HOA Governing Documents Explained

Q: I recently purchased a home in a development that is under a homeowners’ association. When I purchased, I received “the documents” for our community. I am confused how these documents relate to each other and what the different documents are supposed to mean. Can you clarify the differences between the documents for me? I was also wondering how the “rules” are created. Is this something that homeowners are consulted on? (G.M., via e-mail)

A: According to Chapter 720 of the Florida Statutes, the Florida Homeowners’ Association Act, the “governing documents” of the community include the declaration of covenants, the articles of incorporation, the bylaws, and the rules and regulations.

The declaration is much like your “constitution” and sets forth the basic covenants and restrictions for the community. For example, covenants include the obligations to pay assessments and be a member of the association arising from the declaration. The requirement that your lot can only be used as a single family home, or can only be rented for certain minimum periods arise from the declaration are examples of restrictions.

The articles of incorporation, called the “corporate charter” in many states, establishes the association’s existence and basic structure and governance. It may address important powers, such as the association’s authority to borrow money.

The bylaws (which I often refer to as “the corporate housekeeping rules”) govern the operation and administration of the association. Bylaws will typically address the composition of the board, how meetings are called, and numerous other corporate procedures.

The rules and regulations usually supplement the restrictions in the declaration, and typically address matters of everyday policy, such as parking or use of the community’s recreational facilities.

In addition to “do and don’t” rules, most HOA’s also have what I refer to as “administrative rules”. For example, the Homeowners’ Association Act grants the board authority to adopt certain rules governing the frequency, duration, and other manner of member statements during board meetings. An official records inspection rule is another example of an “administrative rule”.

The various governing documents are each subject to their own amendatory procedure. Typically, declaration amendments require the highest level of owner vote, whereas rules are most often amended and created by the board of directors. Rules must be reasonable and cannot conflict with the rights provided for in the other governing documents. Amendments to all governing documents must be recorded in the public records to be valid.

The bylaws usually establish the board’s rulemaking authority, and may include limitations on this authority, such as a board only having the ability to create rules governing use and operation of the common areas.

The law does not contain any requirement for owners to approve rules, which are most often adopted by the board, assuming adequate rulemaking authority have been granted to the board. However, owners have the ability to attend board meetings where they can voice their opinions and raise any concerns regarding any items the board plans to vote on, including rules and regulations.

Q: My neighbor wants to erect a flagpole in his yard. I am concerned that it will block my property’s view. Is there anything that can be done about this? (S.S., via e-mail)

A: Probably not much.

Section 720.304 of the Florida Homeowners’ Association Act provides that homeowners may erect freestanding flagpoles of no more than twenty feet in height on any portion of their property, regardless of provisions in the governing documents to the contrary. However, the flagpole cannot be built on an easement, and must not obstruct sightlines at intersections.

The law also lists certain flags that may be displayed from the flagpole, again regardless of contrary provisions of the governing documents, including a United States flag, an official flag of the State of Florida, or of the United States Army, Navy, Air Force, Marines, Coast Guard, or POW-MIA.

The law does state, however that flagpoles and corresponding flags are subject to all building codes, setback requirements, and all other applicable governmental restrictions. If your community’s covenants pre-date the enactment of these laws, there is an argument that they cannot be applied retroactively. However, that is far from settled on this topic.

Originally posted on floridacondohoalawblog.com and written by Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. 

Deadline looms for older Florida High-Rises to Install Engineered Life Safety Systems!

Florida’s 2019 60-day Legislative Session will begin on March 5, 2019 and is expected to end on May 3, 2019.

The Florida Fire Protection Code, Section 31.3.5.12 of the National Fire Protection Association (NFPA) 101 requires existing (pre-1992) “high-rise” buildings which are not otherwise exempt to be protected either by an automatic sprinklers system or by an Engineered Life Safety System (ELSS) by Jan. 1, 2019. Given the timing involved, any further legislative remedies no longer seem feasible.

The components of an ELSS may vary from one jurisdiction to another but the ELSS must meet all of the other requirements of the NFPA 101. A typical ELSS requires the following:

  1. A report by a licensed architect or engineer identifying the building’s existing condition and outlining the alterations needed to comply with the NFPA 101.
  2. A complete fire sprinkler system for all common areas.
  3. A partial fire sprinkler system for the condominium units which typically is one sprinkler head inside each unit located above the entrance door to the unit.
  4. A complete fire and smoke alarm system which complies with current life safety codes.
  5. An approved compartmentation plan designed to restrict a fire from spreading which typically includes either smoke-proof elevator lobbies or pressurized elevator hoistways, sealing of floor and wall penetrations, etc.

Naturally, it will take time to complete the necessary Engineer’s Report and to locate, vet and hire a contractor who can perform this work in your community. Also, there is the large matter of how to pay for the ELSS installation. If you plan on using reserve funds to do so you will need a membership vote to approve using those funds for that purpose unless you had a special reserve earmarked for ELSS installation. If you plan on obtaining financing to pay for the installation it takes time to apply for and secure such financing.

At this point, if your pre-1992 high-rise is not exempt and you have not yet made plans to install the necessary ELSS prior to the end of 2019 you need to speak to experienced Association counsel immediately to take the steps needed to ensure you do not miss the deadline and wind up being fined as a result.

Easements by Necessity – Goldman v. Lustig

In the recent case Goldman v. Lustig, Case No. 4D16-1933 (Fla. 4th DCA January 24, 2018), at issue was whether Unit Owners had the right to use and access a dock located behind an adjacent townhouse owner’s waterfront property.

The Unit Owners’ complaint sought a declaration of their rights to use the dock, as well as a permanent injunction to prohibit the adjacent property owner from preventing their use of the dock. The complaint also alleged that the adjacent property owner severed his riparian rights (simply defined as the method of allocating water among those who possess land along its path) to a portion of the dock when he entered into a quitclaim assignment with the Association. The adjacent property owner filed a countered seeking a declaratory judgment that would affirm his rights to the dock, and a permanent injunction to stop the Unit Owners from both using any portion of the dock and accessing the dock through his property. The Court found that the assignment was valid, as both the Unit Owners and the adjacent property owner executed the assignment, and riparian interests may only be severed by an express bilateral agreement (a reciprocal arrangement between parties which promises to do something in exchange for what the other is doing).

However, the central issue in the decision was whether the Unit Owners had a right to access the dock through the adjacent property owner’s land by way of an easement by necessity. In Florida, an easement by necessity is granted when there is no other accessible right-of-way to your own land except by crossing over someone else’s land.

While the Court held that the Unit Owners were entitled to use a portion of the dock, it explained that they were not entitled to an easement by necessity in order to access the dock, as they failed to demonstrate an absolute need for such easement. Although accessing the dock by land required the Unit Owners to cross the adjacent property owner’s land, the Court reasoned that they were not entitled to an easement by necessity, as they could also access the dock by water.

The Court provided that because the Unit Owners live on waterfront property, they could find an alternate way to access the dock. For instance, the Unit Owners could build their own access pier, which the Court considered to be a “reasonable and practicable way of egress or ingress.” The Court stressed that factors such as cost or inconvenience are not determinative for purposes of obtaining an easement by necessity.

Originally posted on floridacondohoalawblog.com and written by Esther Zuccaro

New Law Requires Recording of Homeowners’ Association Rule Amendments

Q:        I am a director in a homeowners’ association. I understand that there have been recent changes to the laws regarding document amendments. Do these changes in the law require that all changes to the rules and regulations made by the board of directors be recorded? (W.L. via e-mail)

A:        Yes. The recent changes to the Florida Homeowners’ Association Act require that amendments to rules and regulations made on or after July 1, 2018 be recorded in the public records.

The new amendment to Section 720.306(1)(e) of the statute states that an amendment to any of the “governing documents” is effective when recorded in the public records of the county in which the community is located. The statute was amended a couple of years ago to define “governing documents” to include rules and regulations.

I am not sure of the need for this change as perceived by our Legislature. It seems quite burdensome to me. By comparison, the Florida Condominium Act does not require and has never required rule amendments to be recorded to be legally valid.

Q:        Can you explain the differences in financial reporting requirements for condominiums? I am a director on a condominium board and we were wondering whether we could prepare a report of cash receipts and expenditures instead of an audited financial statement. (J.T. via e-mail)

A:        Section 718.111(13) of the Florida Condominium Act requires that year-end financial statements be prepared in accordance with generally accepted accounting principles. The required form of financial statement will depend on the amount of the association’s total annual revenues.

Associations with total annual revenues of less than $150,000 must prepare a report of cash receipts and expenditures. Compiled financial statements are required for associations with total annual revenues of at least $150,000 but less than $300,000. Reviewed financial statements are required for associations with total annual revenues of at least $300,000 but less than $500,000. Audited financial statements are required for associations with total annual revenues of $500,000 or higher.

For the association to prepare a lesser report than required by statute, the law requires a majority of the voting interests present at a properly called meeting of the association to specifically approve what type of report can be given instead. The approval and meeting must occur before the end of the association’s fiscal year and the financial reporting method is only effective for the fiscal year in which the vote was taken.

There are similar requirements in the homeowners’ association context.

Q:        I read your recent article regarding insurance and repair after casualty damage, such as a hurricane. Do you have support for the statement that air conditioning units are the association’s responsibility? Is there a difference for other air conditioning equipment such as air handlers? (K.H. via e-mail)

A:        Section 718.111(11)(f)1. of the Florida Condominium Act requires the association to insure “all portions of the condominium property as originally installed or replacements of like kind and quality, in accordance with the original plans and specifications.” Subparagraph 3 of that part of the statute then goes on to exclude certain items from the associations insurance coverage responsibility, including electrical fixtures, appliances, water heaters, and built-in cabinetry, among other items. These items are often called the “exclusions” to the association’s insuring responsibility.

Air conditioning equipment was added to the list of exclusions in the statute in 2003. However, such equipment (which would include compressors/condensers and interior air handling units) was then removed from the exclusion list when the statute was rewritten in 2008, so it is now part of the association’s responsibility for insurance and repair after casualty.

It is important to note that this is different than maintenance responsibility. Most declarations of condominium place maintenance responsibility on the owners. While the association cannot “opt out” of the statutorily-required insurance obligation, it can (by majority vote of the members) opt out of post-casualty repair cost allocations, which is typically most relevant when deductibles come into play.

Originally posted on floridacondohoalawblog.com and written by Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers.