Monday, December 19, 2011

Is your association vulnerable to a frivolous age discrimination lawsuit?

Last week, the Housing Opportunities Project for Excellence, Inc ("HOPE") called a press conference, issued a press release and sued several real estate agencies and condominium associations in Broward County. The group announced that one of its goals was to remind folks that are in the housing industry that they cannot discriminate against families with children.

HOPE was established as the result of a grant from HUD in October, 1988 to Metro-Dade County's Equal Opportunity Board (formerly the Fair Housing and Appeals Board). On its website, HOPE states that it is the only non-profit fair housing organization in Miami-Dade and Broward Counties currently engaged in "testing for fair housing law violations, pursuing enforcement of meritorious claims and conducting fair housing education and outreach." HOPE further states that it has recovered in excess of $8.5 million in settlements for victims of housing discrimination. HOPE's board of directors is composed of accomplished and well-known individuals.

This all sounds like our tax dollars hard at work in the worthy pursuit of ferreting out injustice in the housing industry. However, in the case of at least two Broward County condominium associations sued last week and named in that press release and at the press conference, none of the careful HOPE activities cited on their website actually took place.

According to HOPE's own lawsuits, HOPE "tester" and named plaintiff, Alyssa Arnell, apparently visited several internet sites listing classifieds for unit rentals and found ads which had language stating that "children under 12" were not allowed to visit the property being advertised for lease. In the case of one of the associations, Ms. Arnell also located an age restriction from 1986 but did not search further to find that the 1986 restriction was removed by further amendment in 2002.

In fact, HOPE did not take even the most basic steps to "research" the potential discrimination. A simple phone call to the association would have revealed that the unit being leased was being leased by an owner and not the association, that the association had no knowledge of the language this owner had in his ad, that the 1986 age restriction had been removed and that the association had never disapproved any prospective residents based on age since the 2002 amendment.

What attempts did HOPE make to educate these boards and communities before suing them and denouncing them in a highly public fashion? What level of care does a tax-funded agency such as HOPE have before calling private communities discriminatory when the facts don't support the accusations? Is it possible that HOPE is unaware that associations who are sued must put their insurance carriers on notice and risk possible repercussions as a result? Is it possible that HOPE is unaware that associations who unjustly find themselves on the receiving end of negative publicity might just have their pending sales affected?

Hopefully, HOPE will do right by the two associations it has apparently wrongly accused and any others out there with similar fact patterns. Perhaps, however, there is a silver lining in all of this for everyone else? Every community would be well advised to check their governing documents to ensure that age restrictions that are no longer legal and enforceable are promptly removed or, if amending them out is not a possibility given membership apathy, that a disclaimer is placed in the public records acknowledging that the restriction is no longer enforceable nor does the association refuse housing based on age.

If you find an out-of-date age restriction in your governing documents, it must be removed or disclaimed even if your association has never enforced it. Leaving it intact can be construed as de facto discrimination. Sometimes these restrictions are remnants from developers dating back decades and associations are unaware that they even exist in the documents. As for HOPE, let's all hope they start really researching and educating in addition to denouncing and suing.

Friday, December 9, 2011

Does your board have to enforce your community's governing documents?

How many times have you wondered if your board was going to get around to pursuing the blatant parking violator next door or the nightly nuisance across the street? Most folks living in a common interest ownership community assume that the board must take action to enforce the documents, but is this assumption legally supportable?

The Fourth District Court of Appeal issued a decision this week in the case of Robert Heath v. Bear Island Homeowners Association, Inc.

Heath, a parcel owner, sought an injunction to require his HOA to enforce the community's Declaration of Covenants against other owners who allegedly undertook changes, modifications and improvements to their residences without first obtaining the association's approval.

The trial court held:

The Association, however, had no legal obligation to take legal action to enforce the Declaration. Article XII, entitled “Enforcement of Declaration,” states, in pertinent part:

The enforcement of this Declaration may be by proceeding at law for damages or in equity to compel compliance with its terms or to prevent violation or breach of any of the covenants or terms herein. The Developer, the Association, or any individual may, but shall not be required to, seek enforcement of the Declaration.

Quite simply, because this plain language explicitly makes enforcement of the Declaration a purely discretionary decision on the part of the Association, Heath had no clear legal right to an injunction to compel the Association to enforce the terms of the Declaration.

Does this decision create potential issues as to whether a Board has any fiduciary duty to enforce its covenants when the language is permissive as it is in the Bear Island example above?

It certainly does make sense for boards to make strategic decisions when it comes to enforcement of the covenants. Not all rules and battles are created equal and some may be moot before a legal decision would be obtained. For example, in the case of a nuisance tenant with only 2 months left on his or her lease, the better option might be to advise the owner that the lease will not be approved for renewal as opposed to going to court to seek an injunction against the nuisance when it is likely that the lease will expire and the tenant will be removed before the injunction is granted.

The danger with a decision like Bear Island, however, is the uncertainty as to whether a board can look the other way on some violations it chooses not to fight, while pointing at the covenants and saying, "it only says may, not shall enforce". Would an association be more willing to enforce the documents on behalf of some owners and not others? The ripple effects from this case bear watching closely.

Monday, December 5, 2011

Not all association information is created equal

Recently I came across a few topics for community associations published online and in print which were at worst legally incorrect and at best simply misleading.

It seems that most papers these days have condo and HOA columnists, online blogs abound and a new "expert" pops up every other month. Just how much of the information being blasted out there, however, is completely accurate?

A few weeks ago, an association columnist in a Florida paper answered a question from a reader who wanted to know if the members could cancel a reconstruction contract entered into by the board. The columnist answered firmly and affirmatively that the membership could indeed cancel such contract by a majority vote of the voting interests present at the next regular or special meeting of the association. The columnist even cited the particular statutory provision on which he relied. All of this to the average reader would be enough to undertake the vote to cancel the reconstruction contract. The only problem? The statutory provision cited was a subsection of a paragraph dealing with bulk cable contracts. While the columnist's advice was spot on regarding cancellation of a bulk cable contract, it was not applicable to other types of contracts such as the reconstruction contract referenced by the reader.

Most folks agree that requiring directors to be certified in some fashion to serve on their boards and undertake all of the tasks necessary to properly administer and operate a community on behalf of the residents, is a worthy goal. In fact, my group, the Community Advocacy Network (CAN) has included language in HB 319 to add the current certification requirements for condominium directors to the HOA and Cooperative Acts as well.

The current statutory condominium certification requirement can be fulfilled one of two ways: sign a certification or attend a Division-approved education class. In addition to classes provided by the Division and the Ombudsman's Office, the private sector has stepped up by providing a plethora of free classes in a variety of formats and venues. The problem this time? Some providers of these classes are not informing people that the classes are not mandatory. In fact, a newly elected or appointed condominium director (and soon HOA and Cooperative directors) can fulfill his or her statutory certification by signing a certification attesting that he or she "has read the association's declaration of condominium, articles of incorporation, bylaws and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability and that he or she will faithfully discharge his or her fiduciary responsibility to the association's members."

Whether you believe that signing this certification is meaningful or simply a waste of time, it is the law in its current form and any advice or representation regarding this requirement should cite to the current law, not wishful thinking.

The third item that made me look twice? One of the association educational providers citing in promotional materials that condominium directors must read "the statute" in addition to the association's governing documents and attest to reading same in the signed certification. In fact, when the certification language was first drafted a few years back, having to read the statute was originally in there but that language was removed from the bill before it was passed.

So what does all this mean to you? Well, advice given in blogs, online, on the radio, etc. is not all created equal. Moreover, since it is "general in nature" and comes with the standard disclaimer of such, you will probably have no recourse if you follow it to your detriment. This is why the tried and true attorney-client relationship provides you with perhaps the most comfort when it comes to relying on advice.

Does this mean your attorney will never make a mistake? No it doesn't. We all err from time to time. However, you have a lot better shot at proving you acted reasonably as a director if you do make a mistep by saying you followed your attorney's advice in writing as opposed to saying you read it in the paper or online somewhere!