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

Associations Can Require a Key

Q: I recently received an e-mail from my condominium association asking for a key to my unit. I have a problem with the board having a key to my unit. Am I required to provide a key? Can the association enter my unit at any time? (J.M. via e-mail)

A. Florida law gives your association the irrevocable right of access to your unit. However, this does not mean that the board can enter your at any time, for any reason. The association can access your unit during “reasonable hours” when it is necessary for the maintenance, repair or replacement of the common elements or of any portion of your unit that is required to be maintained by the association.

The right of access provide by the Condominium Act has been interpreted by the state agency which regulates condominiums to be broad enough to support a requirement that unit owners must provide keys to their unit to the association. Therefore, if your association’s declaration requires unit owners to provide keys to the association, I believe the provision is enforceable. If the requirement arises from a board action, there is more room for debate, but the prevailing view is that such rules are generally enforceable as well.

Unless there is an emergency, the association should provide reasonable notice to you before accessing your unit. The association’s acceptance of keys imposes a duty to handle the keys in a reasonable fashion. For associations that require owners to provide pass keys, it is a good idea for the board to establish policies addressing safety measures such as how the keys will be stored and who will have access to the keys.

Q: I live in a gated community that is governed by a homeowners’ association. I am a veteran and I often display my American flag outside my home. I intend to display the same flag for other holidays and days of remembrance. I recently received a letter from the board of directors of my association complaining about my “unapproved” flag. Can my association prevent me from displaying my flag on Labor Day? (L.F. via e-mail)

A: Section 720.304(2) of the Florida Homeowners’ Association Act states that any homeowner may display one portable, removable United States flag or official flag of Florida in a “respectful” manner, and one portable, removable official flag that is not larger than 4 ½ feet by 6 feet, which represents the United States Army, Navy, Air Force, Marine Corps, or Coast Guard, or a POW MIA flag regardless of any covenants, restrictions, bylaws, rules or requirements of the association. A homeowner may also erect a freestanding flagpole not more than 20 feet high on any portion of the homeowner’s real property, regardless of any covenants, restrictions, bylaws, rules or requirements of the association as long as the flagpole does not obstruct sightlines at intersections and is not erected within or upon an easement.

Additionally, in 2005, Congress passed the Freedom to Display the American Flag Act to ensure that the right of an individual to display the United States flag on residential property not be abridged. The law generally provides that a condominium association, cooperative, or residential real estate management association may not adopt or enforce any policy that would restrict or prevent a member of the association from displaying the flag of the United States on residential property within the association. It is important to note, however, the law does permit associations to adopt reasonable restrictions pertaining to the time, place, or manner of displaying the flag of the United States necessary to protect a substantial interest of the association.

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

New Term Limit Law Not Retroactive

Q: In one of your recent columns, you wrote about a new law that imposes term limits of eight years on condominium directors. Is this retroactive? (S.L. via e-mail)

A: In my opinion, no. Of course, lawyers’ opinions are just that, and what the courts have to say is what ultimately counts.

My interpretation is based on a long-standing rule of statutory construction. Florida courts have consistently held that condominium legislation is not to be retroactively applied, unless the legislatures evinces an intent that it be applied retroactively. There are certain exceptions to this rule for “procedural” and “remedial” changes to the statute.

If legislation is intended to be retroactively applied, then a second level of analysis needs to take place which largely focuses on constitutional issues. However, in the case of the new “term limit” law, there was no statement of retroactive application in the new law, so no need to consider constitutional implications.

Of further relevance is the fact that a similar law was enacted a couple of years ago (dealing with term limits on two-year terms) and most attorneys conversant in this field of law, as well as the state agency charged with enforcement of the law, took the position that it was likewise was not to be retroactively applied.

However, internal term limits contained in an association’s bylaws have been legal for a number of years, and would still be effective regardless of the recent statutory changes.

Q: My homeowners’ association recently hired a management company. While the decision to hire the management company was discussed at a series of board meetings, there was no vote by the membership for this significant cost to our association. Can the board simply hire a manager without a vote of the owners when we’ve never had one before? (J.C. via e-mail)

A: Generally, the decision to hire a management company is a decision for the board of directors. That is because the governing documents for most associations either grant this specific authority to the board, and/or provide that all corporate powers can be exercised by the board except where the statute or governing documents specifically require a members’ vote.

Typically, members are afforded the right to vote on amendments to the governing documents, election of the board of directors, the waiver or nonscheduled use of certain reserves funds, and other items as set forth in the statute or the community’s governing documents. Unless there is some specific contrary requirement in your governing documents, which would be unusual (though I do see it from time to time), the board of directors can retain or disengage a manager or management company, without a vote of the membership.

Q: My condominium association holds a number of social events throughout the year and in order to help pay for the cost of these events, our social committee holds various types of fundraisers including raffles and “50/50 drawings.” Some owners are now stating that these drawings are “illegal” and that someone could go to jail. Is this true? (D.G. via e-mail)

A: Your question is timely in light of recent news reports regarding a local political candidate facing allegations that they broke the law by running a “50/50 game” at a campaign event. While I am not familiar with the details of those allegations, and how the law may or may not apply there, it does present an opportunity for community associations to review the issue.

Chapter 849 of the Florida Statutes regulates gambling in Florida. Section 849.09 specifically prohibits a person from promoting or conducting any “lottery for money or anything of value.” This section of the law essentially prohibits all raffle-type games including “50/50 drawings.” While there are exceptions for raffles conducted by certain charitable organizations, these exceptions do not apply to community associations.

Violation of Chapter 849 by holding a raffle or lottery is a first degree misdemeanor for the first offense. Subsequent violations can result in felony criminal charges.

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

Putting the Puzzle Together Regarding Insurance Coverage and Exclusions

In those pages and pages of insurance documents detailing your available insurance coverage you’ll also find exclusions explaining what is not covered in your insurance policy. There might, however, be some exceptions to those exclusions that should keep the claim from being excluded under the policy. Confused yet?

That knotted paradigm is illustrated in a case that was decided by the Florida Supreme Court. In John Robert Sebo v. American Home Assurance Company, 208 So.3d 694 (Fla. 2016), the Florida Supreme Court was asked to determine whether coverage existed under an all-risk policy when multiple perils combined to create a loss and at least one of the perils was excluded by the terms of the policy. The court concluded that coverage did exist in such a scenario. In other words, the Florida Supreme Court decided that insurance companies should not deny coverage for property damage just because it had more than one cause so long as the policy covers at least one of the causes.

Let me explain. John Sebo, the insured homeowner, had an insurance policy that covered rain and hurricane damage but not damage from construction defects. His house was damaged during Hurricane Wilma. The investigation showed the damage was because of the rain andconstruction defects.

The Florida Supreme Court noted that it was “confronted with determining the appropriate theory of recovery to apply when two or more perils converge to cause a loss and at least one of the perils is excluded from an insurance policy.” Two competing theories had to be analyzed in reaching a final decision. The first, the efficient proximate cause (EPC) theory provides that the peril that set the other one in motion is the cause to which the loss is attributable. This meant that in Sebo a trial would have been required to determine which peril was set in motion first.

However, the Florida Supreme Court rejected the application of the EPC theory, preferring the application of the concurrent cause doctrine (CCD).  Under this theory, coverage may exist where an insured risk constitutes a concurrent cause to the loss even when it was not the prime cause for the loss.

Ultimately, the Court in Sebo concluded that there was no reasonable way to distinguish the probable cause of the property loss since the rain and construction defects acted in concert to create the destruction. The Court then looked at the plain language of the insurance policy and found that the policy’s plain language did not preclude recovery.

This confusing paradigm is also illustrated in the case of Bartram, LLC v Landmark American Insurance Comp., 864 F. Supp. 1229, (N.D. Fla. 2012).  That case centered on a dispute between an apartment complex and several insurance carriers. The apartment complex sustained significant water damage caused by faulty workmanship in the building’s construction. While the apartment owners acknowledged that the costs to repair the faulty workmanship itself was not covered, the water (a Covered Loss) that infiltrated and damaged the building should be covered because of the exception. Of course, the insurance companies disagreed and argued that the apartment owners were not entitled to coverage. Ultimately, the Court disagreed with the insurance companies and concluded that the apartment owners were entitled to insurance coverage.

These cases (Sebo and Bartram) illustrate the importance of understanding not just your available insurance coverages but also your applicable exclusions. While you may have coverage for, say, property damage from a hurricane, the insurance company may argue that coverage does not exist as a result of some exclusion in your policy such as faulty workmanship or wear and tear. While the cases I’ve discussed here suggest that in a scenario like that you should be afforded coverage, the fact remains that your insurance company may deny coverage as a result of the exclusion contained in your policy and its “no” should not be readily accepted. Understanding what is and is not covered under a policy is key, as is having an attorney experienced in dealing with carriers in these situations.

Originally posted on floridacondohoalawblog.com and written by Hugo Alvearez ESQ

Board Must Allow Renewable Energy Devices

Q: I would like to install solar panels on the roof of my home, but I did not see any standards addressing this within my homeowners’ association’s documents or architectural review guidelines. Would I be allowed to install these in order to make my home greener? (K.L. via e-mail)

A: Probably. Under Section 163.04 of the Florida Statutes, homeowners’ association declarations may not prohibit owners from installing certain renewable energy devices on buildings located on lots or parcels that are subject to the declaration. These devices include “solar collectors, clotheslines, or other energy devices based on renewable resources.” In the event that an owner wishes to install solar collector devices on a roof, the statute allows the approving entity under the declaration (such as the architectural review committee) to determine the specific location where they may be installed, including positioning the solar collectors to the south or within 45 degrees east or west of due south, if this does not impair the effective operation of the solar collectors.
This law was first enacted in 1980, and the prevailing view is that covenants which predate the statute may still be enforced.

In the condominium context, the statute provides that owners may not be denied the ability to install the solar panels by the approving entity in the declaration, so long as the proposed installation is done within the unit boundaries. However, from a practical standpoint, these panels would rarely be located within the unit boundaries.
The Florida Condominium Act also allows the board of directors to install solar collectors, clotheslines, or other renewable energy devices upon or within the common elements or association property to benefit unit owners, without unit owner approval.

Q: My condominium association has historically had problems getting people to serve on the board. Two board members recently resigned and the remaining three board members cannot get volunteers to fill the vacancies. Some people in our community have suggested simply having the State come in and run the Association. Is that actually an option? (W.P. via e-mail)

A: Not really. The Florida Condominium Act does not provide a mechanism for the State to take over and handle the operation of the association. The Division of Condominiums, Timeshares, and Mobile Homes is the administrative agency in charge of regulating condominium associations. However, it does not have the authority to step in and run a condominium association.

You may be referring to the process of having a “receiver” appointed. Section 718.1124 of the Act provides that when an association fails to fill the vacancies on the board of administration sufficient to constitute a quorum, any unit owner can give notice of their intent to apply for a receiver to be appointed to manage the association’s affairs.

The statute outlines the process to have a court appoint a receiver, including providing notice to all owners, which must be given 30 days before filing the petition, in order to give the association sufficient time to constitute a quorum of the board of directors.

A receiver is typically a professional such as an attorney or an accountant who would run the association until such time as a quorum of the board can be sufficiently constituted. The association must pay the receiver’s salary, which could potentially be expensive. In my experience, appointing a receiver is not a desirable option for an association or your property values. Owners in your condominium need to step up and take their turn serving on the board. You should also look into professional management if your association does not currently use it.

Another option for the association would be to amend the bylaws to provide for a three-member board, which may make it easier to fill all the positions, and only requires two directors for a quorum.

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

Who is Responsible for Electrical Wiring and Plumbing Repairs?

Disputes over maintenance, repair and replacement responsibilities are common in community associations and a well drafted declaration or amendment to the declaration can help prevent disputes over who (owner or association) is responsible for a specific item of maintenance.

Regarding how to interpret your existing condominium documents, the unit boundaries will be defined within the declaration and sometimes within the site plan. Any item/component including electrical wires and plumbing located within the unit boundaries is the unit owner’s responsibility to maintain, repair and replace (unless the declaration states otherwise). In contrast, any item/component located outside the unit boundaries is a common element (or a limited common element) and the association is responsible to maintain, repair and replace the common elements unless a given item is identified in the declaration as a limited common element (benefiting the subject owner) and also identified as being the maintenance, repair and replacement responsibility of the unit owner.

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

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. 

Board Members Can Be Recalled Without Cause

Q:        I have heard that a condominium board member can be removed from the condominium association board by a process called recall. What causes can be used to justify the recall? (C.Q. via e-mail)

A:        Section 718.112(2)(j) of the Florida Condominium Act states that any board member can be recalled and removed from office with or without cause by a vote or written agreement of a majority of all voting interests.

While cause could be specified to justify the recall of a board member, just cause does not have to be shown.

After a director is recalled, the law allows the board to fill the director’s vacancy by appointing a new director, pursuant to a majority vote of the remaining directors, even if it is less than a quorum. The appointed director then serves the remainder of the recalled director’s term. A different process is used if a majority of the board, or the entire board, is recalled.

Homeowners’ associations generally use a similar process for recall.

Q:        What happens if there is a tie between two candidates running for a board of directors’ seat at the annual meeting? Do both candidates win? (E.A. via e-mail)

A:        No. The Florida Administrative Code, Rule 61B-23.0021, states that if two or more candidates for the same position receive the same amount of votes, the association must conduct a runoff election.

At the runoff election, the only eligible candidates are the candidates who received the tie vote at the previous election. The runoff election cannot be held less than 21 days or more than 30 days after the date of the election where the tie vote occurred.

The Code also requires the association to send notice of the runoff election within 7 days of the election where the tie occurred. The notice must be mailed or personally delivered to the members, and must include the date of the runoff election, a ballot, required envelopes, and copies of any candidate information sheets previously submitted to the association by the runoff candidates.

Q:        The board of my condominium association is considering adopting new rules, including rules which change some of the restrictions contained in the condominium declaration. Can board rules change the declaration of condominium? (M.O. via e-mail)

A:        No. Board made rules cannot conflict with any right which is expressly granted or inferable from the declaration. Further, board rules must be “reasonable.” The rules must also be adopted in a procedurally correct manner.

Q:        Are reserve accounts supposed to be kept in separate accounts? In other words, should the roof reserve be in one account, the painting reserve be in another account, and so on. (D.R. via e-mail)

A:        No. There is no requirement in the law prohibiting the “comingling” of reserve funds, and they are most often kept in a single account (but should also be kept within federal insurance limits).

Section 718.111(14) of the Florida Condominium Act does prohibit “comingling” reserve and operating funds. However, for investment purposes only, a multicondominium association may commingle the operating funds of separate condominiums with the reserve funds of separate condominiums.

Q:        Can a candidate running for a homeowners’ association board of directors seek and hold proxies to vote for themselves? (T.M. via e-mail)

A:        Yes. Assuming that the bylaws permit proxy voting in the election of directors (which is prohibited in the condominium context) and absent a limitation on the number of proxies a particular person can hold, there is no prohibition in the law against this.

Most associations that use proxies in elections, however, use a “limited proxy,” so that the person soliciting the proxies would have no discretion on how the votes should be cast.

 

Written by Joe Adams and originally posted on FL Condo HOA Law Blog

State Changes Barbecue Grill Rules

Q:        Has the law been changed to allow grilling on condominium balconies? (J.S. via e-mail)

  1. Yes. The Sixth Edition of the Florida Fire Prevention Code, effective December 31, 2017, permits the use of certain electric grills on condominium balconies. A new edition of the Florida Fire Prevention Code is required to be adopted by the State Fire Marshall every third year, pursuant to Section 633.202 of the Florida Statutes.

The current edition of the Code is based on the 2015 NFPA 1 Fire Code. With respect to cooking equipment, Section 10.10.6.1 prohibits using or kindling hibachis, grills, or other similar devices for cooking, heating, or any other purpose on any balcony, under any overhang portion, or within 10 feet of any structure, other than in one and two-family dwellings. However, Section 10.10.6.1.1 allows listed electric portable, tabletop grills, or other similar apparatus, so long as they do not exceed 200 square inches of cooking surface.

Even if permitted by the Code, you would need to confirm that your association has not adopted any rules which prohibit the use of electric grills and similar items on the condominium property. Board made rules, if reasonably related to safety, can be stricter than the minimum requirements of state law.

 

Written by Joseph Adams and originally posted on the FL Condo HOA Law Blog

Website Law Likely to Change

Q:        I have heard that there is a new law requiring condominium associations to have a website. Is that true? (J.L. via e-mail)

A:        Yes, although the law has somewhat limited application. First, it is worthwhile to note that the 2018 Florida Legislature passed a Bill on March 9 that would change the 2017 website law. As of this time, the Bill has not been signed by the Governor, but it is not expected that he will veto the legislation. Once the Governor has acted on the Bill, I will present my annual legislative update.

The 2017 law created a new requirement for any condominium having 150 or more units in total to have a website up and running by July 1, 2018. The new law will change this requirement in several important ways.

For associations which are obligated to comply with the law, the required implementation date will be pushed back to January 1, 2019. Perhaps more significantly, the scope of the law has been narrowed as to which associations it applies to. For example, a multi-condominium association that operates 10 condominiums with 50 units each would have had to comply with the website requirement under the 2017 version of the law. Under the 2018 changes, a multi-condominium association that operates 150 or more units does not need to comply with the mandatory website requirement unless at least one of the condominiums operated by the association contains 150 or more units.

The 2018 amendments also tweaked some of the posting requirements from the original law, allowing posting of summaries of certain documents rather than the documents themselves.

 

Written by Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers Originally appeared on the FL Condo HOA Law Blog