Monday, December 4, 2017

In Defense of HOAs

HOAs certainly have their share of detractors.  Many HOAs operate a community of detached, single family homes which begs the question:  it's my house; it's my yard; other than the local building code, why should my HOA be able to restrict what I can do with them?  Does it really matter how I maintain my yard? Shouldn't the choice of exterior paint color be left up to me rather than the HOA board or an architectural control committee?  Shouldn't I be able to park whatever vehicle I want and park it wherever I want on my lot?  The answer to those questions depends on one's expectations and, unfortunately, sometimes people who prefer few or no restrictions find themselves living in communities with extensive rules and regulations.

While some people are quick to criticize HOAs and even call for the dismantling of their regulatory framework, there are significant benefits that a mandatory homeowners' association can provide.

In my hometown of Plantation, Florida, an ongoing controversy exists in terms of a holiday light display on a residential cul de sac which is not part of a mandatory community association. When I first visited the attraction, I marveled at the grand scale of the display: a large Ferris wheel in the middle of the lawn with adorable teddy bear passengers, an outdoor movie screen playing holiday classics, thousands upon thousands of lights and law decorations and masses of people milling around and gawking like me.  My second thought was "I really would not want to live on this street."

This nationally recognized holiday display takes place on an otherwise quiet cul de sac with fewer than a dozen homes and only one street that provides access to the residents and their guests and visitors.  The push and pull between the owners who host the display and their neighbors has, not surprisingly, played out in the media.  Several of the neighbors have been vociferous about the negative impact their neighbor's activity is having on them.  They claim that the lights, noise, garbage left on their lawns by visitors, weeks of set-up and removal of the display as well as the pedestrian and vehicular traffic over the span of many weeks all contribute to the diminution in their quiet enjoyment of their homes and their ability to celebrate the holidays on their terms.  They also fear that the display could hinder the ability of emergency vehicles to render assistance in their neighborhood while the display's visitors are clogging the streets.

There is little doubt that a holiday display on this scale would not be permitted in a mandatory homeowners' association and this is only one example of activity than an HOA could and arguably should regulate.  Every set of Association governing documents contains a clause that prohibits activity that interferes with the peaceful possession and enjoyment of the other homes in the community.   In this case, the governing documents could be amended to add specific guidelines regarding holiday displays and exterior alterations to a residence.  No HOA documents would permit any type of display which could be classified as a nuisance or which would bring a nightly influx of non-residents into he community.

A violation of the governing documents such as this holiday display would have resulted in fines and, if those fines exceeded $1,000, they could have become  lien on the property and possibly foreclosed.  Whether you believe that a massive holiday display in a residential area is a nuisance or a blessing, the tools available to a private residential community enforcing its private restrictions are undeniable and they can and should work to the benefit of other lot owners.

Detractors of mandatory HOAs may argue that the local city or county can regulate the use of residential property and enforce Code violations.  Well, that may be true in theory but in practice the local authority sets minimum standards, whereas your community may want higher standards of aesthetics.  Also, the local authority is often reluctant to become embroiled in these kinds of situations and, even when they do take action, they may not be as successful as an HOA would.  In the case at hand, the City of Plantation sued the display's owners and lost.  The City filed a nuisance lawsuit based on alleged traffic issues and the judge ruled against the City. Curiously, the nuisance impact on the neighbors was not addressed in that lawsuit.  In the end, this case illustrates how a private community could more effectively enforce private restrictions as opposed to relying on municipal Code enforcement.

What other advantages can an HOA provide?  Residents in an HOA benefit from the services and amenities that sharing expenses can provide, such as security services, recreational amenities like pools, exercise rooms, tennis courts and more. Lastly, highly functioning HOAs can foster a strong neighborhood connection.  In the case of the besieged cul de sac, that neighborly connection arose not because things were going well but because they were going very wrong.

Monday, October 30, 2017

Countdown to 7/1/18 and the New Website Requirements for FL Condominium Associations


By July 1, 2018, a Florida condominium association with 150 or more units which does not manage timeshare units must have an independent website or web portal wholly owned and operated by the association or a website or web portal operated by a third-party provider.

 

Creating an in-house website may prove to be too daunting for all but the biggest and most technologically sophisticated communities which means most Florida associations will contract with a third party provider for their website.

 

Many management companies provide their association clients with a webpage or website to facilitate owner payments and distribution of association information. These websites can be quite useful. However, under this new law, an association could be thrown into violation status if a change in management or a payment dispute with their management company results in their web portal being shut down, even for just a short period of time. Most management company agreements specify that the association webpage or website provided belongs to the Management company and NOT to the association. As such, your board may wish to establish its own independent website (even in addition to the one provided by your management company) to prevent any interruption in service and, thus, violation of the statute. Another alternative is to negotiate ownership of the association website in your agreement with your management company.

 

If your Florida condominium association consists of 150 or more units, you now must start evaluating your options for compliance. If you have a website provided by your management company, you must review your agreement to confirm whether or not that website is owned by your association or by the management company. What does your agreement provide in terms of transitioning your website content in the event you or the management company terminate your agreement? If your association currently has its own website independent of your management company, do you have a Content Management System (CMS) for that website or do you rely on a website designer to upload your content? If the answer is the latter, you must review that protocol with your webmaster as association documentation must be uploaded timely to your website in order to comply with the new law.

 

If your condominium association has 150 or more units and you do not have any website at this time, you have a lot of work to do in the coming months. The starting point is to organize your association documents into digital format for ease of uploading to your future website.

 

The association must post the following documents on its website:

 

a. The recorded declaration of condominium of each condominium operated by the association and each amendment to each declaration.

b. The recorded bylaws of the association and each amendment to the bylaws.

c. The articles of incorporation of the association, or other documents creating the association, and each amendment thereto. The copy posted pursuant to this sub-subparagraph must be a copy of the articles of incorporation filed with the Department of State.

d. The rules of the association.

e. Any management agreement, lease, or other contract to which the association is a party or under which the association or the unit owners have an obligation or responsibility. Summaries of bids for materials, equipment, or services must be maintained on the website for 1 year.

f. The annual budget required by s. 718.112(2)(f) and any proposed budget to be considered at the annual meeting.

g. The financial report required by subsection (13) and any proposed financial report to be considered at a meeting.

h. The certification of each director required by s. 718.112(2)(d)4.b.

i. All contracts or transactions between the association and any director, officer, corporation, firm, or association that is not an affiliated condominium association or any other entity in which an association director is also a director or officer and financially interested.

j. Any contract or document regarding a conflict of interest or possible conflict of interest as provided in ss. 468.436(2) and 718.3026(3).

k. The notice of any unit owner meeting and the agenda for the meeting, as required by s. 718.112(2)(d)3., no later than 14 days before the meeting. The notice must be posted in plain view on the front page of the website, or on a separate subpage of the website labeled “Notices” which is conspicuously visible and linked from the front page. The association must also post on its website any document to be considered and voted on by the owners during the meeting or any document listed on the agenda at least 7 days before the meeting at which the document or the information within the document will be considered.

l. Notice of any board meeting, the agenda, and any other document required for the meeting as required by s. 718.112(2)(c), which must be posted no later than the date required for notice pursuant to s. 718.112(2)(c).

 

The association must ensure that privileged information and privileged records are not posted on the association’s website. If protected information or information restricted from being accessible to unit owners is included in documents that are otherwise required to be posted on the association’s website, the association must be sure to redact the privileged content before posting the documents online.

 

The association’s website must be accessible through the Internet and must contain a password-protected section that is inaccessible to the general public and accessible only to unit owners and employees of the association. Upon a unit owner’s written request, the association must provide the unit owner with a username and password and access to the protected sections of the association’s website that contain any notices, records, or documents that must be electronically provided.

 

In a highly functioning community, a website is just another technological tool along with online voting and electronic transmission of meeting notices which can make a board’s job easier and the members’ experience more positive.

 

Sunday, October 15, 2017

Can Your Community Association Stop Bullying and Harassment in Their Tracks?

Bullying in any form cannot be condoned either in schools, workplaces or communities.  While a newly filed bill by Rep. Emily Slosberg (HB 123) has the laudable goal of protecting Florida's senior citizens from being bullied, just how feasible is it in a community association context?  From some of the board and membership meetings I've attended over the years, it is not at all easy to spot who is the bully and who is the bullied and the reality is that sometimes the bully becomes the bullied and vice versa.

HB 123, if passed, would create a new law known as the "Stand Up for Seniors Act." The law appears to apply only to "55 and over" communities in Florida.

                             WHAT BEHAVIOR WOULD THIS LAW ADDRESS?

Bullying under the Act would be defined as "intimidation or harassment that causes a reasonable person to fear for his or her physical safety or property" and may consist of physical actions including gestures; cyberbullying; oral, electronic or written communication or any threat of retaliation for reporting of such acts.  Bullying can take place in person or can be done through the use of technology such as email, texts or the internet; this type of bullying is known as cyberbullying.                                                                                                                                                                              
Harassment is defined by the bill as any racist, threatening, insulting or dehumanizing gesture, use of data or computer software or written, verbal, or physical conduct that has the effect of substantially interfering with or disrupting a member's opportunities, peaceful enjoyment of his or her home or the association common areas, or association benefits.  A person who wrongfully reports an act of harassment in bad faith would be committing harassment.


                  WHAT IS REQUIRED OF ASSOCIATIONS UNDER THIS PROPOSAL?

1.    "55 and Over" associations would have to adopt and review at least every 3 years a policy prohibiting bullying and harassment.

2.    The association's policy must ensure that association members do not subject others to fear or intimidation and the policy must apply to all members.

3.    The  association's anti-bullying, anti-harassment policy must contain the following:

 (A)    A statement prohibiting bullying and harassment.
 (B)    Definitions of bullying and harassment that conform to those set forth in the law.
 (C)    A description of the type of behavior expected from each association member.
 (D)    A requirement that the association investigate any reported act of bullying or harassment.
 (E)    A list of penalties for people who bully and harass or who wrongfully accuse others of bullying and harassment.
 (F)    A procedure for receiving reports of an alleged act of bullying or harassment including allowing a person to anonymously report such an act.  A disciplinary action, though, could not be based solely on an anonymous report.
 (G)    A procedure for a prompt investigation of a report of bullying or harassment.

4.     After the association completes its required investigation of a report of bullying or harassment, the association must submit its findings to the Ombudsman who will then either send a written warning to the member upon the first offense; require the member to complete an anger management treatment program upon a finding of a second offense; or impose a $100 upon a finding of a third or subsequent offense.

                                   IS HB 123 HELPFUL OR JUST WINDOW DRESSING?

HB 123 contains a glaring omission inasmuch as it regulates the behavior of "Association members" but does not seek to address the behavior of abusive tenants, guests, visitors and other residents.  Even more troubling is the obligation being placed on volunteer boards to regulate civility inside their communities.  A board's role in a community association is to enforce the covenants.  Absent a clear violation of those documents, most boards are not well suited to exercise almost entirely subjective judgment to determine who is the perpetrator and who is the victim in many disputes.  Lastly, requiring associations to spend limited resources on investigations, some of which may result in inconclusive findings or findings that the complaint was unsubstantiated, creates a quagmire.

Bullies are pernicious and we have never been as exposed to them as we are today in various forms around the world.  Progress has to start somewhere but I am not convinced that residential senior communities in the Sunshine State should be required to take the lead in this fight. Perhaps our government officials should be the pioneers in this anti-bullying and anti-harassment crusade by setting an example of civility?
                                                                                                                                                                                                                                                                                                         

Monday, October 9, 2017

A Rude Awakening: Your Board May Not Have the Right to Screen Leases and Sales at All!

Even in the frenzy of post-Irma repairs, ordinary life continues and for most volunteer boards and professional managers that means screening applicants who wish to lease or purchase in their communities.

However, purchase and rental screening has become such a part of the fabric of community association life that some boards and managers have forgotten to confirm the source of authority for such activity.  Several boards were recently dismayed when I advised them that they do not have authority either to charge a transfer/application fee or to approve leases or sales at all.  They learned this information while they were in the midst of screening pending applications.

Their responses to that uncomfortable revelation included:

"Of course we can screen, we always have."

"Our manager told us we can screen and charge an application fee."

"We suspected we couldn't do it but it's a calculated risk we're taking."

The fact that your community may have a practice in place for charging a screening fee, requiring applications, running background checks and conducting personal interviews with potential new purchasers and potential new tenants does not make any of the foregoing legal unless your governing documents (and specific documents in some instances) provide your Board with this authority.  In fact, in two of these communities, the Declaration clearly specified that sales and leases were not subject to prior approval by the board only to prior notice.  In today's investor-friendly environment, more and more developers are creating initial documents which allow unfettered leasing and sales activity.  It is neither reasonable nor advisable for a board to assume it has the authority to screen sales and leases because its management company does the screening and collects the associated fees.  A responsible manager will urge the board to obtain the necessary legal opinion any time the question of legality arises.


In a Florida condominium, a transfer fee cannot exceed $100 per applicant (with spouses and a parent/dependent child being treated as one applicant) and a transfer fee cannot be charged at all unless the association has the right to approve a lease or sale and the fee is provided for in the Declaration, Articles or Bylaws.


                                                  Why is it important to be so cautious?


A cottage industry has naturally cropped up where some lawyers and law firms are initiating individual and class action lawsuits against boards and management companies for charging fees in excess of or in violation of the statutory limits.  Granted, there is a reasonable desire on the part of many volunteer boards and a high expectation on the part of many association residents to ensure that new purchasers and tenants are properly screened to avoid any potential threat to the safety, security or financial well-being of the community.  However, the framework to conduct such screenings must be authorized by the governing documents.  As for taking a calculated risk, given the potential to be ordered by a court to return illegal transfer fees taken over the span of several years, there is little doubt that confirming your authority or properly amending your governing documents to provide such authority is crucial.

Monday, October 2, 2017

A Different Kind of Blog Post: A Letter to My Children


I had planned another blog post for today about boards' screening ability regarding sales and leases. However, I woke up to the news of yet another mass shooting and loss of life; this time in Las Vegas. I sat down this morning and wrote the following email to my twenty-something daughter and son who live in LA and NYC respectively. To the extent that it can help other concerned parents like me, I am sharing it.

Dear Ryan and Lauren,

The four of us went to bed last night in three different cities and I venture to say that none of us had the specter of mass shootings on our minds before we closed our eyes. We all woke up this morning to the news that there has been mass carnage in Las Vegas due to a shooter who stuck an automatic weapon out of a window in a hotel we've previously stayed at and mowed down people who had just started listening to Jason Aldean.

 

There is not much I can add to the discussions that are sure to ensue regarding the Second Amendment, the NRA, mental health and more. In a country as large and "Type A" as ours is, it is not realistic to expect that anything significant will change. Months from now we will again go to bed not realizing the risks out there and whether or not one of us or our loved ones will draw the short straw by being in the wrong place at the wrong time.

 

What I can urge you to do is to live in the now. Previously you've heard me say this as a philosophy to reduce stress and enjoy the present. Now I see being present as having an additional bonus- a way for you to avoid danger.  We have all become so accustomed to avoiding eye contact with others (when was the last time you really looked at a homeless person), to having a running script in our heads with an endless to-do list or a recitation of worries about what happened at work today or will happen tomorrow, friend issues, etc.  That kind of thinking should be done when you are somewhere safe and you can zone out. When you are out and about, you need to be present. Look around. There are usually clues that something might be amiss if you choose to notice them. Don't sidle up mindlessly to a backpack, duffel bag, cell phone, laptop, etc. that appears to have been left somewhere. If you get on a subway and there is such an item just sitting there, get off that car and tell someone immediately. The same holds true in other venues such as restaurants, malls, concert halls, etc. The worst thing that can happen is you delay your travel by a few minutes or you risk the embarrassment of having your actions being seen as an overreaction. The best thing that can happen is you saved your own life and countless others. As for embarrassment, it is a wasted emotion and not one which should prevent you from listening to and reacting to the well-honed instincts you both have.

 

There are people who are very good at being present, vigilant and active without being paranoid or otherwise negatively impacting their enjoyment of life. For those people, noticing their surroundings keenly each day brings countless pleasant surprises: beautiful sunsets as they drive home, a flowering tree on their morning walk, a baby giggling wildly in the mall, a co-worker who looks happy. For these same people, that sense of awareness might also help them notice the suspicious backpack, the person on the subway whose eyes are darting wildly and who is wearing clothing that is unseasonal, the movie theater or restaurant that feels "off". If you walk into a store and there is no clerk at the front desk, leave. It could be that the clerk is in the bathroom, it could also be that something bad is going down in the back room. Walk around the block and come back when the clerk is back at his or her post. Humans evolved to avoid predators. Our bodies are vulnerable and we're not that hard to kill. We don't have fangs or claws or (for most of us) unusually thick hides.  We have our instincts and our brains and modern life is working in many respects to blunt the survival skills we do have.  

 

So what I am suggesting is take your noses out of your cell phones while you walk around in public. Notice the people and objects around you. When you choose a seat in a restaurant try to have a clear view of the door and the entrance/exit. In a public venue, always know where the exits are. There are other dangers besides active shooters and those can include careless people who start fires in packed, wood frame concert venues. If you see something unusual, say something. Act, don't remain paralyzed in an emergency as you ponder your options. 

 

I want you to enjoy every aspect of your lives. Of course, as your mom, I want you to be safe so you have decades of living ahead of you. If you take a little more time to understand the real risks out there and what you can do to safeguard yourselves and others, life will be all the sweeter.

 

Xo,

Mum

Sunday, September 17, 2017

Community Association Questions Post Hurricane Irma

   


As with many Florida communities, my HOA Board had questions in the aftermath of Hurricane Irma. Would FEMA pay to pick up all our debris, when should the security guards be asked to return to duty and could we tap into reserves without a membership vote to pay for storm repairs?  Here are a few other questions, I've received from associations statewide who are grappling with the issues presented by a storm like Irma.


Q: We signed up with a Public Adjuster right after Irma but we are now not happy with his contract. It looks like we are being charged 15% of any recovery we receive. Are we stuck?

A: Under section 626.854(6), F.S., you have five (5) business days to to cancel a Public Adjuster contract without penalty or obligation. Also under section 626.854(10)(b)(1), a public adjuster cannot charge more than 10% of the amount of the insurance claim for events that are the subject of a declaration of a state of emergency by the Governor. The Governor declared a state of emergency for all 67 counties prior to Irma.

Q: One of our board members who always is a problem wants to hire someone she knows who is "great" to handle several repairs we need post Irma but this contractor is not licensed to perform work in Florida. What can we say to shoot this idea down?

A: Here are some of the risks associated with hiring unlicensed contractors:

The contractor lacks proper qualifications and, as a result, performs poor quality work in your community.
The contractor lacks insurance and thus provides no protection for your association should individuals be injured or property damaged during the course of the contractor's performance.
The contractor may have a criminal background which explains the lack of licensure.
The contractor may not comply with applicable building codes.

The DBPR also says to watch for "red flags" that indicate you may be dealing with an unlicensed contractor. Some of these include:
A claim to be "licensed and insured" but the contractor cannot produce a license
The contractor wants all or most of the money up front or will only accept cash
The contractor wants a check written to them individually or to "cash"
The contractor wants to proceed with an oral agreement only
The contractor simply showed up at your property to solicit your business.
For the complete list of red flags, please visit:  http://www.myfloridalicense.com/dbpr/reg/ula-consumer-tips.html

It is noteworthy that hiring an unqualified contractor and potentially squandering your insurance proceeds exposes the individual board members to potential personal liability.  Please be sure to visit your City's website to confirm whether or not the contractor you are considering is properly licensed in both Florida and in your City.  

Q: We have a number of units in our building which we believe have water damage thanks to Irma. We would like to go in and inspect these units and dry them out. However, we have several uncooperative owners who are refusing to allow us in and to pay for these services. What should we do?

A: Sections 718.1265, 719.128 and 720.316, Florida Statutes, grant boards emergency powers so long as an official state of emergency exists in Florida. Among those powers is the right of the Board to enter into units/homes to assess water damage, to remove water-soaked items such as carpeting, furniture, etc. and to seek reimbursement from the owners for those costs. Should an owner refuse to properly reimburse the association for those costs, the association may enforce its right of access, perform the required repairs, and lien the unit for any costs advanced.

Q: Our high-rise condominium recently transitioned from developer control. We have not yet hired an Engineer to confirm whether or not we have any construction defects in our building. Now that Irma has done some damage to our roof and windows, is our construction defect claim going to be impacted?

A: Developers and contractors will certainly use the hurricane as the cause of any and all exterior wall/window/roof issues. Conversely, if the building manifested no problems as a result of the storm, the developers and contractors will point to the building's performance to prove that there are no defects.  If your building was only minimally impacted by the hurricane, you should proceed expeditiously with your Engineer's Report to document your building's condition particularly as we are still in the midst of hurricane season.

If your building was impacted by the storm and  a claim is made then construction defects may be an exclusion in the policy. There's some recent case law that says that such an exclusion may not be applicable in a concurrent causation setting but the analysis would have to be very carefully done on a policy-by-policy basis. 


Q: I read that the IRS is extending the time for filing a tax return for individuals in certain areas impacted by Hurricane Irma. Would this apply to our HOA as well?

A: The IRS announced an extension for victims of the storm in parts of Florida and elsewhere who will now have until January 31st, 2018, to file certain individual and business tax returns and make certain tax payments. This includes an additional filing extension for taxpayers with valid extensions that run out on October 16th, and businesses with extensions that run out on September 15th, 2017.  Even though most community associations file relatively simple tax returns, your Florida HOA should have additional time to file under this program.
Please note, however, that this extension does not apply to the payment of taxes which were originally due on April 15th, 2017.


Q: I am the Treasurer for my HOA . We took out a $2.3 million dollar loan for a clubhouse renovation project. We've been paying off that loan.  Should we start including some sort of forbearance period when a state of emergency has been invoked? Associations in SW FL and elsewhere will also experience slower than usual assessment payments. Some of those communities might run into a default with their loan repayments as a result for the first time in their history. I don't want to have to rely on a bank's goodwill in this kind of situation.

A: Irma has taught many of us painful lessons not the least of which is the need to address possible hurricane damage in your more important contracts/agreements. Most loan documents grant a very tight grace period after which significant interest and late fees start accruing but do not grant an association forbearance in terms of making loan payments in the event of a disaster. However, as impacted associations know, Irma will likely delay timely payment of regular and special assessments for weeks or months to come as owners grapple with the costs associated with necessary storm repairs.

Most banks want to work with their customers and do not want to deal with defaults so If your loan documents do not address this challenge, I would suggest you contact your banking representative to have a discussion.  Failure to pay on time, however, without specific approval from the Bank will likely result in a default under the loan documents, potential acceleration of the balance, and an increase in interest rate to the default rate.

 For associations who are currently negotiating loan agreements, I suggest including a clause clarifying that the late fees and interest incurred be different for willful nonpayment vs. nonpayment resulting from a state of emergency. That's not an unreasonable request. Boards shouldn't have to hope that their bank has a heart after the storm; it should be memorialized in their loan docs.

If your community has a question about how to deal with conditions post-Irma, please email me at dberger@bplegal.com.



Tuesday, September 12, 2017

Associations dealing with unique problems post Hurricane Irma



Thankfully Floridians heeded the call and evacuated where necessary and prepared one and all for the monstrous Hurricane Irma. While Irma was a lengthy and dangerous storm, the effects on Florida were not as devastating as had been feared. However, for thousands of shared ownership communities, volunteer boards, professional managers and residents will be dealing with the aftereffects of this storm for weeks or months to come.

For some communities, these repair and reconstruction projects will be complicated by other issues that pre-dated Irma's arrival. Let's discuss three different scenarios which might complicate your post-Irma recovery.

1. Associations that had contractual obligations (renovation or restoration projects) prior to the storm.  Some communities were in the midst of large and costly repair and renovation projects prior to Irma. I had several clients who were undergoing concrete restoration, lobby and clubhouse renovations and painting projects.  If your community started another project during the summer that has now been impacted due to the hurricane then the Board will need to evaluate if that project needs to be delayed pending completion of necessary storm repairs. Certainly, repairing a roof damaged by Irma now takes priority over that new Lobby renovation. While most force majeure clauses in repair and renovation projects allow the contractor to put the project on hold if the contractor's operations are impacted by a storm or other disaster, the contractor handling your association's renovation project may be ready, willing and able to proceed with a project that is no longer a priority for you and pushing you to continue with the project and your payment obligations. You will need your association attorney to evaluate the contract to see what options are available to you in terms of delaying the project's progression or modifying the scope of work.

2. Associations with fiscal constraints. Did your association head into the path of Hurricane Irma lacking reserves and without a line of credit in place? If so, you will be working under financial constraints when trying to obtain the funds necessary to make any repairs you suffered. At this point, you should discuss with your association attorney how quickly you can levy special assessments (knowing that it will be weeks or months before those funds start coming in and that you are not guaranteed to collect 100% of those special assessments from all owners. You should also explore the possibility of obtaining government assistance in the form of SBA loans, FEMA debris removal, etc.  Homeowners who need financial assistance to repair their primary residence, temporary shelter, or medical assistance should apply for FEMA Individual Disaster Assistance. FEMA asks those with internet access to register for aid at DisasterAssistance.gov. If you can’t get online, call 800-621-3362 or 800-462-7585 (TTY). Registering will enable FEMA to begin the process of determining eligibility for aid and services.  Businesses, associations, and homeowners may be eligible for Disaster Loan Assistance through the Small Business Administration. Visit https://www.sba.gov/loans-grants/see-what-sba-offers/sba-loan-programs for more information.

3. Associations with significant ongoing collection challenges. If your community had units in the collection process prior to Hurricane Irma's arrival, it may be tempting to forget about those collection efforts post-storm. After all, you have more pressing things on your mind at present. However, I would urge you to continue with those collection efforts as the Board's ability to undertake necessary storm repairs depends on your ability to collect assessments. Abating or delaying your ongoing collection efforts sends the worst possible message when you need to assemble resources to pay for repairs. 

Hopefully our Florida communities will ride out the rest of Hurricane Season (we're finished on November 1st) without incident. I am sure the rest of you share my opinion that the following visitors are most unwelcome:
Jose
Katia
Lee
Maria
Nate
Ophelia
Philippe
Rina
Sean
Tammy
Vince
Whitney



Wednesday, September 6, 2017

Your Florida Board of Directors Now Has Emergency Powers as a Result of Hurricane Irma; What Will You Do With Them?

Governor Scott has declared a Florida-wide state of emergency which now deploys the emergency powers for volunteer boards found in Sections 718.1265, 719.128 and 720.316 of the Florida Statutes. Hurricane Irma may prove to be the testing ground for these emergency powers to determine, post-storm, if boards abused these powers and therefore the powers need to be reduced or if volunteer boards needed more help to cope with Irma than the current emergency powers provided and thus, these powers need to be expanded in the upcoming 2018 Legislative Session.


The intent behind the statutory emergency powers is to provide volunteer boards with more flexibility to deal with disaster situations. You can see from the list below that certain protocol regarding meeting notices, membership approval and limits on board functions and authority are all modified in the face of a disaster. For instance, your board has the authority under these emergency powers to take the necessary steps to dry out individual units and you can lien the owners who fail to reimburse the association for those expenses. You can specially assess the owners without their approval even if your documents would ordinarily require such approval. You can also borrow money without the need for membership approval even if your documents ordinarily require such membership approval.


 Pursuant to Florida law, condominium, cooperative and HOA boards can now take the following steps as long as the state of emergency in Florida continues:


  1. Conduct board and membership meetings with less and different types of notice than typically required by law.
  2. Cancel and reschedule any association meeting.
  3. Name as assistant officers person who are not directors, which assistant officers shall have the same authority as the executive officers to whom they are assistants during the state of emergency to accommodate the incapacity or unavailability of any officer of the association.
  4. Relocate the association's principal office or designate alternative principal offices.
  5. Enter into agreements with local counties and municipalities to assist counties and municipalities with debris removal.
  6. Shut down or off elevators; electricity; water, sewer, or security systems; or air conditioners. Any residents who stay in the face of such shut-downs do so at their own risk!
  7. Declare portions of the property unavailable for entry or occupancy by unit owners, family members, tenants, guests, agents or invitees to protect the health, safety or welfare of such persons.
  8. Evacuate the property in the event of a mandatory evacuation order in the locale in which the community is located. Should any unit owner or other occupant fail or refuse to evacuate the property when the board has required evacuation, the association shall be immune from liability or injury to persons or property arising from such failure or refusal.
  9. Declare that the property is habitable. However, such determination is not conclusive as to any determination of habitability pursuant to the declaration.
  10. Contract for the removal of debris and to prevent or mitigate the spread of fungus, including, but not limited to, mold or mildew, by removing and disposing of wet drywall, insulation, carpet, cabinetry or other fixtures on or within the condominium property, even if the unit owner is obligated by the declaration or law to insure or replace those fixtures and to remove personal property from a unit.
  11. Contract, on behalf of any unit owner or owners, for items or services for which the owners are otherwise individually responsible, but which are necessary to prevent further damage to the condominium property. In such event, the unit owner or owners on whose behalf the board has contracted are responsible for reimbursing the association for the actual costs of the items or services, and the association may use its lien authority to collect those expenses and fees. Without limitation those services may include the drying of units, the boarding of broken windows or doors and the replacement of damaged air conditioners or air handlers to provide climate control in the units or other portions of the property.
  12. Levy special assessments without a vote of the owners.
  13. Without unit owners' approval, borrow money and pledge association assets as collateral to fund emergency repairs and to carry out the duties of the association when the operating funds are insufficient.
Just remember, your residents are counting on you to use these emergency powers wisely and in their best interests. Wishing you all safety in the face of Irma.

Tuesday, September 5, 2017

Five Mistakes Your Board of Directors Can Avoid if Hurricane Irma Hits

In the aftermath of Hurricane Harvey's destruction and with Irma fast approaching the eastern US coastline, I could blog about the steps your community needs to take to prepare. I've written that blog post many times before and I often wonder how many board members, managers and community association residents have followed that advice.  At this point, most of you already know that you should be date-stamping video of your property to memorialize pre-and post-storm condition. and should arrange to have money on hand (either in the form of fully funded reserves or a line of credit) to use for storm repairs.  Some of you also have pre-negotiated debris removal pricing from your landscapers, have adopted and tested emergency plans and have recently reviewed your insurance policy with both your insurance agent and your association attorney to confirm and clarify your understanding of your coverage limits and deductible responsibilities.  To those highly prepared communities I say "Bravo"; your residents are lucky to have planners at the helm of their association as experience has taught that prepared communities will fare better in even a direct strike from a Category 3 or higher storm than unprepared communities will in less fearsome storms.

The surest way to make mistakes after a storm is to have failed to make adequate preparations before the storm.  However, when a storm is bearing down on a community which might not have taken all the recommended advance steps, all hope is not lost. Boards need to focus on taking the right post-storm steps as follows:


  1. Separate the urgent from the important.  Your board can and should undertake the urgent steps needed to secure your building from further water intrusion, to clear debris and to dry out units. Important items such as selecting a contractor and other professionals to help repair your long-term storm damage require the same amount of due diligence as a regular renovation or repair project would.  There is no reason for your board to abandon sensible steps such as compiling bids, vetting contractors, having your attorney review contracts before signing and hiring the right professionals to oversee the construction project simply because the repairs are needed due to storm damage. The first mistake your board must avoid is signing full repair contracts and assigning your insurance benefits to contractors under pressure and in the absence of taking the steps you would ordinarily and prudently take when hiring contractors to perform work in your community.
  2. Do not rely solely on the insurance company's adjuster to evaluate your claim. The insurance company's adjuster is not there to protect you and your association's claim. Your board needs to consult with your association counsel who will assist you in retaining your own adjuster and/or engineer or architect to fully evaluate and compile your claim.  All of the foregoing professionals can help ensure that your insurance company maximizes rather than minimizes your anticipated recovery.
  3. Don't allow the circumstances to control you. The most sought after, high quality contractors and consultants will be in short supply in the aftermath of a disaster.  It is always preferable to hold out for the quality of contractor you would hire for a non-emergency project than to settle for an unlicensed or out of state contractor.
  4. Don't forget that communication with your members is vital. Hopefully you have up to date emergency contact information for most of your members. Websites, emails, texts, phone calls and regular mail are all important channels to keep your members and residents informed about the building's condition. Those communications will help inform your residents when they can safely return to their homes, when to expect repair work to commence, etc.  It should come as no surprise that the boards who are the poorest communicators in the aftermath of a disaster don't tend to fare well at the next annual election. Even more importantly, proof of consistent and informative communications can defuse a potential negligence claim levied against your board.
  5. Lastly, one of the biggest mistakes some boards make is not learning from their mistakes. There will always be another hurricane. Whatever problems or deficiencies you discovered dealing with this year's hurricane should result in an evolution of your hurricane plan for the following year.  Did you find yourself in a bind due to a lack of funds on hand to deal with either the urgent or the important matters which needed attention? Next time you will be certain to have reserves you can use or a line of credit in place prior to storm season. Did you find that you could not get your landscaper out to remove debris promptly and when he did show up the cost was astronomical? Next time, you will pre-negotiate these services and the price before the start of hurricane season on June 1st.  Did your residents express confusion, frustration or anger for months after the storm?  Next time, you will establish and utilize more communication channels and have better contact information to keep your residents informed and involved in the reconstruction process.
According to the former heavyweight champion and sage, Mike Tyson, "Everybody's got a plan until they get hit".  If the worst happens this year and your community does get hit, be sure to minimize your pain by avoiding the foregoing mistakes. As for having a plan, check out our hurricane plan at:  

Tuesday, August 29, 2017

Could your community association turn into the next Confederate symbol battleground?

In light of recent events in Charlottesville, it should come as no surprise that symbols mean different things to different people and there will unfortunately continue to be disagreements (and at times violence) when it comes to interpreting whose rights deserve protection as they pertain to those symbols.

While it is not likely that a homeowner in a private residential community would erect a statute of a controversial figure in his or her front yard, it is possible (and has, in fact, happened) that a resident may choose to display a flag (Confederate or otherwise) which is deemed offensive by some of his or her neighbors or by the Board of Directors.

In the context of a mandatory community association, just how much can or should a volunteer board regulate the display of symbols that some residents may find offensive? There's not much to debate if a resident chose to erect a Nazi or Isis flag in your community as most rational people would support removing those flags as clear symbols of hatred.  However, let's discuss a timely example of a less clear-cut albeit controversial and divisive symbol-the Confederate flag.  Would the Board of Directors in a Florida HOA have the right to request an owner to remove that flag?

In the absence of any Board Rule or provision in the recorded governing documents prohibiting certain types of flags, the answer is NO.

In Florida, the Legislature saw fit to protect the rights of its citizens to fly certain types of flags regardless of any association restrictions to the contrary.

Section 720.304(2), F.S. provides as follows:

(2)(a)    Any homeowner may display one portable, removable United States flag or official flag of the State of Florida in a respectful manner, and one portable, removable official flag, in a respectful manner, not larger than 4 1/2 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.


You may not be aware that in Florida, a law was passed in 1961 to specifically address the Confederate flag.

Florida Statute Section 256.10 provides as follows:

256.10    Mutilation or disrespect for Confederate flags or replicas.- No person shall publicly mutilate, deface, defile, defy, trample upon, or by word or act cast contempt upon the flags of the Confederacy, or replicas thereof, for crass or commercial purposes; provided however that nothing contained herein shall be construed to prevent or prohibit the use of such flags for decorate (sic) or patriotic purposes.

The foregoing statute does not specifically provide that a resident in an HOA is entitled to fly a Confederate flag. The statute does prohibit certain disrespectful handling of such a flag and clarifies that flying a Confederate flag for decorative or patriotic purpose does not constitute casting contempt or disrespect upon that flag.

So what would your association do if an owner insisted on flying the Confederate flag? What would your Board's response be if the flying of that flag sparked protests inside your community?

Your Board could pass a rule which prohibits the flying of all flags other than those currently protected by Florida law.  The protection of the Confederate flag from desecration found in Section 256.10, F.S. does not appear to confer the right to fly it freely in the face of an association's covenants, restrictions, bylaws, rules or regulations.  According to the statutory construction principle of expressio unius est exclusio alterius, the mention of one thing implies the exclusion of another and Section 720.304, F.S., does not protect the Confederate flag in its enumerated list of flags deserving such protection from a community's private covenants.

If your Board does not have a rule regarding flags prior to an owner attempting to fly a flag which draws offense, your board will have a harder time confronting the issue.  If the flag in question draws protests and/or vigilante justice in the form of residents removing or destroying the flag, the Board could seek its removal (or prohibit its resurrection) based on the nuisance provision in its Declaration but that is not the soundest legal position to take.  It would be far smarter and safer to pass a rule which prohibits flags other than those listed in Section 720.304, F.S. in order to avoid controversy or enforcement issues in the future.

So what could the Confederate flag-flying resident argue if an association has an otherwise enforceable rule?

1.   That his or her freedom of speech is being violated.  Since a Florida HOA is not deemed to be a state actor, this argument is almost certain to fail.

2.    That Section 256.10, F.S. allows him or her to fly the Confederate flag. This argument is almost certain to fail as well given that the statute does not confer a right to fly such a flag in the face of  private restrictions; it merely sets for the behavior which must be observed with regard to the flag.  Arguably, the 1961 Florida law is unconstitutional since the U.S. Supreme Court has already ruled that one can disparage or even burn the U.S. flag as a form of politically protected speech.

The takeaway here is that communities must be proactive in identifying potential conflicts and creating rules in advance to address same. If you don't have a flag rule currently in your community association you should consider adopting one.

Wednesday, August 9, 2017

When Differences turn into Dysfunction: Why Your Board of Directors Needs a Code of Conduct

The role of board members in a community association is fairly straightforward:  keep informed on the association's business operations; be familiar with and come prepared to discuss the agenda items for upcoming board meetings; encourage and participate in constructive, businesslike discussions of those agenda items; and use your judgement to represent the community and its members in the way you conduct yourself as a board member and in the way you decide the issues that come before the Board. Unfortunately, some community association board members do not follow these guidelines and some create a level of dysfunction that is highly unproductive.  The result is usually a community which devotes a disproportionate amount of time and resources to argument and personal attack rather than to constructive action for the good of the community. A certain amount of discourse and debate amongst board members is not only healthy, it can be productive when crafting policies and protocols resulting from differing viewpoints.

What happens, however, when differences turn into dysfunction?

Naturally, it is counterproductive when board members find themselves at odds with each other. In some communities these power struggles can manifest in any of the following ways:

  • A Board  Member demanding frequent and heightened access to the association's books and records including privileged information for his or her own nefarious purposes;
  • A Board Member disclosing privileged information including, at times, even disclosing litigation strategy to adverse parties;
  • A Board Member refusing to attend meetings if doing so prevents a quorum from being achieved;
  • A Board Member refusing to cast his or her vote;
  • A Board Member refusing to turn over association books and records in his or her possession either while serving on the Board or after his or her term expires;
  • A Board Member slandering fellow board members or the manager or unit owners who express contrary opinions;
  • A Board Member filing a complaint with the DBPR; and
  • A Board Member inciting and encouraging a recall of fellow directors.
Some of the foregoing director actions (such as a DBPR complaint and a recall action) may be justified if the board as a whole is dysfunctional and the dissenting voice on the board is attempting to steer the board in a better direction. However, some directors fail to understand that being part of the board means accepting that decisions are often made by consensus and not by unanimity; gracefully accepting that your fellow directors may not always (or ever) agree with you should be a job requirement for service on the board. Some directors who are at odds with their fellow board members use tactics which are not designed to resolve the issues but rather to inflame them. More importantly, a fractured board more often than not leads to a fractured community.

For directors who believe they are entitled to greater access to the association documents, the answer is "No", a director is not entitled to any greater access to the association records than an ordinary association member unless that director has been tasked by the Board with certain duties which require such access. For example, a director serving on the Screening Committee should have access to the rental and sales applications.

I am often asked by boards dealing with one or more directors who have a personal agenda which conflicts with the board's goals if that director can be removed from the Board. Again, the answer is "No", a director cannot be removed from the board by his or her fellow directors; only the members in a Florida community association can remove a duly elected or appointed director unless one of the limited statutory disqualifiers applies.  However, a board can, by majority vote, remove a director from holding a particular office such a President, Vice President, Treasurer or Secretary. Doing so may not solve the problem but it can prevent a rogue director from convincing vendors and other third parties that he or she has authority that simply does not exist by virtue of no longer having a title.

Many association governing documents define the scope of board authority as a whole but do not address the mechanics of how a board comprised of different individuals can work together successfully for the betterment of the community.  This is where a thoughtful Code of Conduct can fill in the gaps.

A Code of Conduct should address the following areas for your Board Members:

  • Confirming how conflicts of interest can be identified and avoided and which conflicts must be disclosed;
  • Confirming which directors have authority to sign contracts and negotiate and otherwise deal with vendors and professional service providers;
  • Outlining respective officer and director roles;
  • Creating a communication policy and email protocol both internal and external; and
  • Creating basic expectations for board member service and professional decorum.
In the aftermath of Florida's 2017 Legislative Session which created heightened potential liability for directors in connection with certain basic association operations, according to insurance expert Lou Meskin, some insurance companies are already discussing whether or not a Board Member Code of Conduct should become mandatory or, at a minimum, preferred for the issuance of Directors and Officers coverage.  While a Code of Conduct won't be the panacea some boards are seeking, it can lay the groundwork for more successful association operations.

If you'd like more information about creating a Code of Conduct for your Florida Board of Directors, please email me at dberger@bplegal.com.



Sunday, June 25, 2017

Going Too Far Down the Rabbit Hole: How Our National Political Discourse Parallels Our Community Association Discourse

It's hard right now to turn away from the 24/7 news cycle and its discord, rancor and heated rhetoric. When we spend the majority of our time discussing just 20% of the topics which concern us, we cannot commit time or energy to the other 80% which also demands our attention.  It's not surprising that the same prioritization pressure occurs in private residential communities.  How often has a board or membership meeting been monopolized by the concerns of one very vocal owner?  That owner may very well have legitimate concerns but that still does not justify how some communities seem to be the equivalent of the tail wagging the dog.

We live in a world of increasing oppositions; it's becoming harder to find a middle ground on most topics.  For those of us who work with and live in community associations, the current state of political discourse in America sadly comes as no surprise.  In fact, there are some eerie similarities that reveal a few uncomfortable truths about our society.

Name calling, speaking (and yelling) over others, character assassination, accusations, conspiracy theories, and filibustering are never productive and usually reflect a certain intellectual laziness. Fake news and alternative facts have been employed for decades in some communities where facts matter less than agendas and can be employed equally by both members looking to oust a board as well as boards looking to shut down opposition. the best way to do battle with this problem is to have a membership comprised of people willing to undertake an independent analysis of the situation rather than relying on someone else's version of the truth.  When id doubt, just remember this quote by Daniel Patrick Moynihan: "everyone is entitled to his own opinion, but not his own facts."

Calls to remove leaders are nothing new.  Unfortunately, the recent changes to Florida law will make it less likely that recalled board members will challenge even a questionable recall petition if they must do so by paying for such a challenge out of their own pockets.

Conflicts of interest can erode the trust between an elected official and the people who elected him or her. Just as some members of Congress have filed litigation based on the Emoluments Clause in the U.S. Constitution, a perception that a board member has an undisclosed conflict of interest can lead to dissatisfaction at best and recall and litigation at worst. It's impossible to serve two masters so if you have agreed to serve on your community's board of directors, your decisions must be based on what is best for the community and no longer what is in your best interests.

Just as we have spent an inordinate amount to time on a national discussion concerning the improper use of emails and sloppy email protocol, some directors completely underestimate the trouble a lack of email protocol can cause.  The failure to understand, let alone embrace, best practices when it comes to email protocol which includes safeguarding privileged information and employing language which is designed to achieve a goal not blow it up, can make a small flare-up quickly turn into a full-blown conflagration.

Recently, a new client asked me about what can be done to stop leaks and leakers on their board.  Just how did one roofing vendor reduce his bid to make it lower than the bid that was going to contract?  Leaks on community association boards are often designed to do nothing more than embarrass a board member or officer (or help a vendor friend) but occasionally they cause a lot more damage including an anticipatory breach of contract claim.  When it comes to litigation matters or pursuing insurance claims, closed-loop communications are crucial to the ability to minimize the association's exposure in the former instance and maximize its recovery in the latter circumstance.

Building a proverbial wall can become the turning point in a community. Some directors have very firm ideas about the material improvements they would like to make in their community and how to pay for those improvements, either by special assessment or loan.  Often these ideas are not as wildly popular with the association members as Mr. or Ms. Director would like to believe. It is always best to gauge community sentiment before embarking on costly and potentially divisive projects.

Inevitably, the issue of personality conflicts arises in many communities.  Dealing with personality issues (as exhibited by board members, owners or both) can be one of the toughest problems to solve in a shared ownership community.  It is important to remember that your conflicts involve a "living together" relationship so patience, empathy and updated emergency contacts are some of your best tools when dealing with sensitive behavioral problems.

Finally, the potential for violence is the most disturbing comparison of all between the national stage and our local communities. There have been sporadic reports of violence in community associations over the years.  Two that come to mind include a manger who was shot in the head (but mercifully survived) by a disgruntled former association employee and a board member shot and killed by a fellow director as they argued over association matters.  Violence is never the answer but it does underscore how a 'pressure cooker' situation can blow the lid off any society, micro or macro.

The ability to find some middle ground is sadly disappearing from the national stage and it is, unfortunately, no different in some of our communities but our disgust with our national discourse might just lead us to insist that our association affairs be handled more productively.