Condos, HOAs, and Written Inquiries

Many times I see situations where an owner sends a community a certified letter seeking the answer to questions about various issues.  The nature and manner of the responses is dictated by the type of community. The Florida Condominium Act states that when a unit owner of a residential condominium files a written inquiry by certified mail with the board of administration, the board from the condominium association shall respond in writing to the unit owner within 30 days after receipt of the inquiry. The condominium association board’s response shall either give a substantive response to the inquirer, notify the inquirer that a legal opinion has been requested, or notify the inquirer that advice has been requested from the division. If the condominium association board requests advice from the division, the board shall, within ten days after its receipt of the advice, provide in writing a substantive response to the inquirer. If a legal opinion is requested, the condominium association board shall, within 60 days after the receipt of the inquiry, provide in writing a substantive response to the inquiry. There are penalties if these deadlines are not adhered to. It should also be noted that the condominium association may, through its board of administration, adopt reasonable rules and regulations regarding the frequency and manner of responding to unit owner inquiries.

In contrast, the Florida Homeowners’ Association Act contains no such similar provision.  As such, the HOA is not required under the statutes to respond to the certified inquiry. That being said, the HOA’s governing documents still need to be checked to confirm there is no requirement therein to respond to an owner’s certified inquiry. Even if not legally required, the HOA board should consider whether it is advisable to respond to the owner’s complaints in some manner as a proactive step to possibly help resolve a dispute rather than letting it escalate further.  This decision should come after seeking advice from the association’s counsel.

Originally posted on floridacondohoalawblog.com and written by David G Muller

Procedure To Convert To Pooled Reserves

Q: Can a condominium association board vote to convert from straight-line reserves to pooled reserves without a membership vote?  R.F. via e-mail

A: “Cash flow” funding of condominium reserves, often referred to as the “pooling” method of reserve funding, is a concept that was introduced many years ago through an amendment to the state’s administrative rules regulating condominium finances.  Under the traditional, “straight-line” method, required reserve contributions are calculated by using a formula that divides the cost of replacing a particular item by the number of useful years that item has left, minus the reserve funds on hand for that item, with the result being the amount to fully fund that item for the next fiscal year.  Each reserve component must be separately funded and must appear as a separate line item in the reserve schedule which is part of the budget.  Absent a majority vote of the unit owners at a duly called meeting, monies for each separate reserve item can only be used for that particular reserve item.

Under the pooling or cash-flow method, each reserve item is still separately funded but the money is put into one account. The reserve schedule computation is a bit more complicated and typically needs to be prepared by an accountant or reserve consultant.  The basic theory is that the association attempts to predict the year a particular asset will require deferred maintenance or replacement, and a mathematical formula is then applied to calculate required contributions for each year.  In theory, the money should be available when needed, with a lower contribution than required using the straight-line method.

A condominium association needs approval of the unit owners (i.e. a majority of the owners who vote at a meeting where a quorum is attained) to put existing straight-line reserves into the “pool.”  Once the vote to switch to pooled reserves is successful, no further votes would be required in future years and the association could continue to operate under the pooling method.

Q: My homeowners association is in a dispute with the landscaping company that was recently terminated for doing a bad job and for damaging common property.  The board advises that they are not going to sue the landscaping company because it will cost too much money and there is no way to recover the attorney fees incurred during the litigation.  Is the board right?  Is there no way to recover attorney fees in this type of dispute?  B.L. via e-mail

A: Since your association entered into a written service contract with this landscaping company, the terms of the contract will govern this dispute.  If the contract does not contain a provision allowing prevailing party attorney fees and costs in the event of a legal dispute, the association will likely have no ability to pursue these types of damages.  I use the term “likely” here because Florida Statutes do provide for the recovery of prevailing party attorney fees and costs in certain situations.  That being said, from the information you have provided, I doubt the association will have any statutory claim for prevailing party attorney fees and costs.

It is recommended that any contract the association enters into be first reviewed by the association attorney.  Many proposed contracts that I review on behalf of my association clients seem appealing because they are brief (one or two pages) but lack sufficient details and almost always favor the contractor.  A properly drafted contract will address important terms, including not only how you can terminate but issues like required insurance, indemnity for injuries, and the right to recover attorney fees if you have to go to court.

Attorney David G. Muller is a shareholder with the law firm of Becker & Poliakoff, P.A., Naples (www.beckerlawyers.com). The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this column does not create an attorney-client relationship between the reader and Becker & Poliakoff, P.A. or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

Originally posted by floridacondohoalawblog.com Written by David G. Muller is a Board Certified Attorney in Condominium and Planned Development Law with Becker & Poliakoff, P.A., which represents community associations throughout Florida, with offices in Naples, Fort Myers and 10 other Florida cities.  The Firm focuses a substantial amount of its practice on condominium and homeowners association law. 

Keeping Meeting Minutes Forever

How long is a condominium required to keep minutes of its meetings?   Prior to July 1, 2018 the answer was seven years.  This requirement had both its pros and cons.  Likely the biggest advantage was minimizing storage requirements, as months, years, and even decades of minutes add up, particularly for older communities or those that held monthly board meetings.  Conversely,  the manner or reasoning for certain board actions could not be verified after seven years. This left many boards to simply declare, “this is how it’s always been done” or owners to claim improper alterations had been approved by prior boards, which essentially impaired the ability of the association to enforce a covenant.

As of July 1, 2018, the requirement to keep minutes has changed.  Rather than seven years, minutes must now be kept forever.  This applies to all meetings of the association, whether of the board, members, committees, etc.  Essentially, the change applies to any meeting where minutes are taken.   Although the Legislature had its reasons for this change, concerns of storage nowadays are simply not the same given the advent of cloud storage.

What does this mean in terms of the good and the bad which may be lurking in the minutes?  On any given day what is written in the minutes could benefit or hurt the association.  Nonetheless, minutes are crucial to confirm the proper operation of the condominium.  That said, keep in mind that minutes should reflect who was present, motions made, and the logistics of the motion (who moved, seconded, and the vote).

Originally posted on floridacondohoalawblog.com and written by Marilyn Perez-Martinez