Avoid a Gridlock – Educate, Communicate & Plan

When strangers come together as a new board of directors for a community association, they may find they have such differing views on what is best for the building that they can feel as though they are in a no win scenario.  While working to find a creative solution to the problem is something we as lawyers work on every day, it is not always quite as natural for board members, especially when they have never served in this capacity before.

Serving as a new board member has, among its challenges, a steep learning curve.  I think it is safe to say that condominium law and governing documents for a given community can, at times, be less than easy to understand.  Community Association law uses some unique terminology and there are sometimes subtle, but hugely important, differences on what something means depending on whether a particular word is used.  Consider the terms officers and directors.  While many people understand that a director is someone who is elected by the membership to serve on the board of directors and officer is a position that a director may hold, others may confuse the two terms.  Reading the Condominium Act, that person may read the provision that states that “Unless otherwise provided in the bylaws, the officers shall serve without compensation and at the pleasure of the board of administration” and misunderstand that directors can be removed at any time on a board vote.

Another common confusion that arises is the use of the word “By Laws” instead of Declaration.  These are two very different documents and certain provisions must be in the Declaration in order to be valid.  Similarly, the use of the word “maintenance” instead of the word “assessments.”  A review of the Condominium Act will show that nowhere is an owner required to “pay maintenance” but they are required to pay “assessments” and their unit can be liened for failure to pay “assessments” timely.

When you couple the unfamiliar language that can be used in community association law, with the misunderstanding of what the documents require and years of a particular administration doing something a certain way, a brand new slate of directors intent on making changes can clash spectacularly and cause what Washington D.C. deems “gridlock.”

The first thing to do in a situation like this is to make sure that everyone becomes educated on the issues.  The statutes require “newly elected or appointed directors to certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members.” Instead of this certification, the newly elected or appointed directors may attend an educational curriculum administered by a division-approved condominium education provider and submit a certificate of having satisfactorily completed the educational curriculum.

If new board members feel comfortable reading and certifying their knowledge of all of the information after reading the required documents, then by all means, they should do so.  However, for those who feel less than comfortable with the self-teaching that could be required in the first option, attending a class is a great option.  Many free classes are available to new board members and there are a myriad of ways to attend.  Live classes not only offer the opportunity to ask questions, but also to listen to other people ask questions.  Many times, this can be just as educational.  Also, if the new board of a condominium goes together to the class, it can provide a team building opportunity as well as ensure they are all getting the same information and can understand where the others are coming from.  It is important also in helping people to understand that just because the building next door does something in a particular way, does not mean that the law allows for this, or that your building should be doing it.  From a management perspective, attending these classes with new board members is also helpful to create realistic expectations and help all parties understand the division of labor and responsibilities that exist between a manager and a board.

Once the new board is educated, the communication is the key to understanding and working together.  Holding frequent board meetings to discuss condominium issues will help not only inform the unit owners, but also keep the lines of communication open on a regular basis.  The new board may find that frequent exchanges of ideas and concerns will facilitate an understanding that they are all working toward a better community and that there can be many paths that lead to the same place.  While email is a useful tool for our everyday lives, new (and experienced) board members should refrain from email exchanges when possible, as that can inadvertently lead to email decisions.  The statutes now expressly prohibit email “voting”, even though that was not necessarily authorized before.  The better goal is to have the discussions on the issues in front of the unit owners that may want to attend the meetings, rather than arrive at the meetings only to state the motion, hold a summary vote, and close the meeting.

Finally, creating and agreeing on a list of priorities can help shape the tenure of the new board.  As we all know, time flies when you are having fun.  Although a year can seem like a long time, in the world of projects, construction, maintenance and day to day operation of a condominium, a year can go by much faster than many people expect.  Rather than wasting the year debating on which project is most important, taking the time at the beginning of the year to decide the order and importance of necessary projects, maintenance, and issues to address can not only help shape the budget and expenditures in a fiscally responsible way, but also help temper unrealistic expectations of owners and board members alike.

In summary, educate, communicate, and plan before acting.

 

Originally posted on floridacondohoalawblog.com. Written by Lilliana Farinas-Sabogal

 

Can an Association Be Held Liable for Discriminatory Conduct of Residents?

On a daily basis, we read about acts of hatred and discrimination occurring in our society.  As residential communities are microcosms of the society at large, associations, too, are increasingly faced with determining how to deal with such issues.  Legal precedent has established that associations may be held liable for discriminatory acts committed by its Board members as well as its agents, including the association manager.  Pursuant to a 2016 rule enacted by the U.S. Department of Housing and Urban Development (“HUD”), however, associations can also be held liable for failing to “correct and end” discriminatory acts of residents.

Specifically, 24 CFR, Section 100.7(a)(1)(iii), provides that a person  is directly liable for “[f]ailing to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct and had the power to correct it.”  (Emphasis added.)  “Person,” as the term is used in this rule, includes community associations.  “Discriminatory conduct” includes unlawful conduct engaged in because of a protected characteristic (race, color, religion, sex, familial status, or national origin).  Thus, under this rule, it is possible for an association to be held directly liable where it (1) knew or should have known about discriminatory conduct by one resident towards another resident; (2) had the authority to correct the conduct; and (3) failed to take steps to end the conduct.

This rule raises more questions than it answers which is especially concerning given the potentially dire consequences an association may face if it fails to address the discriminatory conduct of a third-party.  For instance, can an association really be expected to “correct and end” the discriminatory conduct of a resident when its enforcement options are limited by statute and the governing documents which may ultimately prove ineffective?   HUD’s published response to this issue was that associations regularly rely upon notices of violations, threats of fines, and fines as mechanisms to compel compliance with the community’s restrictions and they should, therefore, use whatever legal means they may take to end the harassing conduct.  In practice, however, is a fine or violation letter, or even the inability to vote or use the common areas really going to correct the discriminatory acts of a person driven by prejudice?  Further, what if the third-party’s actual activity, even if discriminatory in nature, is not specifically prohibited by the association’s governing documents?  Does that mean that the association does not have the “authority to correct the conduct” and would not be held liable under the rule, or does it mean that the association would be required to amend its governing documents to address discriminatory acts by residents?  Additionally, does this mean that associations are now responsible for looking at the motivations behind a resident’s actions to determine if they are discriminatory in nature?

Presently, there are no real answers to these questions.  Given, though, that the rule requires an association to “take prompt action” the immediate take away is that an association simply cannot ignore a discriminatory situation between residents and would be well advised to consult its community association attorney to discuss the particular facts of the situation and work towards a solution that complies with the current HUD rule.

Originally posted on floridacondohoalawblog.com. Written by Sara K. Wilson

Fines and Board Eligibility

Many times, associations are challenged by owners who believe their names were improperly kept off the election ballot because the owner did not agree that they owed a fine.  The Condominium Act states that a person who is delinquent in the payment of any monetary obligation to the association is not eligible to be a candidate for the board.  The date of eligibility is established 40 days before the annual meeting and election.  As such, if an owner turns in their candidate notice 50 days before the election and owes a fine at that time, they can still be on the ballot so long as they paid the fine by the 40-day deadline.  If the fine remains unpaid as of the deadline, the unpaid fine is considered a monetary obligation, which means that pursuant to the statute, the person is not a proper candidate for the board and their name should not be on the ballot.  This is true whether the person has challenged or otherwise disputed the fine.

Originally posted on floridacondohoalawblog.com. Written by David G. Muller

 

Different Laws Govern Associations

Q: My community has both single-family homes and townhouses. A question has arisen as to whether the laws that govern condominium associations or homeowners’ associations apply. Can you clarify this for us? (B.K., via e-mail)

A: The answer would depend on the language of the governing documents for your association. Condominiums are governed by Chapter 718 of the Florida Statutes, known as the Florida Condominium Act. In order for the property to be a condominium, it would have to have been created pursuant to a recorded declaration of condominium.

Homeowners’ associations are governed by Chapter 720 of the Florida Statutes, known as the Florida Homeowners’ Association Act. Property subject to this law does not have to be created in a specific statutory manner, but is usually created by a declaration of covenants. The statutory tests to determine whether a community and its association are governed by Chapter 720 are whether the association is responsible for the operation of a community where the voting membership is made up of the parcel owners or their agents, or a combination thereof, where membership in the association is a mandatory condition of ownership and where the association is authorized to impose assessments and record a claim of lien against the parcel if the assessments go unpaid.

Condominiums and communities governed by homeowners’ associations take many forms, so you cannot tell just by looking at the property. For example, some condominiums are freestanding buildings (typical single family home) where the units are actually plots of land or the footprint of the building. Conversely, some homeowners’ associations govern townhouse or villa-style dwellings where there are multiple dwellings contained in each building that “look like” condominiums.

Q: Recently, our condominium board discussed replacing our pool deck. Our pool deck is currently made up of composite decking material. The board wants to install a cement deck. Doesn’t this require a vote of our unit owners? (K.M., via e-mail)

A: Possibly. The Florida Condominium Act states that there shall be no material alteration or substantial additions to the common elements except in the manner provided in the declaration. If the declaration is silent, then such material alterations or substantial additions must be approved by a 75% vote of the total voting interest of the association.

The seminal case defining “material alterations” comes from a 1971 decision from Florida’s Fourth District Court of Appeal called Sterling Village v. Breitenbach. In Sterling Village , the court stated that if the change “palpably or perceptively vary or change the form, shape, elements or specifications of a building from its original design or plan or existing condition in such a manner as to appreciably affect or influence its functions, use or appearance,” such a change was a material alteration.

Under the test set out in Sterling Village, replacing a composite deck with a concrete deck would appear to be a material alteration and may or may not be subject to owner approval based on the language in your declaration. For example, many declarations allow a board to spend a certain amount of money on material alterations before triggering the requirement for a unit owner vote.

There is also an exception in the law. If an alteration is considered “necessary maintenance” to the condominium property, the owner vote is not required. Convenience and cost savings are not sufficient legal criteria to support changing the common elements without a unit owner vote based on the necessary maintenance exception to the material alteration rule. On the other hand, changes necessary to comply with the law are generally permitted under the necessary maintenance exception. Use of alternative materials always presents a close question. Generally speaking, decisions in this context should be predicated on both a legal opinion, as well as demonstrable evidence from a credible source (for example, an engineer) that the change is “necessary” as that term is used in the law.

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