however permissible for less than a quorum of the board to meet and discuss board business.  To that extent, meetings of community association boards differ from government organizations, for whom there can be no gathering of two or more elected officials or members of a committee to discuss matters that may come before the board or committee.  As far as emails go, we believe that, since the intent of the law is to ensure that owners may be heard on any agenda issue, and since statutes are strictly construed, that a quorum of the board may not conduct business via electronic means, because doing so deprives the members the opportunity to participate in the meeting and constitutes a discussion of association business among more than a quorum of board members.

Dear Poliakoffs,

I am the Vice President of an HOA in South Florida.

Recently, there has been a discussion/debate in Florida about the legality of the HOA’s enforcement of mounting and removal of non-permanent hurricane shutters outside of the actual hurricane season.

Our community contains seasonal residents as well as year round elderly residents who have inquired about the possibility of extended or year-long periods for mounting removable shutters.

What is the current Florida legislation on this issue (if any), or legislation under consideration, concerning non-permanent hurricane shutter allowance periods, or dates that an HOA can enforce mounting and removal guidelines?  Signed, A.K.

Dear A.K.,

The issue you raise, whether an association can compel unit owners to remove non-permanent hurricane shutters or keep accordion-type shutters open when there is not a threatening storm, has been debated for over fifty years.  Many seasonal residents lock up their homes and close their shutters for added security.  The problem is that other residents live in their units year round, and they consider closed shutters both an eyesore and a security risk.  They feel it detracts from the aesthetics of the community, and it make it more likely that the property will be targeted as empty or abandoned.  The shared ownership laws do not address this question.  Quite frankly, we can appreciate the sentiments of the owners who do not want to live in a community where half of the homes are “boarded up” for the summer.  To compel owners to keep shutters open, the board or the membership needs to pass rules and regulations specifying when shutters can be closed and when they must be left open.  We believe that these rules are enforceable.

On a totally unrelated note, every community should also have rules in place compelling unit owners to close their water shutoff valves when they will be absent for an extended period of time, and ensuring that their A/C units be left on and set to around 78 degrees to retard any mold growth during the summer rainy season.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Board Meetings, Condo Associations, Condo Rules, HOAs, Homeowner's Association, Owner Rights, Rules and Legislation Tagged , , , ,

New Neighborhoods–Owner Lawsuits for Collections and Modifying Maintenance Allocations

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New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Owner Lawsuits for Collections and Modifying Maintenance Allocations

Dear Poliakoffs,

I read your columns in The Palm Beach Post and purchased a copy of your book, New Neighborhoods, about a year ago.  Very informative.

My question is whether an individual condo owner, or a group of condo owners, can file a lawsuit against owners who are not paying their association dues.  The association has pursued foreclosure or lien action in some cases, but that is a very prolonged and seemingly ineffective process.

The point is that it can be quantified that the non-payers are causing individual and collective financial harm to us for which there should be some redress.  Signed, T.P.

Dear T.P.,

In our opinion, there is no more serious crisis facing shared ownership communities today than the large number of unit owners who are not paying their share of the common expenses.  The Condominium Act mandates that the board, when it promulgates the annual budget, does so on a balanced basis.  That is, the budget must cover all past due, current and future obligations, plus mandatory statutory reserves.  When a unit owner or first mortgagee fails to pay the full share of a unit’s obligation, the shortfall has to be picked up by the remaining unit owners, mainly those who are making their payments on a timely basis.  This aspect is sometimes very hard for delinquent owners to understand.  There is no metaphysical “association” that is being harmed by their failure to pay maintenance—the harm goes directly to their neighbors in the form of even higher maintenance costs.  Essentially, if one of your neighbors is choosing not to pay their maintenance bill, you, and all of the other owners in the building, are loaning them money.  And frankly, it’s not a loan with particularly favorable terms.  Today, a significant line-item in most association budgets is an item for “bad debt” to cover monies that are not collected from unit owners.  This “bad debt” then has to be made up by the paying owners.

As a direct result of the ongoing economic crisis, thousands of shared ownership communities have cut back or discontinued routine maintenance programs, maintenance of reserves, full insurance coverage for casualties and liabilities, and necessary capital projects such as roof repairs, pavement resurfacing and building repainting.  At some point in time, someone is going to have to to pay the piper.  As such, the boards of community associations, as fiduciaries of the unit owners, have an obligation to take all necessary actions legally permitted to collect assessments from non-paying unit owners.

That said, it’s not always that simple to collect.  The law allows the association to place a lien on the delinquent property, but a lien in and of itself has no real force to compel payment.  To make a lien effective the board has to authorize foreclosure—instruct a lawyer to take possession of the property to repay the lien.  Many boards are reticent to foreclose on unit owners, for a multitude of reasons, including the costs of the foreclosure action, the superiority of bank mortgages, and a simple social disinclination to take away a neighbor’s home.  And while this sentiment is certainly understandable, there’s no question that aggressively pursuing foreclosures against delinquent unit owners is about the only effective tool to enhance collections in shared ownership communities.

While we have not heard of anyone doing it to this point, we see no reason why a unit owner or group of unit owners cannot seek to collect the monies owned the association by delinquent unit owners.  We’d suggest that those unit owners who want to take action against delinquent owners obtain an assignment from the association of its collection rights and give it a shot.  Sitting back and allowing everyone’s home values to plummet is certainly not the answer.

Dear Poliakoffs,

I live in a condo where the original 1972 documents state that assessments will be made based upon percent of ownership.

I am currently the secretary/treasurer of our association and there has been some debate over rounding off these amounts to the nearest dollar.

At previous board and annual meetings it was voted and agreed by a majority that we should round these maintenance figures off to the nearest dollar. Are we within guidelines by doing so?

Your assistance in resolving this issue would be greatly appreciated.  Signed, L.M.

Dear L.M.,

While the steps your board has taken sound facially reasonable, the law is clear–you cannot change the percentage of ownership of the common areas and the manner of sharing in the common expenses in any way without the written consent of 100% of the unit owners and all lien holders of record.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Association Dues, Condo Associations, Delinquencies, Homeowner's Association, Lawsuits Tagged , , ,

New Neighborhoods–Incidental Damage, Material Alteration in an HOA and Language on Proxies

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New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Incidental Damage, Material Alteration in an HOA and Language on Proxies

Dear Poliakoffs,

I have recently discovered damage to my condo in North Palm Beach.  Immediately, I sent a letter to my association.  The president called me last week, and an engineer and a contractor saw the damage.  I was told that there would be scaffolding on the outside of the building near my third floor apartment to make the repair.  The damage is on the ceiling between a screen and the glass sliding doors approximately six inches inside the screens.  The concrete work is to be covered by the association.

My question to you is whether I should be expecting the screen removal and replacement and sliding door removal and replacement to be taken care of by the association?

How do I handle this, and what might I do to be sure that I do not get charged for these expenses?

Thank you for any input that you might be able to give me.  Signed, R.T.

Dear R.T.,

The association should pay for any incidental damage caused by them in making necessary repairs to your unit.  This would include, in your case, the removal and replacement of the screen and sliding door.  It’s their responsibility, and they should cover the bill.

Dear Poliakoffs,

I read your informative column every week and I was particularly interested in your article published on December 10, 2011. This article commented on HOA law as it pertained to a subdivision governed by HOA covenants and restrictions, where the documents were silent regarding material alterations.

Your answer to a question asked by J.R. stated that a material alteration to a common area would require the written consent of 100 percent of the association’s members.

Please advise where I may access this legal information. Is it from Florida law or statute? I am writing from an unincorporated subdivision in Flagler County with a mailing address of Flagler Beach.

Also, please advise where I may purchase your book–New Neighborhoods – The Consumer’s Guide to Condominium, Co-op and HOA Living.

Thank you for your time and attention.  Signed, G.B.

Dear G.B.

First, thank you for asking about our book!  New Neighborhoods is available from bookstores everywhere—if they don’t have it in stock, it’s easy to order.  You can also find it at most large online bookstores, as well as in electronic format for the Amazon Kindle, Sony e-Reader and Apple iPad.

The question you asked is a good one because, when dealing with homeowner’s associations and the HOA Act, the Law is not as clear as it is in a condominium setting.  In a condominium, the vote to approve a material alteration is whatever percentage is provided in the documents, or if the documents are silent then the approval required is 75% of the entire membership. But HOA law is less clear. A recent case held that where the modification to the common areas was material, the actions of the association was “ultra vires,” which means, “acting outside the corporate authority;” which is why we said 100% approval would be required. Other cases have held that if the net effect of the change is to change the fundamental character of the community it is not permitted without 100% approval. In contrast, there are non-material changes that many argue can be made by the board without unit owner approval. So the answer to your question is that it depends upon the nature of the modification that is being made. To help solve this problem, any HOA documents that do not provide limits on the board’s authority when it comes to making modifications to the common areas should be amended to clarify when membership approval is required, and by what percentage vote.

Dear Poliakoffs,

I have a question regarding limited proxies, but I could not find the answer.

May the proxy form sent to owners by the board of directors for voting on an amendment include a statement in bold type on the proxy form stating, “The Board Recommends a Yes Vote”?

I thank you in advance for your opinion.  Signed, A.M.

Dear A.M.,

We do not know of any ruling that would preclude the board from putting the bold recommendation on the face of the proxy.  That said, readers should remember that for any proxy dealing with the waiver of reserves the following bold print must appear on the face of the proxy:

WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Common Areas, Condo Associations, HOAs, Homeowner's Association, New Neighborhoods Column Tagged , ,

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New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Handicap Access to Board Meetings and Conflict of Interest

Dear Poliakoffs,

I reside in a community governed by a homeowner’s association.  The board of directors conducts its meetings at a location that is not accessible to handicapped people.  I have requested, in writing and in person, that they change their meeting place, without success.  I would appreciate direction on how to proceed.  Signed, L.M.

Dear L.M.,

If your question was whether meetings of government entities need to be conducted at a location that affords access to a handicapped person, that answer would be yes.  The problem here is that most courts have held that the conduct of community associations does not rise to the level of “state action”, thereby precluding the necessity of an association having to comply with the laws that govern municipal meetings and actions.  Community associations are private organizations governed by private contracts (and by statute).

We’re frankly not sure where to draw the line in the case of shared ownership communities.  We have had visually impaired unit owners request ear phones for meetings, and hearing-impaired unit owners request a sign-language translator.  Some foreign-speaking unit owners have even demanded that the association provide interpreters.  This can be difficult, if not impossible, to do given the diversity of unit owners from many parts of the world.  However, a number of older properties do not have handicap-accessible common areas, and the law hasn’t generally forced them to adapt to the new codes and regulations.

That said, there is one aspect of federal law that might afford you some relief.  The Fair Housing Act does provide that a handicapped person, at his or her expense, is entitled to make modifications to the common areas to afford handicapped individuals full use and enjoyment of the premises.  So if you were so inclined you do have the right to request that the board allow you to modify the location being used for meetings (for example, by building a ramp) so that you may attend.  You would have to pay for the modification, and it would need to be reasonable (in one case a woman wanted to build a ramp into a pool that covered half of the pool—that was not considered a reasonable modification).

Dear Poliakoffs,

I am on the board of directors of a condominium in Cocoa, FL.  We are in the process of accepting bids for annual condo maintenance.  The president rents his unit to his stepson and wants the board of directors to hire him for this maintenance contract.

Is this a conflict of interest, since the stepson will be paid by condo funds that, in turn, would be used to pay rent to the president?  Can the president cast a vote, or must he abstain from voting?  The president will be signing the contract.  Signed, D.B.

Dear D.B.,

So long as the president discloses the relationship, nothing in the law would preclude the board from deciding to hire the president’s stepson to work for the association.  Regardless of who the Association hires, it needs to have a written agreement that complies with the provisions of Florida Statutes 718.3025 and 718.3026.  Inclusive in FS 718.3025 is a provision that requires the disclosure of any financial or ownership interest a board member or any party providing maintenance or management services to the association holds with the contracting party.  A few years ago, board members were not allowed to abstain from voting unless there was a financial conflict of interest—but under the current law, the president may abstain from this vote if he feels it’s appropriate.  However, an abstention is still not required, though probably prudent.

If the president does hold a financial interest in the company contracting with the association (though simply collecting rent from his stepson is not a financial interest), the contract must be approved by an affirmative vote of two-thirds of the directors present at a meeting at which a quorum is present.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Board Meetings, FHA, HOAs, Owner Rights Tagged , , ,

New Neighborhoods–Public-Use Pools and Board Member Abstentions

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New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Public-Use Pools and Board Member Abstentions

Dear Poliakoffs,

Our condo association documents include a provision for the non-exclusive use of an outdoor pool and deck that is owned by the developer. The association pays a “fair amount” to help defray maintenance and upkeep costs (just as if it were a common element); the documents also say that the developer has the right to open the pool for public use as well. The developer has indicated he intends to sell daily and weekly pool passes to the public. Our concern is that he will sell so many public passes that there will be no room for association unit owners–we would have access to the pool, but effectively no ability to use it. The pool has a health-department restricted load of 70; the association has a total of 114 units with 558 total residents. Is there some formula that’s generally accepted as a “fair share” between the association and the owner; that is, how many of those 70 slots should be reserved for the association? The pool deck raises a similar question, as it has space for 200 users.  Signed, R.K.

Dear R.K.,

While it is not uncommon for equity clubs and golf courses (around which large planned developments are often built) to be open to the public, it is extremely rare to hear of a swimming pool and pool deck where the developer sells admission to the public. As for the definition of a “fair amount” to be paid by the association, or a “fair share” of the deck to be reserved to the unit owners, unfortunately there is no legal definition for that term, and it’s not a term that would typically be used in legal documents.  A judge would need to investigate the original intent of the developer to determine how much money should be paid for upkeep, and if a portion of the pool and deck should be reserved for the condominium.  But also, there are very serious issues involving liability and security that need to be addressed. We would strongly encourage the association as the representative of its members to have its attorney contact the developer and set up a meeting to discuss its legitimate concerns, and to draft an agreement that both establishes the exact rate of payment for the use of the pool and deck, as well as protects the rights and interests of the association members.

Dear Poliakoffs,

Our board of directors is opting to have a new, eight-person board start serving in January.  They said no one else volunteered to be on the board, which is not true.  Our bylaws indicate that the association should have a three to nine person board, the intent being to have an odd number to avoid ties.  To address this problem, our new president said she would always vote on the first round, and that if there were a tie she would “stand down” for the next vote.  Is this allowed?  If the statute indicates that all board members must vote, wouldn’t this action be illegal?  Signed, J.J.

Dear J.J.,

Your question raises a couple of separate issues.  First, a board of directors doesn’t normally choose, on its own, how many board members serve on the board.  The size of the board is normally stated in bylaws, which typically provide a mechanism for the membership to increase this number if desired.  If no number is stated, the board is made up of five members.  Many documents do also state that the board should be an odd number, to avoid tie votes.  Elections must be held every year to fill vacancies on the board.  If there are fewer candidates than vacancies on the board, elections are not held—all of the candidates are automatically seated.  If there are no candidates, then the sitting board members may be appointed to the board for a new term.  If the board is still short of the number of directors specified in the documents, then the currently serving board members would have the right (and arguably the obligation, if a qualified candidate is available) to appoint a new board member to fill the vacant seat.

As for a board member abstaining (choosing not to vote on an issue), until a few years ago the statute mandated that every director vote on every issue, with abstentions allowed only in the case of a conflict of interest.  Voting was considered a fiduciary prerequisite to board service.  However, in 2008 the Condominium Act was amended to allow board members to abstain.  An abstention is treated as if that member has taken no action.  Quite frankly, it is our opinion that a member of the board should exercise their business judgment and cast a vote on every issue being considered.  What is the point of board service if a director is, metaphorically, simply going to punt a decision to the other members?

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Board Meetings, Common Areas, Condo Associations, Developers / Construction, HOAs, Homeowner's Association, New Neighborhoods Column Tagged , , ,

New Neighborhoods–Long-Term Guests and Mandating Flood Insurance Coverage

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New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Long-Term Guests and Mandating Flood Insurance Coverage

Our condo documents state that guests can visit a resident for up to 30 consecutive days without being considered residents, themselves. People in our building have had guests or caregivers stay with them for 30 consecutive days, then leave for a day and return for another guest pass and another 30 consecutive days. This mostly happens in the winter when an elderly person comes down for a few months with his or her nurse. Our board has been making these guests go thru the owner and resident security check and application process at the cost of $150.00, even though, according to the by-laws, these guests have to be here over 30 consecutive days to be considered a resident. I that feel that this is a dual interpretation of the by-laws. Signed, J.B.

Dear J.B.,

First, you did not indicate whether the rule limiting guests to “30 consecutive days” is a board-made rule, or a restriction contained within your condominium documents. If it is a board made rule, it must be reasonable to be valid, while a rule found in your original documents can be somewhat unreasonable so long as it does not violate a fundamental right.

Second, there is a difference between a “guest” and a “caregiver.” Most authorities agree that a caregiver is not subject to limitations on guest rules, nor are they counted against individuals below the age of 55 in communities for older persons.

Now, that having been said, assuming that the rule is valid and enforceable, then there would be nothing which would preclude someone from leaving for a day and returning for an additional 30 days, as you’ve described. That is why it is critically important that all rules and regulations be written in a clear and concise manner.  Your board probably does not have the power to force these guests to go through the owner/resident application process, even if they are using a loophole to get around the association rules.  The only solution would be to amend the documents and close the loophole.

Dear Poliakoffs,

I read in a recent column that it is up to unit owners to convince their boards to provide flood insurance for their associations, as the Florida statute does not make flood coverage mandatory.  Our board provides 80% coverage, but my mortgage provider requires 100% coverage, and has force-placed a flood policy on my behalf.  If I get a lawyer and pursue the issue for the extra 20%, do I stand a chance of winning?  I’m just asking because I’m already way underwater with my condo, trying to do right by my mortgage commitment as I slowly deplete my retirement savings.  So, I really don’t want to spend the money for a lawyer if I’m going to lose.  However, I would like to take a stance and, maybe if I win, the Florida legislature would amend the statute to require 100% flood insurance coverage in FEMA-specified flood areas.  Signed, J.S.

Dear J.S.,

The question, really, is what would you gain through your lawsuit?  Let’s assume that you are successful in forcing your condominium to secure the extra 20% coverage you require.  The money required for this new insurance policy would be passed directly through to the owners in the form of higher maintenance charges, and it would likely be the exact same amount it would require for you to purchase the policy yourself.  It’s six of one, a half-dozen of another.  Ultimately, you’re going to pay for the flood coverage, whether it’s paid to your mortgage provider or to the association itself.  The issue is with your mortgage provider, and the federal government.

Here’s the breakdown on flood coverage in condominiums.  Nearly all flood insurance is provided through the National Flood Insurance Program, or NFIP.  The NFIP provides either 100% replacement coverage on a unit or $250,000 worth of coverage, whichever is lower.  In your case, it sounds as if your unit is worth less than $250,000, and the association has decided to purchase only 80% coverage per unit (80% coverage is generally the minimum required for other, more complex reasons).  By federal law, any property that is covered by a federally-insured mortgage must be protected by a maximum-value flood policy.  So it’s actually the federal government that is mandating that you buy flood insurance, not Florida.  Now, we agree that it’s absurd for any mortgagee to require a condominium unit owner to buy flood insurance when that is ultimately the obligation of the association, especially if the unit is not on the first floor of the building. But the Florida Legislature cannot resolve this issue. All Florida could do is mandate that condominiums purchase these maximum policies, which would simply result in all unit owners paying higher maintenance fees.  What you really need is for congress to change the federal flood insurance requirements for borrowers and lenders.  Do note, however, that force-placed policies may be more expensive than what you can buy through an insurance broker—you should contact one to get the best price on the extra 20% coverage you need.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Condo Associations, Condo Rules, HOAs, Homeowner's Association, Insurance, New Neighborhoods Column, Renters, Renting / Subletting Tagged , , , , ,

New Neighborhoods–Parking Rules, Non-Owner Boards and Multi-Condominium Funds

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New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Parking Rules, Non-Owner Boards and Multi-Condominium Funds

Dear Poliakoffs,

We live in a 135-townhouse HOA development.  Since the development opened, there has been one nine-space parking lot used for overflow parking for residents and tenants.  Recently, the HOA declared this lot can only be used for “guest parking”.  Others are subject to towing.  No guidelines were ever published, and some guests have been ticketed.  In one case, the security guard and a guest nearly came to blows because the guard did not believe that the person was a guest since the car had been in the parking area a “long time”.  Nothing in the original documents designate this lot as being for guests only.  Can the HOA declare what was once a common area off limits to residents and tenants?  If so, can the residents be compelled to pay for an area for which they do not have access?  Is there an option to appeal to local or state agencies? Signed, A.K.

Dear A.K.,

It is within the board’s discretion, absent a provision in the covenants, conditions and restrictions to the contrary, to pass reasonable rules and regulations governing the common areas; that would include a parking lot.  The truth is that few communities were designed with sufficient parking spaces to accommodate multiple family cars, handicap parking and parking for guests.  To be honest, assigning nine parking spaces for guest-only use only does not sound particularly unreasonable.  Assuming this is association-owned property, local and state agencies are unlikely to get involved.

Dear Poliakoffs,

Our HOA documents state that a board member must be an owner and resident of the community.  Does “owner” include a spouse if that spouse’s name is not on the deed or tax record?  Does the term resident refer to being a legal Florida resident (homesteader) or just residing in the unit on the property?

If someone is currently serving on a board and does not qualify under the terms of the documents what are the recourses available to the unit owners with regard to removing the person and reversing any actions, contracts, expenditures or other matters that the person authorized in any way while serving in the unauthorized position?  Since all board members signed that they have read and understood the statues and documents would there be any possibility of criminal charges?

We have an election coming up so I would appreciate a reply to these questions as soon as possible.  Thank you for all your past advice and any assistance you can provide now.  Signed, M.O.

Dear M.O.,

In a situation where the governing documents require that a member of the board be an “owner,” the spouse of a record title owner whose name is not on deed would not qualify to serve on the board. If a person is currently serving on the board who is not otherwise qualified, they are deemed to not be a board member; period. They cannot serve, and any action that they take, such as voting, would be deemed null and void. Now, a third party has the right to rely on the legitimacy of an association president being a valid decision-maker in signing contracts—so if the board member was the president, the contracts he or she entered into on behalf of the association would still be enforceable.  Otherwise, those would be unenforceable, as well.

In so far as what constitutes a “resident” where the documents are otherwise silent, it would be a person who’s primary residence is the unit, whether or not they have filed for a homestead exemption. Serving without authority on a board would be a civil, not criminal, violation of the law.

Dear Poliakoffs,

We are a multi-condominium with three buildings and three budgets. Can the operations account monies be commingled with expenses for one condo building that doesn’t have the funds to pay for certain damages? I was under the impression that my condo fee was for my building repairs and my building’s reserve funds. The building in question opted out of the reserves for one year and now doesn’t have the funds needed to do the repairs. I understand that common element expenses are shared, but can a single association in the multi-condominium use funds from the other buildings for their own expenses?  Signed, D.S.

Dear D.S.,

Although the operating funds and reserves of separately declared condominiums operated by a single association (a multi-condominium association) can be commingled into a single account, the association must maintain separate books and records for each condominium it operates, including the reserve funds, and it cannot use the operating funds or reserves of one condominium to pay for expenses of one of the other condominiums. There should be four separate budgets; one for each of the condominiums and one for the shared expenses of the three condominiums. A unit owner of one condominium should not be paying the cost of operation of another of the condominiums.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Condo Associations, HOAs, Homeowner's Association, New Neighborhoods Column, Owner Rights, Parking Tagged , , ,

New Neighborhoods–Apathy, Covenant Enforcement and Renter Rights

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New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Apathy, Covenant Enforcement and Renter Rights

Dear Poliakoffs,

We have a situation at our condominium–only one person has served on the board for several years, as no one else was interested.  When nothing was being done to maintain the building, we asked to see the financial records.  Two months later, with no response, we sought arbitration from the state and it was approved.  The president then hired counsel who sent a letter stating the property manager (who was fired after all this started) had not been given all the paperwork from the state.  Since then the attorney is refusing to cooperate.  What is our recourse?   Signed, D.M.

Dear D.M.,

Unfortunately, the shared ownership concept cannot work if unit owners are not willing to volunteer their time to serve on boards and committees.  The apathy that you are seeing at your property is the same apathy that we typically see in the broader national democratic process.  And, the answer is not simply to hire a management company to run the property.  It’s the board’s job to create the policies that a property manager follows.  If this doesn’t happen, buildings deteriorate due to the lack of maintenance, property values drop, and no one can account for association funds.

As the old saying goes, “It is better to light a single candle than to cure the darkness.” Become a leader in your community.  Organize a slate of directors to run for the board, and recall the sole sitting board member.  Once elected, bring in fresh, unbiased professionals to get your books and records in order and your property back to the standard you expected when you purchased your home.  The only way to solve this problem is for someone to take the bull by the horns and just do the work that’s required.

Dear Poliakoffs,

Our HOA is enforcing a landscape covenant requiring three palm trees in the front of each home as the builder and core communities (now defunct) had designed.  Over the years, the palm trees have died, and the landscape committee has approved some homeowners to replace the three trees with a single Christmas palm with three trunks.  This approval was later rescinded.  When our home was built, the landscaper put in one palm tree, which he stated was the requirement for our street as the home fronts are small.  Now that we are selling our home, we were sent an inspection report via the buyer’s title company that we are not in compliance.  The HOA is assuming that all homes on all streets in the community must have three palm trees in front.  Almost every home has one palm tree, except for those that were resold.  The HOA is requesting removal of the one palm and replacement with three new palms, to include permit fees and other costs.  Is this legal?     Signed, J.B.

Dear J.B.,

The Florida Homeowners’ Associations Act (Chapter 720) has very stringent guidelines when it comes to architectural controls and homeowners’ rights and privileges.  First and foremost, the authority of an HOA or architectural control committee to review and approve plans for architecture or other improvements located on a parcel is limited to the extent that the covenants, conditions and restrictions (CC&Rs) grant the board or the architectural control committee such power. In doing so, they must conform with the general principles of waiver and selective enforcement—if an association waits to enforce a rule against owners for a long period of time, or if they enforce the rule against some owners, but not others, that rule generally becomes unenforceable.  While the board might be able, prospectively, to require future landscaping to be in conformity to the initial landscape plan by declaring their intention to abide by the CC&Rs from a stated time forward, it is doubtful that the board, given the passage of time, could retroactively require any property owner to remove previously placed landscaping.

A more challenging issue is the HOA’s compliance with the Florida Friendly Landscaping Law.  That law prohibits HOAs from denying a homeowner the right to install Florida-native landscaping that is compliant with the law.  Florida Friendly Landscaping is found when Florida-appropriate native or habitat-friendly plants are used in the right places, watering is done efficiently, fertilizing is done appropriately, mulch is used, wildlife is attracted, yard pests are managed responsibly, yard waste is recycled, and storm water runoff is significantly reduced.  The law is designed to reduce the use of water and reduce water pollution.

Dear Poliakoffs,

Could you please advise where I can find the law stating that usage rights are transferred to a tenant when a condominium is rented?    Signed, R.D.

Dear R.D.,

Florida Statute 718.106(4) provides that when a unit is leased, a tenant should have all use rights in the association property and those common elements otherwise readily available for use generally by unit owners, and that the unit owner should not have such rights except as a guest, unless the tenant waives these rights in writing.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Condo Associations, Covenants, HOAs, Homeowner's Association, New Neighborhoods Column, Renters, Renting / Subletting Tagged , , , ,

New Neighborhoods Column–New Feature!

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Hi everyone!  I’m going to start a new feature this week–I’ll be reprinting the question and answer column that I write with my father, Gary A. Poliakoff, and that appears in newspapers and magazines throughout Florida.  It’s called New Neighborhoods, just like our book.  If you have any questions for the column, feel free to send them to me through this website, or at the email listed at the bottom of each column.  I hope you enjoy this new weekly feature!

New Neighborhoods

By Gary A. Poliakoff and Ryan Poliakoff

Self-Management and Sidewalk Repairs

Dear Poliakoffs,

I live in a 152-unit condominium complex in Boynton Beach, Florida.  Due to the hard economic climate, our board of directors wants to “self-manage” the complex.  They are soliciting unit owners who have experience in bookkeeping, accounting, information technology, law, billing, reception, etc. to submit resumes to the board.  These would be paid positions.  Is it legal to self-manage a condo complex? Is it legal to solicit paid help from unit owners in the complex? Is a CAM license needed to self-manage the condo complex?  This sounds very risky to me.  We have always had professional management companies with an on-site, licensed property manager.  Signed, D.S.

Dear D.S.,

People assume that property management is fairly simple—in fact, it’s a very complex profession.  As you note above, it involves issues of finance, law, politics and real estate.  So it’s important to understand that the question of whether it’s legal to self-manage a property has to be kept separate from the question of whether it’s prudent to do so.

It is, in fact, perfectly legal to self-manage your condominium.  However, in our book, we do recommend that larger communities, such as ones of your size, consider a professional manager or management company, because property management is a very specialized job that benefits significantly from training and experience.  It is simply not a task that lay people can typically perform.  However, as a question of condo law, volunteer unit owners are allowed to operate a condominium.

Where this gets tricky, however, is the question of licensing, and the nature and scope of the work being performed.  Florida Statute 468 (Community Association Management) defines “community association management” as the performance of certain defined functions, for pay, for an association of over 10 units and a budget in excess of $100,000.  Those functions include controlling or disbursing funds of an association, assisting in the noticing or conduct of community association meetings, and coordinating maintenance and other day-to-day services for the property.  Any person performing these tasks must be licensed by the state.  Licensing requires taking a two-day course and passing a written exam—not a serious burden, but still a basic threshold that should be met by any residential property manager.  While a volunteer who performs strictly ministerial functions under the direction of a licensed manager does not need to be separately licensed, an owner or resident being paid to do any of the proscribed tasks would need to be licensed by the state.  If in doubt, we’d recommend you speak to someone at the Department of Business and Professional Regulations, the agency that governs licensed community association managers.

Dear Poliakoffs,

The sidewalks in our small homeowner’s association need repair due to roots from oak trees planted by a previous board.  Some believe that these trees were planted illegally. We were given an option of either just repairing the sidewalks, or getting a town-approved plan to both replace the trees with a different variety and to then repair the sidewalks.  The membership voted in favor of repairing the sidewalks.  Does the board need to have a special meeting to discuss this repair, even though it has already been approved?   Also, what can we do to avoid this situation in the future?   Signed, J.G.

Dear J.G.,

First, while it’s not something you mention in your letter, volunteer board members who serve on condominium, co-operative and homeowner association boards are granted significant leeway in their decision making under the business judgment rule and will generally not be found personally liable for their actions absent a show of self-dealing or fraud.  Accordingly, we would not waste time debating the decision of whether or not the oak trees should have been planted in the first instance—what’s done is done.

As for avoiding this situation in the future, it is self-evident that the trees were either planted too close to the sidewalks or were an inappropriate tree for the application if the root system is tearing up the sidewalks; so realize that this problem is likely to recur.  The board may want to hire a horticulturalist to determine if the roots can be pruned, or if the trees can be relocated elsewhere on the property.  If the association will not replace the trees, than you have to simply accept that this is a problem that will likely crop up again.

Now, as to the board discussing and approving the repair.  It’s hard to tell from your letter why the membership was voting on the issue in the first place, unless your documents require a membership vote for large projects.  Repairs that are not material alterations of the property would typically be left to the board’s discretion.  We would probably have the board meet to approve the project, if only to ratify the decision of the owners.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living.  Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., and Ryan Poliakoff is the Vice President of Management at AKAM On-Site.  Email questions to condocolumn@becker-poliakoff.com.  Please be sure to include your hometown.

Posted in Condo Associations, Condo Management, HOAs, Homeowner's Association, New Neighborhoods Column Tagged , , , , ,