Sunday, December 28, 2014

Defining a Nuisance in your Community


If you live in a shared ownership community, you have likely heard the term "nuisance" bandied about now and then. It is an unfortunate byproduct of living in close quarters with others that at some point, another person's conduct may impact your enjoyment of your home.


A nuisance can be summed up as a condition, activity or situation (such as loud noises or foul odors) which interfere with another person's use or enjoyment of property. Every set of association documents I have reviewed over the last two decades contains at least a bare bones nuisance provision.

Legally speaking there are many different types of nuisances which include:

1.      Abatable nuisance-easily removable by reasonable means.
2.      Nuisance per se (aka absolute nuisance)-an interference so severe that it would                    create a nuisance under any circumstances.
3.      Anticipatory nuisance-a condition which has not yet risen to the level of a nuisance but           is very likely to become one.
4.      Attractive nuisance-a dangerous condition that could attract children-a typical example           is an unsafe lake or other body of water.
5.      Permanent nuisance-cannot be readily abated at reasonable expense.
6.      Private nuisance-this one is the most applicable in the community association setting            as it impacts a person's enjoyment of his or her property.
7.      Public nuisance (aka common nuisance)-is an unreasonable interference with a right            common to the general public.

Practically speaking, the following conditions can be considered nuisances depending on how often they occur and the level to which they rise:

-Loud noises-radio, pets barking, screaming, etc.
-Odors
-Parking-blocking in neighbors' cars, parking on others' property, etc.
-Failing to clean up after dogs and/or allowing dogs to run around off leash
-Domestic violence
-Smoking
-Overflowing waste receptacles used by owners undertaking home renovation projects
-Leaving holiday decorations up year-round

The foregoing list is certainly not all-inclusive. Nuisances in communities often result in long-ranging consequences which can include board members being recalled for failing to act, people moving out of the community and, in the most dire circumstances, violence erupting between neighbors.

Which activities have you seen in your community or a neighboring community which could constitute a nuisance? What has your board done to correct the problem?

If you have not looked at, let alone amended, the nuisance provision found in your original developer-written documents, it is time to do so. Why leave it up to a trier of fact to determine what is considered a nuisance in your community? Spell it out for swifter and easier enforcement.


Sunday, December 14, 2014

Filling out lender and title agency questionnaires-should your community association take the extra step?

With growing frequency, volunteer community association board members and association managers are being asked to fill out lengthy and often complicated paperwork on behalf of business entities who are looking to evaluate the value of a particular community.

Your board may receive a request from a lender or title agency (or the attorney for either of the foregoing or for the owner looking to sell or finance his or her home) asking you to fill out a questionnaire which assesses the community's overall condition including disclosing the number of delinquencies, violations, and leased properties among other items. The more brazen of these requests may include language which states that you are providing this information "under penalty of perjury" and that your statements are being relied upon by the company requesting same in order to make that loan or write that insurance policy.

Just last week, I received a request from an insurance company asking one of my clients to guarantee that a policyholder's home was protected 24/7 by armed guards.

Some boards and managers are rightfully reluctant to serve the role of quasi-risk assessment officer for a business entity. However, when an association balks at filling out this paperwork, the typical reaction from the entity requesting same (or from the owner) is that the association is tortiously interfering with the contemplated transaction. Of course, the next sentence usually contains some threat of legal action.

How should your board react to these kinds of requests?

In fact, the Florida shared ownership statutes do not require boards to fill out these questionnaires. The Condominium Act, for example, provides in Section 718.111(12)(e), that an association or its authorized agent is not required to provide a prospective purchaser or lienholder with information about the condominium or the association other than information or documents required by the Act to be made available or disclosed. The Condominium Act further allows the association to charge a fee up to $150 plus the reasonable cost of photocopying and any attorney's fees incurred by the association in connection with preparing a response. Lastly, the statute specifically states that neither the association nor its agent are liable for providing such information in good faith if the response includes the following statement:

"The responses herein are made in good faith and to the best of my ability as to their accuracy."

Even with the ability to charge for the preparation of a response and the statutory protection from liability, some association boards and managers may feel that providing such information could fall under the category of "no good deed going unpunished" should the entity later attempt to recoup losses against the association for the representations it made.

Every one of these questionnaires is slightly different so do speak with your association attorney prior to attempting to fill one out. Your board may also wish to create a policy on which requests will receive responses, which it deems unduly burdensome or risky and the fees it will charge.

Sunday, November 23, 2014

When tragedy strikes in a community association

Very recently, a manager I know and worked with was viciously attacked while on duty in his community. A former employee walked into the management office and shot this unsuspecting young man in the head.

People I know asked me what could have been done to prevent this tragedy from occurring. It is always easy to be a Monday-morning Quarterback, but the fact remains that if someone is intent on doing you harm, he or she can usually find a way.

That being said, this attack does necessitate an important discussion about how to protect an association's employees, directors and residents. Whenever you are dealing with volatile personality types, it is important to plan thoughtfully. We have previously seen violence in community associations where a resident attacked a director and vice versa. We have also seen resident vs. resident crime. director vs. director crime and resident vs. manager and director vs. manager attacks. Sadly, no group is immune from being attacked or being the attacker.

What if you don't know someone has such a personality? Well, hiring decisions should not be taken lightly. In this case, a thorough personality screening of this employee may or may not have revealed a history of mental illness or highlighted other troubling personality issues. Given how some people react to bad news, terminating an employee might also require speaking with a professional ahead of time to frame the news in the best possible light and to take all necessary precautions should the employee present a problem immediately upon learning of the termination.

If you have any inkling that a resident, employee or director may have violent tendencies, you must take immediate steps to defuse the situation, reach out to all appropriate professionals and service agencies and do not go it alone. Can the management office be equipped with a metal detector? Of course, but how many communities want to go to this extreme?

Fortunately, Jeremy Holland, the manager who inspired this blog, is recovering with the help and overwhelming support of his family, friends and the community he served.

Monday, November 17, 2014

Multiculturalism and your Community Association


Many communities around the country have foreign members who are not proficient English speakers. Others have members who are fluent in English but would prefer to converse in their native tongue. I have attended Board and Membership meetings  in Florida where residents (and some directors) spoke Spanish, French, Creole, Portuguese, Chinese, Greek, Italian and Russian.
Some association directors feel strongly that only English should be spoken at board and membership meetings and only English should be used for an association's written communications.
 However, if your board's goal is to communicate effectively with your members and you do have members who would benefit from translating that message into their native tongue, aren't you thwarting your own goals by not doing so?
 Communities in certain areas like South Florida, Texas, California, Arizona, New York and other areas with high concentrations of foreign residents, may want to give some thought to how multiculturalism can benefit and strengthen their neighborhoods.
 When was the last time you reviewed your applications for purchase and rentals with an eye towards foreign purchasers and renters? Do you request background information from their countries and do you have any of your information published in other languages? What does your association website look like and is there a translation button on there for residents who wish to view the information in a different language?
Does your community have social events which expose foreign members to traditional American holidays while also hosting events which expose your American members to foreign holiday celebrations or customs?
As our world continues to shrink, private residential communities need to think about how multiculturalism can and should play a role in their policies and protocols. What are you willing to do to create a feeling of inclusion and what do you consider unnecessary and/or inadvisable?
My firm, Becker & Polikaoff, has created a unique resource for communities with Hispanic directors and members known as Condomundousa. You can find Condomundousa on Facebook, Twitter and LinkedIn as well as read their blog at www.condomundousa.com.

Sunday, November 2, 2014

Videotaping community association meetings-where do the owners' rights start and the directors' rights end?

Have you ever sat in a board or membership meeting only to notice at some point that someone in the audience is videotaping the meeting? Did the fact that you were being filmed concern you at all?

The Florida Legislature granted condominium and HOA members the right to videotape board and membership meetings. Florida cooperative owners can only videotape board meetings. However, that right is tempered by the fact that such taping is subject to reasonable board rules and regulations. The reasons for wanting to videotape a meeting can vary from member to member. Some people feel that it is the only possible method to accurately capture what transpires at a meeting; this is particularly true when a board does not provide timely and accurate meeting minutes after the fact. For other people, the ability to videotape may provide a handy tool to harass or annoy someone they don't like in the community. Many boards do create reasonable rules and restrictions regarding the videotaping of meetings and those rules typically require that someone planning to use such equipment advise the board in advance and tape from a certain distance during the meeting. In addition to thinking about how the person videotaping should conduct himself or herself, it is important to give some thought as to how those tapes will be used after they are made.

If you learn that tapes of your community meetings are being posted on Youtube or other public forums, you may have legitimate privacy and security concerns. Those tapes can reveal directors' faces and names (given at roll call) as well as such sensitive information as a director advising that he or she won't be at the next meeting because they will be out of town. At that point, it would not be difficult for someone to look up that person's property address in the Public Records and use that information for ill intentions.

The Florida shared ownership statutes unfortunately do not currently limit the use or distribution of videotapes by owners but the board can pass a rule limiting such use. However, it would be preferable if this loophole were closed statutorily by clarifying that videotapes made of association meetings cannot be posted in public forums. In the interim, there is certainly an argument to be made that prohibiting the posting of such videotapes in a public forum would constitute a reasonable board rule.

Wednesday, October 15, 2014

Cleanliness is next to Godliness-especially in a community association!

The fear of this century's next pandemic has increased with the recent media coverage of the growing spread of Ebola. Even without the risk of a highly contagious and fatal disease like this one, most of us already know that contact with crowds and multiple surfaces do increase our odds of becoming ill with any number of viruses. In some communities with retirement-age populations, even everyday illnesses can pose serious health risks. However, when was the last time your community association board discussed what can be done to keep your residents a little healthier?

Here are some basic ideas to consider:
  • In multifamily buildings, it makes sense to install hand sanitizer dispensers or wipes in high traffic areas such as the elevators and front desk. This is also true for homeowners' associations with recreational amenities like clubhouses.
  • Reach out to local healthcare providers and arrange for flu and pneumonia shots to be given inside the community as well as for mobile health screening units to make regular visits. Also, invite medical professionals as guest speakers to attend board and membership meetings and/or to distribute pamphlets and other wellbeing material.
  • Review your protocol for on-site association employees to consistently maintain cleanliness and hygiene standards both in terms of maintaining the association premises as well as expected personal employee hygiene and practices. A security guard constantly handling identification material from people entering the community should routinely clean his or her hands and the surrounding surfaces.
  • Consider adding recreational amenities and services to your community such as a weight room and trainers.

Naturally, for communities who do not wish to fit the aphorism of "no good deed going unpunished", the proper release forms should be obtained from owners for some of the foregoing activities. So, why should your community care about these kinds of preventative health measures?

The most obvious answer to that question is that this community is your home and you either live there with your family or your family and friends visit you there. Your staff's health should be of importance not only because it is tied to productivity but because you care about them. Lastly, the epitome of neighborliness is looking out for each other and one of the best ways to do that is to employ best practices when it comes to common health concerns.

Monday, October 13, 2014

How can your attorney help build your community's brand?



My last blog discussed the importance of building a brand for your community association. Many of you may have agreed with the concept but struggled with the idea of how to achieve such branding for your community.

The obvious people to assist you in this endeavor would be a Social Media specialist, website guru and a graphic artist. However, you may be surprised to learn that an experienced and knowledgeable community association lawyer may be your very best asset in terms of establishing and safeguarding your community's unique brand in the marketplace.

Let's look first at the branding for a typical retirement community.  In order to promote that brand, it would be helpful if there exists an active social structure with abundant recreational activities.  Your association attorney could help create that infrastructure with recommendations for various standing committees, committee structures, Board resolutions creating same, as well as policies and best practices for members of those committees.


As far as fiscal issues are concerned, is your community perceived as doing things as cheaply as possible or as one which spends wisely and delivers value for the assessment dollar?  My law firm, Becker & Poliakoff, is one of the founders of the Communities of Excellence program which spotlights Florida communities and managers who "get it right".  Many of the communities who receive awards for innovation, 

Are your community's rules too loose or too restrictive or your governing documents out of date?  We can look them over for drafting, legality and whether they actually accomplish your goals and bring them up to date with the law.

Are your dispute resolution processes civil and fair or rigid and heavy handed?  We can help set up templates for demand/notice letters and resolutions for fines and suspensions.

How do approach communication at board meetings, between board meetings, between board members, etc.?  Nothing does more to set the tone in the community than open and transparent operations, and that requires a commitment to communication.

Sunday, October 5, 2014

Does your condominium, cooperative or HOA board know if and when it is appropriate to grant a hardship exemption?

I am often asked by boards for whom I am rewriting or amending governing documents to include the right to grant hardship exemptions for a variety of use restrictions. Typically, boards want the leeway to grant exceptions when it comes to leasing or selling units, altering units  or limited common elements, performing maintenance and allowing certain types of architectural changes or improvements.

What many boards fail to understand is that any time an exemption or exception is granted, they are creating a precedent which may render their restrictions unenforceable in the future.

If there is no mention in the governing documents that a board has the right to grant an exemption then a board should not even contemplate doing so.

If the documents do provide such authority, a board still needs to discuss with legal counsel what the pros and cons are when it comes to exercising that right. Often this right to grant an exemption is tied to the perception that the owner is experiencing a hardship of one sort or another which can be a highly subjective matter.

A classic example of a situation where a hardship exemption might be equitable would be when an owner's tenant dies two weeks into a lease term in a community which restricts leasing to only one time in any calendar year. A board may very well feel that the intent of the restriction to keep the community safe from transient rentals will not be accomplished by applying the restriction under those circumstances.

Boards get into very murky waters when the hardship exemption is being granted to a fellow board member or an owner who is seen as a "friend of the board".

The better course of action when it comes to granting hardship exemptions is to clearly identify in your documents which situations would be eligible for such exemptions.

For example, in terms of leasing and sales restrictions, you might want to clarify that the following situations are eligible for an exemption:

-adding a family member to the deed for estate planning purposes
-heirs taking title to a unit
-death of a tenant within a certain time period after signing the lease
-abandonment of the unit by the tenant within a certain time after signing the lease
-a casualty event rendering the property uninhabitable for a time

These types of exemptions should be identified for other use restrictions and your governing documents amended to take the guesswork out of what does and does not qualify for a hardship exemption.

Monday, September 22, 2014

Does your board undertake "Due Diligence"?


Directors are often told they should "do their due diligence" before making certain decisions on behalf of their associations. How many people actually understand what steps are needed to fulfill that directive?
"Due diligence" is defined as an investigation of a business or person prior to signing a contract, or an act with a certain standard of care.
The foregoing definition, however, might not be enough for some boards or managers to map out a plan. The steps needed to diligently assess something or someone will change depending on the circumstances but what follows are some basic methods to undertake due diligence.
1.      When evaluating a potential association hire, using a thorough application, holding a personal interview, making calls to former employers, requiring a skills test and perhaps even a personality test can all give the board a better picture of the person they may be hiring. Naturally, your board will want to pick and choose from this list depending on the type of employee you are hiring. It is also important that the person with whom the job candidate will be interacting most closely post-hire has some contact during the evaluation process to ensure a productive working environment.
2.      When hiring a professional advisor such as an attorney, accountant, manager, engineer or architect, you will want to confirm that the candidate has the skills and resources your community needs. For example, if you are considering complicated litigation, you should hire a firm that specializes in your specific problem or issue rather than a firm that may only occasionally handle that type of litigation. You will also want a firm that has the resources to continue a protracted fight. When considering any professional advisor, you will want to ensure the individual or company has a good reputation in the industry, a proven track record and verifiable credentials.  Naturally, it is better to hear great things about your candidate from others as opposed to hearing them only from the candidate.  Check out your candidate online. Does the firm or individual have a presence? Can you see what resources they possess? Beware though as not every professional writes his or her own material; sometimes those blogs, papers and summaries are ghostwritten by PR firms. Be blunt and ask your candidate whether or not their written materials are their own. While there is nothing wrong with a targeted marketing campaign, if a professional creates a misleading image that his or her company is larger or more successful than it is, beware. Ask how many employees actually work there and see if their website backs up their claims. Ask to see documentation to verify any success stories. Google can also be a useful tool to see what others are saying about this individual or company.
3.      When hiring a contractor to perform any type of work in the community, be sure to confirm that the contractor's commercial license is active, that the license is the type you need for the work you are requesting and investigate any complaint history and resolution of those complaints with both the State and the Better Business Bureau.  Checking references with associations who previously used your contractor candidate for the type of project you are considering is also essential to your due diligence.
While there are no guarantees that a properly vetted candidate will go on to perform good things for your community, an improperly vetted candidate can spell disaster. Boards who understand the need to perform due diligence tend to avoid costly problems down the road.

Tuesday, September 2, 2014

Five things a community association Board of Directors should never do!


I have represented association boards for more than two decades and served on my own HOA board at one time so understanding the mechanics of a volunteer board comes easy at this point. Part of that understanding, however, is also an acknowledgement that boards often want to undertake certain actions on their own either as a means of cost-savings or because they simply don't understand the repercussions.

While the following is certainly  not an all-inclusive list when it comes to ill-advised actions , these five do come with significant and sometimes costly results if a board goes it alone. So what are the five things your board should never do?

1.      Negotiate the Legal Terms of a Contract.  Yes, we all know that you and your fellow board members previously signed legal contracts in your business careers and sign them personally now and again but doing so on behalf of your membership without having those contracts properly reviewed and negotiated by your association attorney is just bad business, period.

Boards can and should discuss with potential vendors what they want the business terms of a contract to look like: how long the project should take, what materials will be used, what it will cost, etc. However, ensuring that the contract language used actually garners you the results you negotiated is your association attorney's job and not yours.

2.      Fire an employee or vendor without seeking prior legal advice.  I am often asked at social gatherings by family and friends whether or not someone can be sued for this thing or that thing. My answer is always the same "Yes, if an attorney can be found who is willing to file suit (and let's be honest there is usually that attorney out there) then you can and likely will be sued."

Firing employees and terminating contracts with vendors are two areas fraught with the potential for retaliatory lawsuits. Tell people you no longer want them and many do not go quietly into the good night. There are legal issues involved with firing employees, particularly older employees so this is yet another area where expert guidance is absolutely crucial prior to taking action.

3.      Amend the governing documents. Far too many boards get this one wrong. They either use the retired personal injury attorney from out of state to draft changes to their documents or they task their reluctant manager with doing so.

Granted, if you are looking at an amendment as simple as changing the date of the annual meeting, it can seem like overkill to have your attorney draft a one-sentence change. However, some boards attempt to draft amendments with significant changes such as implementing age and occupancy restrictions which can subject the community to liability if they get it wrong. It is also important to remember that amendments should not be drafted in a vacuum-they must be crafted with an eye towards eliminating any conflict amongst similar provisions in each of the association's governing documents as well as written to ensure statutory compliance.

4.      Threaten Legal Action before doing your due diligence.  If you are going to threaten legal action, it would be prudent to determine beforehand if you actually have the legal authority to do what you wish to do. Threatening and losing often does more harm than not pursuing an action at all. Not only will you lose face, you will also likely wind up paying your opponent's attorney's fees and costs. Check with your attorney first to ensure that your contract, your governing documents or the law allows you to safely take the stance you wish to take.

5.      File an insurance claim for property damage without assistance. The process of becoming whole after a covered loss seems simple enough,doesn't it? Your association paid a (likely hefty) insurance premium and when you are damaged, you would think filing a claim is the only action needed. You would, of course, be wrong and perhaps a tad naive. In order to level the playing field, boards must acknowledge that the playing field isn't level to begin with and must enlist the assistance of experienced professionals (namely, your association attorney) to file and shepherd  their claim through an often artificially complicated process.

Sunday, August 17, 2014

How to start building a valuable brand for your community association? Part II of our Branding Series!

My last blog discussed why you should start considering your community's brand and how you are viewed in the marketplace by potential purchasers, vendors and even your local government officials.

Today's blog will focus on the steps you need to take to build a brand that will make you proud to call your community home.
  • One of the easiest things you can do is to secure your community's web address which is also known as your URL (Uniform Resource Locator). Securing your association's URL is relatively expensive and prevents others from using that URL to either create confusion or, worse, set up a site which denigrates your community. Once you do set up a website for your association, you will find that site to be useful in terms of disseminating information about ongoing community projects, increasing transparency in your association operations and facilitating participation by your members. The most successful association websites have residents coming back again and again to check on news, list items for sale, download requested information and to participate in surveys about ongoing and upcoming projects.
  • Take a look at your signage both physically throughout the community as well as your letterhead, your website and all other printed and electronic material. What kind of image does your font and logo portray? Is there consistency throughout all your communication portals which convey a consistent and polished image or are there varying approaches which create disparate and even confusing images?
  • Speak with your association attorney about the types of policies you wish to create to support the brand you are building; these policies can pertain to security, occupancy, volunteerism, common area usage, civic involvement, ecological sensitivity and more. You will also need legal assistance to trademark your logo, craft an employee handbook and create the proper protections on your association website and other communication portals.
  • Decide if Social Media is something you could manage to further enhance your brand. A Facebook page, Instagram andTwitter accounts might attract new purchasers and employees but they can also detract from your brand if those channels are left to languish.  Social Media is not something which can be managed sporadically; successful use of this medium requires constant tending and the right tone. The effective use of Social Media can portray your community as a harmonious, well-run neighborhood and it can do this in a fraction of the time that old-fashioned networking and social events would take to build a similar image. The point of Social Media should be to start a dialogue not to make a point. Social Media portals are becoming more and more important for communities with a significant percentage of absentee owners as a necessary tool to keep those people informed and involved. If you do decide that Social Media is right for your community, your association attorney can assist in ensuring that your passwords and accounts are owned by the association.
  • If your community is professionally managed, address your branding expectations in your management agreement and revisit those expectations on an ongoing basis. In fact, your choice of management company and other professional advisers also contributes to your community's branding. A self-managed community will naturally present a different image than a professionally managed one. A folksy feel in a 15-lot HOA might benefit from a brand perspective from self-management. However, a high-rise tower's brand might suffer entirely in the absence of professional management. An on-site manager, a portfolio manager, a handyman who lives in an empty unit, a bookkeeper sitting in the association office and valet and concierge service all bring different aspects to your brand. A community lacking in retained advisers such as attorneys and accountants can also detract from your brand building efforts. Finally, it is important to remember that the reputation of the advisers you choose also contributes to your brand so choose them wisely.
It is no coincidence that the communities with the most positive brands are also those with the greatest level of volunteer involvement, the highest property values and the most membership satisfaction. Successfully branded communities also enjoy greater involvement with local public policy makers. Your community's branding (or lack thereof) will go a long way towards attracting or repelling the purchasers, renters, employees and vendors you want.

Sunday, August 10, 2014

Building and protecting a brand for your community association-Part 1 of a 3--part series on Association Branding!

I just returned from the TOPS Software CAMfire conference in St. Petersburg and was mightily impressed with the entire program. I was honored to have been one of four keynote speakers as well as having been asked to teach a class along with Pilera Property Management Software owner, Ashish Patel, and to serve on a Social Media Panel with some very talented ladies: Gina Holbrook of Premier Property Management; Andrea Drennen of TOPS, and Ashley Capps of Trapp Online.

Not surprisingly, Social Media was a very large focus of the conference. For my keynote speech, I decided to address a topic most people would not readily connect with private residential communities-branding.

When you are asked to think of iconic brands, names like Nike, Apple, Starbucks and Coca Cola probably come to mind very easily. These companies all engaged in costly, strategic and sustained brand building over many decades to ensure that their company names would convey a recognizable, memorable and successful image to their customers and potential customers.

When you think of iconic community brands you might draw a blank. You might not even understand what the concept of branding has to do with the private residential community you call home. Whether you realize it or not, the community association in which you live or provide services has a brand in the marketplace, it just might not be the brand you ultimately want associated with your community.

Think of the most upscale community in your city and ask yourself how you know what you know about that community. The communities with the best brands carefully cultivate their image and thee the steps needed to protect their brand with not much being left to chance.

If you think branding is irrelevant to your community, think again. Branding (or the lack thereof) goes a long way towards attracting or repelling potential purchasers, quality renters, talented employees and honest vendors.

Want to know how your community's brand manifests itself?  Start by asking what kind of reputation your community has in the market. When was the last time you asked neighbors outside your community, local realtors and others in your area how they would describe your association? Is your community seen as stodgy or hip? Flexible or rigid? Upscale or budget-friendly? Is yours the trendy upscale high-rise catering to young professionals in an urban area or is your community more the laid-back, family-friendly suburban enclave? The list of possible brand permutations is vast.

In Part II of our Branding Series, we will discuss some of the things you can do to start building your community's brand.

Sunday, July 27, 2014

Medical Marijuana, Google Glass and other new subjects for association use restrictions.

Summer is the perfect time for many associations to speak with their association attorney about updating their rules and regulations. I have been busy for the past few weeks reviewing and updating rules and regulations for all types of communities. Naturally, one of the rules which I have been discussing at length was whether or not secondhand smoke had become a problem and should be addressed.

More and more community associations are addressing the issue of cigarette and cigar smoke and even vapors released by e-cigarettes. However, very few address the issue of marijuana smoke.

Florida Governor Rick Scott recently signed the Compassionate Medical Cannabis Act  into law which allows for the limited use of medical marijuana for persons suffering from epilepsy, cancer and ALS. In addition to this law, Florida voters will be asked to decide in November if an even more expansive use of medical marijuana should be allowed by amending the Florida Constitution to permit such usage. Early polls indicate widespread support for this referendum.

Twenty-two states and the District of Columbia now have some form of law that permits the use of marijuana for varying medical purposes.

Of course, this new right is accompanied by a countervailing concern about how the use of and growing of marijuana might impact neighbors living in shared ownership communities. The starting point for associations in other states which have preceded Florida on this path has been the passage of rules limiting the smoking of medical marijuana in common areas as well as on balconies, patios, front and back yards.

Regardless if you see this as a personal-freedom issue or just another potential usage that should be regulated by your association, the fact remains that new laws, new technology and new products coming on to the market bring with them the need for boards and residents to evaluate how they wish to see their communities operated.

Another example of a rule which was requested by an association board for the first time recently pertains to wearable technology. In this community, a few residents using Google Glass presented questions about security risks as well as data and personal privacy concerns. Wearable technology encompasses not just Google Glass but other wearable devices such as health monitors, watches, GPS devices, cameras, etc. The basic concern with wearable technology is that there will be no telltale signs that the tech users are taking pictures or video or tape recording conversations. In fact, the very appeal of wearable technology is that it can be used with little or no effort.

Whether we are talking about smoking marijuana or wearing Google Glass, any usage which falls within the definition of a nuisance can be regulated as such. Otherwise, your association may wish to get a little more specific about these and some other new member behaviors which have popped up on your radar.



Monday, July 21, 2014

New Blog Name...Even Broader View of Community Association Issues!

Congratulations!!

You are reading the first post I am writing under the name of my new blog, the Community Association Law Blog. If you are reading this post, it is likely that you have followed my association blog for some time already now.

For the past decade, I have blogged about issues that confront all types of community associations throughout the U.S. and the world. A quick perusal of our archive reveals that we have covered an awful lot of ground together over the years.

Today my old blog URL was redirected without my knowledge to a law firm with whom I have no affiliation. Rather than risk any interference in my blog postings, I have created this new URL to continue without missing a beat.

Please make a note of the new Community Association Law Blog which can be found at www.communityassociationlawblog.com.

I look forward to many more years of sharing insights, experiences and some humor on the various issues that impact the millions of Americans who live in condominiums, cooperatives, homeowners' associations, mobile home parks and timeshare communities.

Warmest Regards,
Donna

Which affirmative defenses might derail your community's enforcement efforts?

Most association boards can decide when they wish to pursue an owner who has violated the community's restrictions. However, it is the rare board that undertakes a thorough analysis before sending out those demand letters to determine if the owner can use any affirmative legal defenses to successfully challenge the association's enforcement efforts.

Naturally, enforcement decisions should not be made in a vacuum. Association boards are well advised to consult with their association attorney to determine (a) if they have the authority to enforce the restriction they wish to enforce and (b) if there is any current or previous situation which would make such enforcement challenging at best and impossible at worst.

Let's look at some of the affirmative defenses which might derail your board's enforcement efforts.

Laches-this legal doctrine denies claims in which the person or entity asserting the right has delayed for a considerable amount of time in asserting that right or claim and such delay could prejudice the adverse party. If a board knew an owner had erected a shed in violation of the covenants and restrictions but waited several years to pursue enforcement, laches may be raised as an affirmative defense.

Equitable Estoppel-this affirmative defense comes into play when a court will not grant legal relief to a party who has not acted fairly.  For example, if an association improperly assigned parking spaces and then attempts to enforce the parking space restriction against an association member, the defense of equitable estoppel could be used. This defense brings to mind the legal maxim-"he who seeks equity, must do equity."

Waiver-in this affirmative defense, the association would have voluntarily surrendered a known right. That could be a right which derives from the statutes or from the association's governing documents. An example of waiver would be a board which fails to make an approval decision on an application to purchase within the time period set forth in the governing documents.

Selective Enforcement-An owner can use the affirmative defense of selective enforcement to prove that the association is enforcing the restrictions in an arbitrary manner against some owners and not others. Unfortunately, many owners rely too heavily on this particular affirmative defense to challenge all attempts by their association to enforce the rules. For example, if an association fails to pursue an owner for a mailbox violation that does not necessarily create a selective enforcement defense by an owner who is being pursued for a pet violation. Florida courts have held that a successful selective enforcement argument in the association setting requires an "apples to apples" scenario.

If you are a board member attempting to enforce your use restrictions, please speak with experienced association counsel to ensure that a possible affirmative defense is not lurking out there. If you are an owner who is being pursued for a violation, ask yourself if any of the foregoing defenses might apply to your situation.

Monday, June 30, 2014

What exactly does grandfathering mean in your community?

In the community association setting, we often hear about certain things, people or practices being “grandfathered in” which basically means that new restrictions cannot apply in those instances.

The term “grandfather clause” has an ignominious past; it arose as a constitutional device used by some Southern states to deny voting rights to black Americans between 1895 and 1910 by exempting those people whose lineal descendants had enjoyed the right to vote prior to 1866 from having to comply with latter-day voting requirements tied to education, income and real property ownership.

In today’s parlance, someone can be “grandfathered in” when it comes to owning a pet, driving a commercial vehicle, leasing out a home and more.

Why does the notion of grandfathering create strong emotions on both sides of the equation? 

For boards and association members wishing to enforce new restrictions which they feel are in the best interests of the community, it is important to know that the rules will apply equally to all. For people who bought in a community without certain restrictions, it can be unsettling to learn that your dog, vehicle or tenant is no longer welcomed.

In Florida several years ago, the Condominium Act was changed to provide that changes to leasing restrictions would only apply to existing owners who consented to such leasing amendment and to new owners who took title to their property after such amendment had already been recorded in the public records. Naturally, that legislative change has been met with some consternation over the years as boards and managers struggle with the administrative and practical challenges associated with some owners being restricted in terms of their ability to lease while others are not.

One of the biggest hurdles and misunderstandings associated with grandfathering is the time period during which the exemption should exist. For example, if a new pet restriction is passed, should current pet owners be entitled to keep only their current pet for its natural life expectancy or does that mean that subsequent pets can be maintained in the unit as well? The same question applies to rentals, vehicles and other use restrictions. Often people believe that it is the unit which is grandfathered and not a particular condition or situation. Pets, lease agreements and vehicles all have a “life span” of sorts.


Be sure to speak to your association attorney about how grandfathering should be handled when new restrictions are being considered in your community.

Sunday, June 22, 2014

Could your condominium be voluntarily terminated?


Do you live in an older condominium building in a prime location? Have you ever thought about terminating your condominium in order to sell your older building to a developer desirous of your location? Has the fact that your older building is going to require significant ongoing maintenance and repairs become an inducement to consider termination?

I heard earlier last week from the son of a woman who lives in a Boynton Beach community which has accepted a developer's offer to purchase the condominium property and terminate the condominium form of ownership. He was citing the  provisions in Section 718.117, F.S. relating to waste and questioning whether or not the termination of his mother's condominium met that litmus test. I provided him with the voluntary termination provisions in that same section of the Condominium Act and explained that 80% of the owners can vote to terminate the condominium form of ownership for any reason so long as not more than 10% of owners do not object to same.

Florida's Condominium Act was changed a few years ago to make voluntary condominium terminations possible so that owners could take advantage of offers to purchaser without being hamstrung by a handful of their neighbors. This last session saw language pass which now requires a delay in voting on a termination for several months after an initial vote fails to achieve the necessary threshold.

The downside to any termination is that an owner could have purchased his or her unit at the height of the market, taken a mortgage and when the termination is approved, receive fair market value which is far below the outstanding mortgage balance. The upside to the voluntary termination provisions is that it allows the vast majority (80%) of owners to take advantage of an advantageous developer offer to purchase an older building in a prime location.

There will always be owners who resist a termination offer as being a hassle or not likely to result in sufficient monetary gain. However, for others the ability to make an otherwise unconsidered real estate gain, the offer may be too good to turn down. Still others may be disenchanted with the condominium concept altogether and would welcome the opportunity to "cash out".

Has your condominium community been approached about a possible termination and what would you do if you were?

Monday, June 16, 2014

Construction Cranes are going up but would you buy a new condo?



We've all seen the construction cranes going up, now the data confirms our suspicions. According to Cranespotters.com, there are 247 South Florida condominium projects in the works. Condominium sales currently make up half the home sales in South Florida. This trend of renewed condominium construction is not confined to our geographic area but is being seen throughout the U.S., particularly in Boston, Seattle, LA, Houston, New York City and San Francisco.

Many industry experts see this period as the early stage of a long-term recovery in the condominium market. South Florida developers with whom I have spoken expect the bulk of these units to be purchased by foreigners and, to a lesser extent, local empty nesters who are looking to downsize and transition to a more urban and convenient lifestyle. Let's face it, if you want a certain location combined with a relatively maintenance-free lifestyle, single family home ownership is not likely to meet those goals. A single family home on or near the beach is going to cost a lot more than a condominium unit and require extensive upkeep.



With this flurry of condominium construction surrounding us, it does raise the question of whether or not the intended purchasers of these units will be happy long-term with their choice. One way to ensure that your housing purchase remains a good fit is to do your due diligence ahead of time.

Certainly, you need to read the governing documents and association policies thoroughly and ask yourself if any of the restrictions currently impact your lifestyle or could do so in the future. Attending a condo class or hiring an association attorney to give you an overview of what items in your association documents could change over time is also not a bad idea.

However, there are some things that are typically out of your control no matter how much deliberation and planning go into your condominium purchase. Why? Because the game changes after you transition from developer control.  For example, you will probably not know:

-Who will sit on the board of directors after the community transitions from developer control.
-Whether or not a chronic smoker will move in next door.
-Whether or not that required soundproofing material was installed in the unit above yours.
-Whether or not the developer will deliver a structurally sound and defect-free community.
-Whether or not the assessments you are paying while the developer is in control will go up a little or a lot (assume the latter).
-Whether or not the developer has left the association's coffers financially sound.
-Whether or not you or a neighbor will need a service animal or emotional support animal at some point.
-Whether or not you will be outvoted on most matters in the future including amendments to the documents, funding reserves and material alterations to the common elements.

For condominium purchasers, a cost/benefit analysis is in order along with a leap of faith. Know that some things are entirely in your control including your choice to either be part of the solution or part of the problem.

As for the developers who have such high hopes for their new projects, they would be well advised to start taking into account the long-term comfort and peace of mind of their purchasers by creating certain safeguards (both in the documents and structurally) to ensure that the condominium lifestyle choice remains a popular one for many people. There are ways to better insulate units from secondhand smoke and  noise but tight budgets are often earmarked for bells and whistles that can be seen and not more mundane items.

So, will I ever leave my suburban home and delve into the condominium lifestyle? Time will tell but the doctrine of caveat emptor would certainly be forefront in my mind.

Monday, June 9, 2014

BP Oil is still paying on claims. Could your association or individual community members be eligible?


As virtually every resident, property owner and business owner along the Florida Gulf Coastknows, BP Oil has entered into a class action settlement designed to compensate victims of the April, 2010, oil spill from BP’s Macondo well. The fund was originally established at $20 billion with the requirement under the settlement agreement that if it is depleted before all claims are paid, BP is required to replenish it. As of this time last year, there was $300 million remaining in the fund.

The Deepwater Horizon Settlement was approved by a Louisiana Federal District Court on June 2, 2012, and a court-appointed claims administrator has been evaluating and paying spill-related claims ever since. The original claims deadline of April 22, 2013 has now been extended until at least September 13, 2014. In another bit of fortunate news, the U.S. Supreme Court ruled today that BP must continue paying claimants while it pleads its case to our nation's highest court. Today's decision comes after the U.S. Fifth Circuit Court of Appeals in New Orleans ruled that businesses claiming damages from the 2010 spill don't have to prove direct harm, under the terms of the settlement.

For rental property owners, business owners and all types of community associations located in the areas covered by the settlement who have not yet filed claims, now is the time to act.

The settlement created six distinct categories of claims. The category most commonly applicable to community associations is the Business Economic Loss (BEL) category. Eligibility for BEL claims depends upon whether the claimant’s property is located within the covered geographical area and whether the Claimant can show a loss in revenue. If so, chances are that the claim will be paid. The coverage area is comprised of four separate geographical zones identified as Zones A through D. Properties in Zone A receive the most favorable treatment and can qualify for payment without having to prove that their revenue losses were directly caused by the oil spill.  As you know, most associations can show losses related to delinquencies as well as to increased insurance premiums and other rising costs to operate and administer their communities.

Zone A includes stretches of the FloridaGulf Coastfrom Pensacola to the Florida Keys. Zones B, C and D extend inland from the coast for as much as 100 miles. You can determine whether your property is within a coverage area, as well as your particular Zone, by reviewing the Deepwater Horizon Claim Center’s website at:  http://www.deepwaterhorizoneconomicsettlement.com/maps.phpor by reviewing this interactive map: http://69.166.140.73/zonelocatoreconomic/

The formula employed by the Claims Administrator to determine economic losses is not necessarily logical or intuitive. Evaluation of a BEL claim involves comparing averages of income and expenses during a pre-spill “Benchmark Period”—a series of months selected by the claimant—with a corresponding “Compensation Period” during 2010. Certain revenues and expenses are excluded when making this comparison. If the comparison establishes a loss, a risk transfer premium may apply, increasing the potential claim by as much as 150%. In most cases, it will be impossible to determine whether your association has a viable claim without having your financial information reviewed by a professional with a working knowledge of the settlement and the protocols employed by the Claims Administrator. Consequently, many associations will no doubt leave “money on the table” by assuming they have no loss and failing to secure the proper guidance to determine whether they have a viable claim. 


While aspects of the settlement are still being appealed and uncertainties remain, one thing is certain: those who miss the claims deadline will not be paid, even if they have compensable losses. Becker & Poliakoff has been handling these claims for communities, individual property owners as well as business owners in the eligible zones. If your community is located in one of the four zones and you have not filed a claim or even considered doing so, now is the time to contact us to discuss your options before the window of opportunity closes forever. If you and/or your fellow board members or your association members in your community rent out their units or own businesses in any of the four zones, the same logic applies.  For more information please contact us at bpoilinfo@bplegal.com.

Sunday, June 1, 2014

Some guidance for new board members



When you first learn that you will be serving as a new member of your community's board of directors, you are likely to be offered either congratulations or condolences; what you are not likely to be offered is much in the way of guidance for your new "job".



You probably achieved your director's seat in one of the following ways:

1.      You were recruited/urged to run for the board by your neighbors or current board members;
2.      You were appointed by the existing board to fill a vacant seat;
3.      You ran for the board because you were anxious to correct perceived deficiencies in current association operations or you are one of the rare few who embrace service to others; or
4.      You threw your name in the ring and an election never occurred as there were not more candidates than available slots.

Regardless of how you came to serve on your board, there are right and wrong ways to begin your tenure as a community association director.

Ask questions.  Rather than making assumptions, why not ask questions about why the board is doing certain things and enforcing or ignoring certain policies? Of course, questions should be just that, inquiries with the genuine purpose of obtaining information, not veiled accusations or overt criticism. There will be time for change and possible censure later after all the facts are gathered. For now, just try to figure out why your board does what it does and based on what authority.

Do your homework. The work begins not ends after you join your board of directors. First and foremost, you must be prepared to attend your board meetings as well as any membership meetings. However, your work as a director doesn't end there. For self-managed communities you could be looking at quite a bit of legwork to perform the necessary duties of operating and administering the community. Even if your community is professionally managed, you should not expect to abdicate your responsibilities as a director to a manager or to your fellow directors. You will need to read reports, minutes and a host of other materials pertaining to your role as a director before you are expected to weigh in with a decision on them.

Become familiar with your role and your association's documents.  There are a plethora of free and good classes out there that will help you better understand your role as a community association board member. Attend a class, read a book and yes, read your governing documents even if you do both of the foregoing. If you are the ambitious type, you might want to also consider reading the statute which governs your particular type of association but do not expect to interpret everything on your own-that is your association attorney's role.

Take your role seriously. As with any representative form of governance, people are relying upon you to make sound and reasonable decisions on their behalf. The members are also allowing you to spend their hard-earned dollars so understanding what it means to be a good financial steward is a critical component of serving on your board. You cannot fulfill your fiduciary obligations if you do not show up, are not adequately prepared and do not take your role as a director seriously. Remember, even if you think the role is a cakewalk, you might learn a hard lesson to the contrary in court.

Put aside your personal issues and hotspots and focus on what is in the best interests of the community. This is perhaps one of the hardest lessons to embrace but is likely to be the most important overall. You cannot truly represent your community if you are focusing on what matters to you to the exclusion of what matters to the majority of your association members.

Lastly, be proud of the fact that you chose to serve as a community association director at some point in your life. Winning that seat is usually a vote of confidence in your skills. Remember, your voice and your vote count so use both wisely.

Sunday, May 25, 2014

Should your community seek FHA Certification?



FHA Certification does two things for a community association and its members: it allows residents to obtain a Home Equity Conversion Mortgage (HECM) and it opens up the pool of eligible homebuyers who are seeking FHA-backed loans when purchasing their home.

An HECM is a reverse mortgage which is a loan that is available to qualified homeowners who are 62 years or older. A reverse mortgage enables seniors to stay in their homes while they receive advances on the loan, the repayment of which is secured by the equity in their homes.


An in-depth discussion on the pros and cons of a reverse mortgage is beyond the scope of this blog but a major advantage is that it does not need to be repaid as long as the homeowner resides in the property and does not otherwise default on the loan (i.e.. by failing to mainteain property insurance or by not paying property taxes).

Some private banks do offer reverse mortgages, however, the only reverse mortgage product insured by the U.S. government is the HECM which is insured by the FHA.

With regard to the second part of the certification equation, FHA loans permit a lower down payment which makes them very attractive to homebuyers.  In 2009, FHA loans comprised approximately 2% of the loan market; in 2010, that figure had climbed to 40%. Given the popularity of the FHA loan product, not being certified means community members may have a much smaller pool of people interested in buying their homes.

There are basic eligibility requirements which must be met in order for a community association to receive FHA certification. The certification process is not nearly as complicated or costly as some people believe. Well-managed and financially stable communities typically experience no problems in becoming FHA certified. If your community wishes to be certified by the FHA, the following guidelines must be met:

-No more than 15% of your units can be delinquent for more than 30 days.
-At least 50% of the units must be owner occupied.
-At least 10% of the association's budget must be allocated for reserve funding.
-The association must have adequate insurance coverage.
-There can be no pending litigation other than routine collection activity.

If your community wishes to seek FHA certification, please contact me via email at dberger@bplegal.com or by phone at 954-364-6031.

Monday, May 19, 2014

Does your community file the proper tax return?

Last week I was fortunate to sit in on a continuing education class provided by Donna Seidenberg and Steven Price of the Fuoco Group (www.fuoco.com), certified accountants and business advisors. The class focused on the issues pertaining to association tax returns.

Realistically-speaking, board members are not all likely to understand the complexities of accounting principles. Even though members of my family are certified public accountants, I chose law for my career so some of these nuances escape me as well. Board members do need to know, however, how to hire a competent accounting professional to assist their communities.

Here are some of my takeaways from this very useful class.I apologize in advance for the simplistic overview but this blog is designed to stimulate your board's desire to discuss these issues at greater length with your community's accounting professional.

Associations are not-for-profit corporations, they are NOT a non-profit corporation which is tax-exempt such as a 501 (c) (3) which is typically a religious or charitable institution. Some directors still erroneously believe that the association does not need to file a tax return as a result of its not-for-profit status.

90% of community associations file the one-page federal 1120-H return which is the easiest form to prepare for condominiums and HOAs. The 1120 return is a more complicated form and is, at a minimum, a five-page return which carries greater risk.

Naturally, a common question for most directors is which association revenue is taxable. An example of non-membership income would be laundry fees paid by renters. An example of membership income would be application fees and security deposits. It is important from an accounting standpoint to segregate the membership vs. non-membership income.

The tax treatment of reserve funds has some interesting nuances. Capital reserves are not taxable. A classic example of a capital reserve would be a roof reserve as it adheres to the structure. Non-capital reserves, on the other hand, are taxable. A painting reserve and a hurricane deductible reserve are two examples of non-capital reserves. If you pool capital reserves (ie roof reserve) with non-capital reserves (ie. painting reserve) then all of the reserves will be treated as non-capital reserves.  Pooling reserves are a big no-no for commercial condominiums as far as taxes are concerned.

The following associations cannot file the 1120H return.

Commercial Condominiums;
Condominium Hotels; and
Cooperative associations (they must file an 1120-C form).

There are certain thresholds which must be met in order for an association to avail itself of the 1120-H tax return. Those thresholds are:

  • 85% of the units must be residential in nature.
  •  60% of the association's income must be derived from assessments.
  • 90% of the association's expenses have to go towards the "acquisition, construction, management, maintenance or care of association property."

Some associations with substantial recreational amenities fail this test. If your community provides an impressive array of amenities, services and facilities, you will need your CPA to prepare a very specific expense allocation.  For example, it becomes important to know just how much of the tennis pro's time is spent giving lessons and how much is devoted to maintaining the tennis courts and facilities as different activities trigger a taxable event.

Think there are no consequences for getting this wrong? Think again. Penalties may ensue for filing the wrong type of return. This is one area where you want to get it right the first time.