Monday, November 23, 2015

Why Do Most People Hate Paying Legal Fees?

It happens on a weekly, sometimes daily basis. I receive a question from a blog reader and the question is not general in nature; in fact, the question seeks legal advice (often on a fairly significant matter that involves potential liability) which can only be provided after thoroughly reviewing the reader's governing documents and rendering a legal opinion. My standard response is usually: "Do you have an attorney for your association?"

Ninety percent of the time, the blog reader responds that the association does have legal counsel and then offers a reason why the association's counsel was not contacted with the question. The reasons run the gamut from the lawyer being inept to the reader thinking the question was not important enough to contact the attorney.

I understand, however, that the real reason is often that most people hate paying legal fees and if they can get a free first or second opinion from a blog, other social media source or even just a retired out of state lawyer at a cocktail party, all the better in some minds. These efforts to avoid paying legal fees cross many practice areas.  For example, I am amazed at how often people will sign contracts without counsel's review and with apparent disregard for crucial items like warranties, indemnification, adequate insurance coverage, dispute resolution and venue and more.  On the other hand, people facing criminal charges are far more likely to pursue and pay for quality legal assistance in order to avoid going to jail.

Unfortunately, community association directors often believe they can squeak by with advice from whatever source is cheapest or, even better, free. Some boards will go so far as to pressure their association manager to provide such advice under the belief that the service falls within the scope of their management fee. In terms of lessons being learned the hard way, many who seek discounted or free legal advice get what they pay for and overlook the fact that when things go awry (as they often do when human behavior is involved) that they will eventually need experienced legal counsel. Such representation will be more costly and more complicated as a result of the delay, especially if litigation results. 

What if instead of avoiding legal fees like they were the plague, board members and managers simply became more sophisticated consumers of legal services? When deciding whether or not to seek proper legal advice on a matter, that decision must include an acknowledgement of what costs might ensue should things go wrong. Moreover, legal expertise, successful track record and a communication style which facilitates trust, understanding and dispute resolution are all more important factors than hourly rate when choosing an attorney.

Abraham Lincoln is quoted as saying, "A lawyer’s time and advice are his stock in trade." As lawyers, we are selling our expertise to consumers who hopefully understand the difference between what is free and what is in their best interests.

Monday, November 2, 2015

Why should your community consider trademarking its name and logo?

Many communities rely upon name recognition and a certain style logo to attract attention from potential new purchasers as well as to enhance real property values for existing owners.
I live in a country club community that has a distinct font and logo which is intentionally highlighted on our association website, advertisements, business cards, stationary and, naturally, our community signage. For the sake of this blog, we will call my community Ridgeview Golf Estates. We have spent considerable effort and money over the years to build a certain mystique around the name and the look. What we failed to do, however, was to register the name and logo as our trademark and, as a result, we have had businesses in the vicinity trade on our good name over the years to the point that we now have the Shoppes of Ridgeview Golf Estates (with some less than desirable stores) and neighboring communities who use Ridgeview Golf Estates in their name even though they are not affiliated with my community. Often, well-known communities wind up with local realtors, security and pool companies and other vendors incorporating the community name into their business name in order to trade on the community's brand and reputation. By putting their names in the public eye, such exposure can give rise to trademark rights for these businesses which a community can later find difficult to challenge and can also make it harder for a community to later trademark its name in the face of these other trademark rights.
While a federal trademark registration may not be needed for most community association purposes, state trademark protection for your community's name and logo is advisable for a number of reasons.
A search of the all-state database will reveal online trademark records with other marks that begin with the words contained in the community's name or the like. Often, this search will reveal business names that have or include your community's name. Even if similar business names may not be registered as trademarks, nonetheless these business names could be used in such a way as to develop trademark rights in the companies that are using these names.  Thus, there should be some attention paid to these names as trademark rights could exist in them even if the business owners in question are not fully cognizant of their having such trademark rights.
It is important for communities to be aware that a third party could be accumulating trademark rights in a mark containing some variation of their name even without any trademark registration or any company-name registration or any other type of registration. The mere fact of using a name or mark in the public eye automatically gives rise to trademark rights. If these third-party users are far enough away from the community geographically, an argument can be made that the association should not be prevented from registering its own trademark.
In light of what else is out there in the public eye, your Intellectual Property (IP) attorney may suggest that your association should claim your rights narrowly by limiting your claim to only a stylized mark with specific design elements of your logo.
Speaking of the design portion of your mark, there are copyright issues that come into play. Copyright exists in the artwork as such, whether or not included as part of a trademark. Normally the individual artist who created the artwork would own the copyright in it. Alternatively, if that individual created the artwork in question as part of his or her normal job duties for an employer (such as an ad agency) then that employer would own the copyright in it. Either way, an association could not make use of this artwork as part of its trademark without authorization from the copyright owner, or without having that copyright owner transfer over to the association the copyright in the artwork. The fact that the association paid for the artwork to be prepared does not in and of itself accomplish any such transfer. On this subject of third party rights or creations generally, it is important for associations to be aware that as they progress further in preparing materials and taking other actions as to their websites, social media sites, advertising and other materials, they should be mindful of the possibility of trademark or copyright issues arising by virtue of using the materials of third parties.
If your association is taking the time to thoughtfully create a name and logo, it only makes sense to protect that investment. I am always surprised that most developers do not take the time to register as trademarks the names and logos of the communities they create. However, even if your developer neglected to do this, your Board of Directors is able to do so and should consider adding this item to your "To Do" list. A state trademark registration is not cost prohibitive and can provide a lot of peace of mind for years to come. Directors, managers and developers wishing to learn more about the trademark process can contact me at

Monday, September 21, 2015

Clearly defining nuisance activity in your governing documents can help association boards avoid future headaches

A nuisance is generally defined as a person, thing or circumstance which causes inconvenience or annoyance. For some people living in shared ownership communities, there is no escaping a nuisance situation that has risen to a level which impacts the enjoyment of their homes and their community.

If you have ever suffered through a nuisance scenario, you may understand how hard it can be at times to achieve consensus on whether or not the activity in question is an actionable nuisance. Is that television really being played at a blaring decibel level or is the neighbor just particularly sensitive or, worse, looking for a new angle in a personal fight?

In a community association setting, nuisances can come in many forms.

  • Loud, consistent noise either in the form of music, yelling, use of electronic devices or failure to properly soundproof flooring in a multifamily building
  • Pets-barking, defecating, biting, and running around off-leash
  • Secondhand smoke-spilling into neighboring units, balconies and common areas
  • Odors from cooking, chemicals and other sources
  • Hoarding-creating conditions for insect and rodent infestation into neighboring units and common areas
  • Domestic violence-frequent arrival of emergency services and police at all hours
  • Visually unappealing property condition-one example would be an overflowing dumpster sitting in front of a house undergoing renovations for months
  • Short-term rentals
A general nuisance provision is standard in most developer-drafted documents. However, it is rare to find a nuisance restriction that is fully fleshed-out; one which clearly defines the various conditions or behaviors which constitute a nuisance in that particular communities and which can therefore be more readily abated by enforcement efforts. When confronted with a nuisance, the starting point is to find out what is driving the behavior or condition and identify the quickest way to resolve the problem. Sometimes the behavior is driven by a mental illness and other times it is a deliberate attempt to annoy.
If an owner is unwilling to cure the nuisance activity, the association's options may include fining, suspension of common area use rights and pursuing a Court Order to force the behavior or activity to stop.  All enforcement will be easier if the activity or behavior is clearly identified in your governing documents as being a nuisance rather than having to debate the issue.

Next time you decide to update your governing documents, please discuss what changes should be made to your nuisance restriction with your association attorney.

Not planning to update those antiquated documents any time soon? Stay tuned for a future blog post on why allowing your documents to remain stagnant is a big mistake!

Monday, August 24, 2015

Does your community's relationship with your insurance agent qualify as a "special relationship"?

Does your board consider itself  "special" in the eyes of your insurance agent? Do you believe your agent has a duty to advise you whether or not the coverage you are purchasing and the limits you are seeking are sufficient?

You might be under the illusion that your agent owes you a greater duty than he or she really does unless your relationship meets a certain standard.

Your board may believe that your insurance agent has a duty to advise you, among other things, about the type of coverage you need and the amount of limits you should carry. However, in the absence of a "special relationship" and certain circumstances, you may be sorely disappointed to learn that your relationship with your insurance agent is merely "ordinary".

In an "ordinary" client-agent relationship, the agent typically has the following duties to his or her client:
  • to procure the insurance coverage requested by your board using a level of skill, care and diligence which is standard in the industry;
  • to inform your board if he or she cannot procure the coverage you have requested; and
  • to not mislead or misinform your board about your coverage.

    Courts are more likely to hold an insurance agent to a higher standard of care with special relationship clients, so it makes sense for your community to become one of those "special relationship" clients. So how do you do it?

-Seek out an agent who is recognized as an expert in the industry.

-Insist on a relationship with your agent that consists of more than just the purchase of a policy or policies. 

-Ask your insurance agent to serve as a professional adviser in terms of the coverage you are seeking and get him or her to confirm that role in writing. This role should also be filled by your association attorney. If you do not understand your insurance purchase, ask your agent to explain it to you, in writing.

-Demand extra time and resources from your agent particularly if you are paying him or her any compensation in addition to his or her commission.

-Have a long-term relationship with your agent.

If you would like more out of your relationship with your insurance agent than simply a sales transaction, you will need to demand it. By doing so, you may also be able to hold him or her responsible for any negligence in the unfortunate event you do not receive the proper advice.


Friday, August 7, 2015

Florida's Community Association Arbitrators seek Salary Review

Florida's Department of Business and Professional Regulation pays six full-time "Senior Attorneys" to act as arbitrators in the Arbitration Section of the Division of Condominiums, Timeshares and Mobile Homes approximately $52,000 per year to handle numerous disputes throughout the State. The alternative dispute resolution provisions found in Section 718.1255 of the Florida Statutes were designed to prevent Florida court dockets from being clogged with certain types of disputes which routinely arise in the condominium and cooperative setting as well as to provide a more cost-effective option to court litigation for owners.

Florida's condominium arbitrators feel that they are grossly underpaid in comparison with other hearing officers employed by the Sunshine State and, it turns out, they are probably right.  In a May, 2015 "desk audit, Florida's DBPR arbitrators asked the state to reconsider their salaries. In their request, the arbitrators state that the work they perform is analogous to that performed by the attorneys employed as Public Employee Relations Commission (PERC) Hearing Officers who preside over disputes of limited jurisdiction. For comparison's sake, PERC hearing Officers earn $90,047 annually. Another comparable position is the Reemployment Assistance (RA) Appeals Manager for the Department of Economic Opportunity. RA Appeals Managers earn an annual salary of $84,999.96.

There are only six Division arbitrators (plus the chief) for the entire state. The DBPR collects millions in fees each year from condominium and cooperative owners. Sadly, those funds are usually diverted to the general operating budget each year. Regardless of how you feel about the Arbitration Program, its effectiveness or attorneys in general, having experienced attorney arbitrators to resolve association disputes is a good thing. Underpaying people is a surefire way to have them look elsewhere for a job.

Is the message here that the resolution of association disputes just aren't as important or valuable as other types of disputes being handled by State Agencies? If the reasons articulated in Section 718.1255(3), F.S. for the creation of an alternative dispute resolution system remain true, why is the State balking at properly funding that system?

If you agree that Florida's Community Association Arbitrators should be paid commensurate with arbitrators for other state agencies, you can contact Ken Lawson and Kevin Stanfield at and let them know you want them to approve the arbitrators' request for salary review.





Monday, July 20, 2015

Will Florida's new online election law for community associations spell welcome relief or more headaches?

The Florida Legislature recently approved a new law which will allow community associations to conduct their elections online through the use of electronic voting. While associations in other states have had this ability for some time now, this is a sea change for the millions of Floridians living in shared ownership communities.

For years, many of the disputes in condominiums, cooperatives and homeowners associations, have stemmed from the annual meeting and election process. People who ran for the board and weren't elected were convinced that the current board or the manager who doesn't like them somehow "kept them off'.  We've heard tales of ballot boxes being stuffed, tampered with and altogether ignored. In the condominium setting, allegations of forgeries on outer envelopes is always a concern while in the HOA setting, complaints of rampant proxy abuse are common in connection with the election of the board members.

Howard Perl, a Shareholder with the law firm of Becker & Poliakoff, has handled these disputes for more than a decade. "Many of the disputes involve judgment calls. Some ballots are discarded when they shouldn't be and others are allowed when clearly they should have been invalidated" he explained.

Election disputes don't come cheap. They are subject to mandatory arbitration with a Florida state agency and can cost up to $5,000 or more depending on how hotly contested the matter is.  Florida's Department of Business and Professional Regulation will be meeting in early August to begin drafting rules to address the new statute.

Now that the path has been cleared to allow Florida's associations to utilize online voting, the question remains whether this move will result in fewer or greater complaints associated with electing a community's board of directors.  Remember the national focus on the Sunshine State's unfortunate hanging chad incident? Hopefully, we will not have a repeat performance and our Florida communities will embrace this new option as one which will (a) likely increase voter participation and (b) reduce the possibility for voter fraud.


Tuesday, July 7, 2015

U.S. Supreme Court Ruling on Fair Housing Law Could Have Wide-Ranging Impact on Community Associations

The U.S. Supreme Court has been in the news a lot which is not surprising given its recent newsworthy rulings. However, there is one ruling that could impact the community association industry profoundly. The 5-4 Supreme Court holding in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, could have wide-ranging impact on community association boards. Previously, a board was diving into dangerous waters when it passed rules and restrictions with the intent to treat people differently. Under the new Supreme Court ruling, a board can be held liable for housing discrimination whether or not anyone on the board intended to discriminate so long as the rule or restriction has a disparate impact on a legally protected group of people.

Boards will have to show that (a) they had a good reason for the rule or restriction and (b) there was no way in which to accomplish their reasonable goal in a manner which had a less disparate impact. 

So how could this impact your community?

Many members wish to ensure the continued success of their community by regularly amending the documents. Often those amendments allow their boards to thoroughly screen new tenants and new purchasers to ensure that newcomers will not present a financial burden on association (if a member cannot pay assessments, the remaining members must make up the deficit) nor will they present a threat to the health, safety or welfare of the community.

Do the following restrictions which are fairly standard in the community association arena create disparate impact concerns?

-Screening applications which inquire about previous criminal background?

-Screening applications which inquire about credit score, employment status and other indicators of financial stability.

-Requirements that a new purchaser have a certain equity interest in the property being purchased.

-Rules involving access to an association's pool and other common areas that may impact families with children

While the ruling isn't a reason to panic or to abandon any attempt to pass and enforce reasonable rules in your community, it does make it more important than ever that you discuss your restrictions with your association attorney prior to implementing same in order to decide whether or not there will be a disparate impact and whether or not there is a way to accomplish your goals without creating a disparate impact.

The four dissenting justices voiced their concerns that the majority decision is based on the Griggs v. Duke Power Co. case rather than focusing on the actual intent and text of the Fair Housing Act. In the Griggs case, 401 U.S. 424 (1971), the Court held that black employees could recover from their employer under  Section 703(a)(2) of Title VII of the Civil Rights Act of 18-964 without proving that the employer's conduct (the employer required a high school diploma or a qualifying grade on a standardized test as a condition for certain jobs) was motivated by a discriminatory intent.

Disparate impact is a much different threshold than disparate intent.

To read the full decision click here: