Sunday, December 29, 2013

Do you know an association manager worthy of the Manager of the Year award?

Today's blog is not written for people who currently have or have had problems with their association managers. Naturally, there are those people and those problems out there and past blogs (and future ones to be sure) have discussed and will discuss what can and should be done when those difficulties occur.

However, today's blog is written for those lucky communities who have an unsung hero in the form of their community association manager. You know the type to whom I am referring-the manager who makes the directors' and members' lives a lot easier not only with their constant preparation and attention to detail but also as a result of his or her personality and passion for what they do.

A great manager can make the difference between a dysfunctional community and a highly functioning community. A great manager can make the difference between having to pass a special assessment for budget shortfalls and not having to do so. A great manager can create a community where the residents are happy, property values are high and life is good.

Showing someone your gratitude usually reaps innumerable benefits to the grantor as well as the grantee. So the question is: do you know of any great community association managers who deserve a little recognition? I know of many who deserve to be recognized and now is your chance. The Manager of the Year is a national awards program sponsored by Association Reserves to honor community association managers who are inspired, inspiring and creative leaders for the communities they serve.

Two lucky managers will win $5,000 each for the best On-Site Manager and the best Portfolio Manager. Managers can nominate themselves or they can be nominated by someone else. Nominations are open until January 15th. Winners will be broadcast on May 14, 2014.

For more information about this national awards program, please visit

Good luck to all the unsung community association manager heroes out there!

Sunday, December 22, 2013

Is Secondhand Smoke Impacting your Community? Take CAN's Up In Smoke Survey.

Picture this:

It is a beautiful Florida day. There is a light breeze blowing, the sun is setting, and it is cool enough to enjoy sitting out on the patio of your condo. You are all set up to sip a cool glass of wine with some friends when your neighbor steps out to enjoy a pack of cigarettes. 

Or how about this:

You are walking to your mailbox to pick up your mail and your path takes you by a neighbor walking her dog and smoking.

Or even this:

You are sitting in your living room watching TV when you smell the cigarette smoke coming through from your neighbor's unit.

While smoke is a natural part of life emanating from candles, cooking and the occasional tobacco product, excessive second-hand smoke is becoming a growing problem for many communities. Over the years we have received many inquiries from condominiums, cooperatives and HOAs struggling with the issue of excessive second-hand smoke impacting their residents and employees. Bearing in mind that it is currently difficult and expensive for associations to successfully intervene when residents complain about a neighbor's excessive smoke invading their units, balconies, the corridors and other common areas, CAN is asking for your input in this short survey.

Has your association confronted the issue of second-hand smoke and how have you dealt with it? Do you believe that an association should have tools to intervene when excessive second-hand smoke becomes an issue or is this an area that associations should avoid?

For the communities that have this issue, it creates a serious impact on their residents' lives.  

While we have heard from many CAN members that this is a complicated issue, how many of you believe that a legislative change making it easier to amend your documents to regulate or prohibit smoking is warranted? 
Please use the following link to take CAN's Secondhand Smoke survey. We will be running this survey until January 10th. We will then compile and report on our findings.

Sunday, December 15, 2013

Directors Do Your Duty!

Recently, a blog reader wrote to tell me that three of the directors on his board refused to cast a vote to approve the association's budget. Apparently these directors did not agree with the increase in assessments created by the new operating budget and, as a result, they decided not to vote at all when it came time to approve the budget. This reader wanted to know if these directors had the right to abstain from casting a vote.

The short answer is NO. Directors have an absolute duty to cast a vote one way or the other on association matters. Directors are elected to undertake the necessary work of the association which often includes casting votes on unpopular matters.

Directors who have a verifiable conflict of interest can abstain from a vote but the occasions when a conflict exists are tied to having a direct or indirect monetary interest in the matter being discussed.  Items on which a director simply does not agree do not create a conflict of interest which would require or permit a director's abstention from a vote. On those occasions not rising to the level of a conflict of interest, a director may request that his or her opinions be memorialized in the minutes but he or she must still cast a vote.

Section 718.111, F.S. states that a director of the association who is present at a meeting of its board at which action on any corporate matter is taken shall be presumed to have consented to the action taken unless he or she votes against such action or abstains from voting. A director of the association who abstains from voting on any action taken on any corporate matter shall be presumed to have taken no position with regard to the action. Directors may also not vote by proxy or by secret ballot at board meeting.

Thus, a director refusing to vote without the benefit of an actual conflict of interest which would permit an abstention is actually voting YES to the matter at hand by remaining silent.

Directors who routinely find themselves unable or unwilling to cast votes on unpopular matters must ask themselves why they agreed to serve on the board in the first place. Directors do your duty: it is ok to be wary about a particular subject matter but it is not acceptable to sit silent and allow your fellow directors to vote while you have no legitimate reason not to participate.

Sunday, December 1, 2013

Has your community ever encountered a non-compete clause?

A client recently contacted me with regard to a personnel matter.  The community had fallen in love with a particular security guard and while the contract with the security company was slated for termination, the board wanted to hire this guard personally to continue on with them.

Unfortunately for this community, the guard had signed a non-compete agreement with his current employer and, as a consequence, would not be able to accept the association's offer of employment for at least two years.

Has this ever happened to your community?

Non-compete agreements became even more common during the Great Recession when signing an agreement restricting future employment opportunities seemed like a small price to pay for a job. These types of restrictive provisions can be found in all types of industries including those which service community associations, particularly management and security services. With the economy on the upswing, more and more employees are starting to challenge the non-compete agreements they previously signed without much concern.

While most employers can insist on a non-compete agreement from its employees, those same employers must have a legitimate business reason to enforce same. Some legitimate reasons include the employee possessing the company's trade secrets or other proprietary information which cannot be accessed through public means. Trying to protect a company's investment in an employee via specialized training as well as protecting the relationship which the company has created with a client base, existing and potential, is a legitimate reason to enforce a non-compete. Trying to prevent competition is not.

Most non-compete agreements restrict an employee's ability to obtain similar employment within a certain geographic area and within a certain period of time after leaving the company's employ.  Lest you fear you will lose your favorite attorney if he or she leaves a particular firm, non-compete agreements have been stricken down by the Florida Bar and other state bar associations as they pertain to attorneys. However, the same is not true for other industries where each agreement will be judged on its own merits. Communities looking to hire personnel should inquire about the existence of any non-compete agreements those candidates may have previously signed. Hiring without having that knowledge can present costly problems for the association including an interruption in services if the employee must be fired and rehired at a future date.

The moral of the story for associations: look before you leap. The moral of the story for employees: understand the long-term consequences a non-compete agreement can present before you sign on the dotted line!

Sunday, November 24, 2013

Court rebukes delinquent landlord who attempts to evict tenants paying rent to condominium association.

An Orlando case which was heard on July 24, 2013, will hopefully send a strong message to delinquent landlords in community associations who attempt to interfere with their tenants tendering rent to the association pursuant to Florida law. 

In the case of L AND V REALTY LLC, Plaintiff, vs. KENNETH BLOUNT, FELIX THEODORE, & MARCOS PERES, a landlord attempted to evict its tenants because they properly tendered their rent payments to the condominium association after the association sent a letter to the tenants indicating that their landlord owed the association $11,042.74.

Pursuant to Section 718.116(11) of the Florida Statutes, the association demanded that future rent payments be paid directly to the association. The tenants complied and began paying rent directly to the association. As a result, the landlord served the tenants with a three-day notice demanding rent for the month of May on or before May 31, 2013 at the Plaintiff's property management company's office. On May 28, 2013, the Defendants paid May's rent directly to the association and Defendants provided the Court with a copy of the receipt at the hearing on Defendant's motion to dismiss.  On June 21, 2013, the Plaintiff, through its property management company, filed this eviction action for non-payment of rent.

The Defendants also paid June's rent directly to the association and they provided the Court with a copy of the receipt at the hearing on Defendant's motion to dismiss. The court ruled that the tenants' payment of the rent directly to the association within the time frame provided by the three-day notice gave them“complete immunity from any claim for rent by the landlord pursuant to Section 718.116(11), Florida Statutes.

The landlord's tactics in this case are disappointing but certainly not surprising. We have heard of many tenants in community associations being told by their delinquent landlords to "just ignore" the association's demand for rent notice. Tenants ignore the association's demand at their own peril since the association can evict them for not complying with that demand while the landlord's threat to do so is nothing more than a bluff. Of course, a landlord could still evict a tenant who is violating the terms of the lease agreement for other reasons but not for failure to pay rent when the rent is being properly tendered to the association pursuant to a demand for rent notice.

The ability to demand rent from tenants in properties owned by landlords who are not in turn paying their assessments applies to Florida condominiums, cooperatives and homeowners' associations. This statutory right has enabled countless associations to recoup thousands of dollars owed and helped many of them regain a healthier financial footing. Tenants in your community need to be educated about their rights and responsibilities when it comes to the association's demand for rent as they often do not receive accurate information from their landlords.

Sunday, November 10, 2013

Do you know what Air Bed & Breakfast is and how it might impact your community?

The concept of house swapping has been around for quite some time. You may be eyeing that scenic villa in Greece and the villa's owners might just want to come down to your place on the beach in South Florida. I've been tempted to look into this for a while but haven't yet done it.

There is a relatively new concept in housing, however, that doesn't require swapping an entire residence and it is gaining traction quickly as a way for people to earn a little extra money by renting out a room or rooms in their home, condominium or cooperative unit. This concept is called Air Bed & Breakfast.
This is not to be confused with another online service, Couchsurfing, in which hosts allow travelers to crash on their couches for free. This service is more often used by college students and only the most intrepid tourists.

If you haven't yet heard of Air Bed & Breakfast, it might be closer to becoming a reality in your community than you know. This San Francisco-based company was created in 2008 as a way to connect people in need of a place to sleep with spare beds in people's homes. Typically, the service grew out of the housing needs usually associated with special events like the Olympics, Super Bowl or mega conferences where hotel rates are exorbitantly high and room availability very low. Through the use of Air Bed and Breakfast, folks can post the availability of a bed or beds in their home on the site and for travelers who are willing to forego the amenities and security that a traditional hotel offers, it might just be a match made in heaven.

A recent search of the site showed several beds listed in the South Florida area with the average night rate of approximately $70.00. So what, if anything, does this mean for your HOA, condominium or cooperative community? Well, it may mean that some of the beds in your community may some day find  their way onto to the airbnb website. The possibility of this happening is likely to increase if your city or a nearby city hosts a very significant event. From an owner's perspective, this might be a nice way to supplement one's income and pay one's bills. From an association's perspective, Air Bed & Breakfast creates a security nightmare as well as enforcement problems. Given the very short-term nature of the occupancy, proving the violation is ongoing can be very problematic.

The concept of a virtual bed and breakfast service only underscores the larger topic of  how involved a community association board should be in terms of monitoring the people who occupy members' homes. Security and nuisance issues are the two reasons that will be used most frequently to support vigilant monitoring. Freedom, privacy and economic benefit will be the reasons used to support a "hands-off" approach to occupancy.

Battles over occupancy can be some of the most vexing and expensive lessons in a shared ownership community. Many, but certainly not all, association documents specify that only an entire unit or home may be rented and not just rooms. If your documents restrict leasing but not an arrangement that is really a quasi hotel night stay, you might want to consider an amendment to clarify exactly the type of use your community wishes to permit and the types it wishes to restrict.

Monday, November 4, 2013

Not every child should grow up to be a lawyer

Just the other day I heard a complaint from a colleague describing yet another incident of an attorney in our industry being inept. After I learned the name of the person in question, it became obvious to me why the comment was made. The person involved is an accomplished sculptor but the choice of law as a career was practically foisted on him by his parents.

During my time as Managing Partner of my law firm, I came across many people who were earning paychecks as lawyers but whose passions lay elsewhere. I found lawyers who were better suited to being journalists, marketers, musicians, artists and actors. When I asked why they had chosen the law as their profession, the answer was usually that it was the "safe" choice and that there had been significant parental pressure to get a job with some long-term prospects for security.

While that may make for a steady income for the individual, it does not always make for the best attorney fit for your community. After all, we all know that we perform better when our hearts are really engaged in something.

I had a different experience growing up. I knew in middle school that the law was the career I wanted to pursue. I had plenty of practice already at that point debating family and friends on everything from where we took vacations to curfews. When I told my parents that I wanted to be a lawyer they seemed amused but otherwise remained uninvolved with my career choice.

The circle has now closed as my son has just taken the LSAT and is looking at law schools. My first question was "who told you to be a lawyer?" I wanted to be sure that a legal career is something he yearns for and not something that he thinks is expected since both his parents are attorneys.

Next time you interview association attorneys (or any kind of attorney for that matter), you might want to ask when they first knew they wanted to be a lawyer. The answer might be illuminating.

Sunday, October 27, 2013

Should community association boards speak to the media?

I am often contacted by members of the media to discuss various association topics. These can range from the serious (secondhand smoke) to the comical (DNA testing of doggie poop).

After my part of the interview is over, I am inevitably asked by the reporter if I know of any community which fits the category we just finished discussing. Typically, I do know of a handful of communities who have either experienced the problem we discussed or contemplated/implemented the solution I suggested. I always tell the reporter I will contact these communities and see if they wish to participate in the story. Sometimes a director or manager will want to weigh in on the story but many times they are reluctant to do so.

This is one way that associations get in the news. The other way is usually when they are being sued for wrongdoing and a reporter wants the board's side of the story. The two big questions are: should association boards comment and if the answer to that question is yes, who should do the actual talking?

Some boards are wisely hesitant to comment on news stories if they believe it may portray their community in a negative light. Certainly the typical reaction to a story about a community embroiled in controversy is not going to be a selling point to potential purchasers. Conversely, a story showing a community that came together to assist a neighbor in distress or battled a problem such as a cell phone tower installation might garner that community some positive attention.

Media reports can impact a community's property values and reputation both positively and negatively; it all depends on the nature of the story. Sometimes even very negative stories require a community's input as no comment may be much worse than a thoughtful, deliberate response. Also, there is value in sharing some hard-won wisdom with others who are going through similar circumstances.

Once you decide that speaking to the media for a particular story is in your best interests, you must decide next who should do the talking on your community's behalf. Most communities do not have trained spokespeople on hand so this choice can be problematic.  Your choices in this regard include a member of the board, the association's manager or principal of the management company or the association's attorney. 

If the story is focused on proposed, pending, existing or completed litigation, it is absolutely vital to speak to your attorney before giving any comment. Speaking to the media may jeopardize a pending or contemplated case as well as violate a confidentiality agreement post litigation. For all other stories, it is best to pick the person who can articulate the association's position in a concise, positive manner.

Just remember, there really is no such thing as "speaking off the record" so if your board does decide to participate in a media story and you are unclear about what is being asked and how you want to answer, ask for your interview to take place, in part or in whole, via email so you can spend some time deliberating on your answers.

Monday, October 14, 2013

Have you ever been the victim of a crime in your community association?

Over the weekend, I finally watched a movie called The Bling Ring. It is based on a true story of a group of fame-obsessed LA teens who robbed the houses of various celebrities.

While it was not shocking that these teens might have been disaffected, lacked parental oversight and behaved badly, what was unbelievable was that one celebrity after another had left a door open to the house, had not turned on their security alarm system and had wads of jewelry and money either under their beds or in unlocked safes. HUH?

In true Hollywood fashion, the bad guys were eventually caught although their actual time served was a little light-handed. Watching the teens in the movie scale walls and fences and open unlocked cars parked in neighborhoods, brought up memories of the one time I was the victim of crime inside my own homeowners' association.

I live in a community which has both a wall and a manned guard gate as well as video cameras at our entrance. Still, we have not been without security incidences over the years but most of those were related to owner error as I am about to relate. Given the difficulty one has in entering a community like mine, it may be that residents get a little looser with their own security measures. Cars may be left unlocked, garage doors stay open during the day or at night and a door or window remains unlocked.

A few years back, a number of cars in our neighborhood, including mine, had items removed from them one night. All of those cars were left unlocked, including mine. I had no one to blame but myself when I realized that all of my CDs were gone. Our board did everything right by getting the word out that the incident had occurred and reminding residents to lock their cars as well as their homes. Of course, one always assumes that these incidences are caused by other people and not the folks living in our own community but the reality is that crime occurs inside your ranks as well.

Have you ever been a victim of crime in your community association? If so, did your own error contribute to your loss as mine did? Were you lulled into a false sense of security that walls, gates, guards and cameras provide at times?

There is a happy ending to my own story. A few days after the incident, I noticed my CD case tucked into a bush in one of our common parks while I was out walking my dog. Apparently, the thieves were not so keen on my musical taste so they threw away the spoils. I had my Chicago and Journey CDs back where they rightfully belonged!

Monday, October 7, 2013

Do you attend community association trade shows?

Trade shows have been around since medieval times when they were known as trade fairs and merchants and craftsmen rolled into town to display their latest goods and offerings.

These days, most industries have trade shows and they have become a big business. Last week I attended the first of more than a half dozen shows that will occur just in the southern part of Florida before the end of this year. It seems as if every year brings more and more shows with exciting venues and innovative agendas.

I enjoy attending the shows as it gives me a chance to catch up with colleagues, see old friends and clients and naturally, check out what the competition is doing. Still, I wonder how many community association directors and members attend these shows and what factors go into their decision to attend.

When your board is debating whether or not to attend a trade show, which of these factors matter most to you?
  • Venue location. Do you like the ritzy locations like resort hotels, casinos, convention centers and the like or would something smaller suit you better?
  • -Parking. Some shows require parking in a garage and paying to boot. Is the convenience of parking a consideration?
  • Do you find trade shows held during the week more convenient than those on the weekend? What about morning and early afternoon hours vs. an early evening event?
  • Educational offerings. Does it matter if classes are offered for board certification and continuing manager education? Some shows have them while others don't.
  • Raffles and giveaways at the booths. Be honest, do the goodies get you there?
  • The company you keep. Do you want to see the principals of the vendor companies you use, the staff members or the particular manager or lawyer you use behind their booth?
Vendors pay a lot of money both in set-up costs and manpower to attend these shows. From a service provider's perspective, how much time do you spend at shows speaking with your target audience and how much time is spent speaking with fellow service providers? Fellow service providers can also provide some wonderful networking so time spent in those conversations is time well spent in my opinion.

From a board member's perspective, how many of you attend association trade shows and have you ever hired a service provider based upon their booth, materials or presence at a show? Lastly, how many trade shows would your board attend in any given year? Do you love them, hate them or have no feelings one way or the other about them?

Sunday, September 29, 2013

And the Academy Award goes to.....your community association?

As a movie buff, I love nothing better than seeing my favorite flicks time and again. As a blogger on community association issues, I can't help but draw some analogies between some of my favorite movies and what I do in real life-helping community associations. 
I started thinking about some of the ways Hollywood has depicted community life over the years. Let's take a look.

The Crucible: this was originally a 1953 play by Arthur Miller based on the Salem Witch Trials. The 1996 movie with Daniel Day Lewis and Winona Ryder does a great job of depicting a community beset with hysteria where the court (aka Grievance Committee) is treated to some testimony that is less than credible but consistent in terms of its targets. Miller's play has been re-staged countless times since its creation and was also made into an opera so obviously the "witch hunt" theme hits many nerves including with some modern day association members.

Rosemary's Baby:  who can forget Roman Polanski's 1968 horror film?  Was there ever a creepier cooperative board? Ever?

The Neighbors:  While Dan Aykroyd and John Belushi are best known for their pairing in the Blues Brothers, this dark comedy based on the book by Thomas Berger (no relation) portrays suburban warfare in its most paranoid incarnation.

Over The Hedge:  this animated film by Dreamworks is one of my favorites. Even though most of us love cute little animals, Allison Janney plays the voice of Gladys Sharp, the president of the Camelot Homeowners Association who is disgusted by the furry intruders into her community. Spoiler alert if you haven't seen the movie already-at the end, Gladys is arrested for using an illegal animal trap known as the Depelter Turbo.

And on the small screen, a new TV show starring Jamie Gertz also bears the name of The Neighbors. In this show, Debbie and Marty Weaver cannot believe their luck in buying into a beautiful, gated townhouse community in New Jersey at a great price until they find out all of their neighbors are aliens. Community members all dress exactly alike and patrol the community in golf carts.

If you have never seen the foregoing movies or haven't seen them in a while, check them out with a community association perspective in mind when you do. Also, ask yourself if Hollywood was going to depict your community on the big screen, what would that movie look like?  

Sunday, September 22, 2013

Condominium Association Could Pay Price for Failing to Comply with Division's Discovery Demands

The Division of Florida Condominiums, Timeshares and Mobile Homes began investigating the Heritage Circle Condominium Association, Inc. as a result of the association's failure to prepare annual financial statements and its failure to fund reserves. Unfortunately, the association continually failed to produce all of the documents requested by the Division throughout the course of its investigation which resulted in the Division filing a petition to compel compliance. 

The Division later amended its initial complaint to seek statutory penalties from the association. The Division's discovery requests were never fully met and finally, the trial court entered a default judgment, without a hearing, against the association. The Division requested and received liquidated damages in the amount of $25,000 and attorney's fees of $4,647.89.

The condominium association appealed and the Fourth District Court of Appeals reversed and remanded the case on September 18, 2013.  Whether or not the sanctions will stand remains to be seen. Still, this case clearly demonstrates how frustrated the trial court must have been with the condominium association as the striking of pleadings is a severe penalty which is used only in extreme circumstances. It is not an unfair question to ask why this association felt that failing to cooperate with the Division's discovery requests was the best strategic move. 

Sometimes the old advice to "stand up and face the music" are the words a wayward association needs to hear before making its errors even more complicated and more costly. There is simply no reason to believe that a regulatory agency is not serious about enforcing its requests and if a fellow board member, manager or lawyer tells you otherwise, get a second opinion!

Sunday, September 15, 2013

Hanging on: directors who fail to turn over association records and property

We've all heard of folks hanging on to items after a personal relationship ends which can create resentment and a host of other troublesome issues. Now imagine what can ensue when an outgoing community association director refuses to turn over association records and property?

Over the years, I have had new boards lament about the fact that a director who was not re-elected to the board refused to turn over vital association information which had been in his or her possession. These items can include the association checkbook, keys to the association office, original plans and specifications for the building and a plethora of other information which the new board needs to successfully transition the community's operations. Whether this refusal to turn over association property is borne out of spite, pettiness or neglect is not important; the outcome of paralyzing the association remains the same.

While there is language in the Florida Condominium Act which requires recalled directors to turn over any and all records and property of the association within five (5) full business days of the effective date of the recall, there is no similar language which would require an outgoing board member to do so. My group, the Community Advocacy Network or CAN, will be seeking to close this loophole in the 2014 Legislative Session by requiring any outgoing directors to similarly turn over all association records and property in their possession.

Has your community ever been impacted by a previous director's refusal to turn over books, records and other association property? What did you do about it? Some communities threaten and some even sue but in the interim, association operations are impacted and often critically. The fact that outgoing directors can play games with records that are not theirs falls under the category of "There oughta be a law" and CAN intends to ensure that there is one soon.

Friday, August 30, 2013

Should associations articulate the reason for denying a proposed renter or purchaser?

Many associations have the authority under their governing documents to scrutinize proposed leasing and sales transactions and to issue an approval or denial in connection with same. 

Boards are often advised that it is safer to simply say that an application was "denied" without going into the details surrounding that denial. If the property owner wishes to know the reason for the denial and pursues it legally then yes, the board will have to capitulate and provide that reason.

One school of prevailing thought remains that providing reasons for a denial could fuel unnecessary legal fights. Naturally, the other side of that debate demands transparency and the reasons that the board is exercising its authority to deny when screening renters and purchasers.

Broward County has recently proposed a new ordinance which would require all Broward County condominium, cooperative and homeowners' associations to give a specific reason in writing for the denial of an application for purchase or rent. All Broward County associations must also give written notice to the Board of County Commissioners of the status of all pending applications to rent or purchase a dwelling!

There is a public hearing scheduled for Tuesday, September 10, 2013 which will start at 10:00 am in the Commission Chambers on the 4th Floor of the Governmental Center located at 115 S. Andrews Ave, Ft. Lauderdale, FL.  Since this proposed ordinance references the Human Rights Act, one can safely surmise that the Broward County Commissioners suspect most reasons for denial are discriminatory. If that is not their suspicion, they are surely likely to increase discrimination filings nevertheless as a result of this ordinance being passed. If you are a Broward County board member or if you manage a Broward County community association,  it is important that you attend this meeting and let the Commissioners know how impractical it may be for your board to advise them about the status of every pending sales and leasing application you receive. It would also be nice to ask the Commissioners what public purpose is being served by the implementation of this ordinance. 

If you live in another county in Florida, this proposed ordinance should still be of concern to you as often counties look to each other and borrow liberally from each other when creating ordinances.

For those of you who may be thinking that there is a preemption issue for this ordinance with state law, there is nothing in the shared ownership statutes which protects a board's right to silence on the reason for denying an application for sale or purchase. There may be some association documents which specify that articulating a reason for denial is not necessary but, in my opinion, the local ordinance would likely trump that documentary provision. 

This proposed ordinance may have wide-ranging impact on the manner in which association approvals must be handled.

Monday, August 26, 2013

Could academic principles transform private residential communities?

My husband and I just returned from dropping off our daughter for her freshman year of
college at a very beautiful school with a rigorous undergraduate business program. While we were bracing ourselves for the flood of emotions associated with dropping off a child at a campus a great distance from our  home, we also managed to enjoy the entire orientation program presented by the school.

As I looked around the packed auditorium where the Dean of the Business School delivered a very heartfelt speech, I thought to myself: "how many of these eager college students see themselves one day sitting on a community association board?" "How many will find themselves living in a condominium, cooperative or homeowners' association in the future?"

Naturally, the answer is not one of them was thinking anything at all pertaining to the community association lifestyle.

The reality is, however, that a great many of them will one day live in a shared ownership community because that is what is being built throughout the United States. Since many of these students are bright and have already demonstrated leadership capabilities by virtue of being admitted to a school like the one in which we were sitting, the hope would be that many of them would give back to the communities they will call home some day when they are raising their own families and, afterwards, when they find themselves as Empty Nesters. But, would they? Why do the lessons of our childhood and young adulthood seem to leave us when we need them most,  later in life and in instances where they could be most helpful?

The Dean told the students and their parents that the faculty and administration demanded excellence from them and insisted on integrity. The goal in the next four years was to create knowledge and transform each of them into their highest selves. The students wouldn't have to go it alone. Each would have a team of advisors assisting them every step of the way.

How many communities could be transformed into places we love to call home if some of these university principles were applied to private residential communities? Why is there not the equivalent of a "team of advisors" helping people when they first move into a community? Many times, people are lucky if they get a wave and a nod from new neighbors. Wouldn't it be wonderful if newcomers to the community were treated to an encouraging orientation program designed to help them succeed in the community, get involved and perhaps run for the board themselves?

Sure, this doesn't always help; not every student will graduate from the university my daughter is attending but by setting the goals high and providing the support needed to achieve them, the administration has greatly increased their odds. What do we as community leaders do to ensure that newcomers to the community truly understand the rules, feel as though the community welcomes them and have the support needed to thrive as an association member? What is done to inspire talented and well-meaning  folks to serve on these boards? Maybe each of our board members and association members need to remember what used to inspire them to be their best selves and apply it where it is needed most these days: their own community.

Sunday, August 18, 2013

Bank awarded fees after condominium association pushes too far!

On August 14, 2013, Florida's Third District Court of Appeal ruled that a bank which had taken title to two condominium units was entitled to its attorney's fees from a condominium association just as any other condominium owner would be pursuant to Section 718.303(1), F.S.

The Ocean Bank v. Caribbean Towers Condominium Association, Inc. case began when Ocean Bank foreclosed on two delinquent units in the Caribbean Towers condominium community in North Bay Village, FL. The bank properly named the association as a defendant in both actions.  Ultimately, the bank took title to both properties at its own foreclosure sales. The bank then attempted to sell the properties and ran into a stumbling block when the association's estoppel certificates demanded payoff amounts almost 9x and more than 13x higher than the statutory maximum known, in the vernacular, as "Safe Harbor". 

Section 718.116(1)(b) of the Florida Condominium Act was amended to cap an institutional first lender's liability for past due assessments in a condominium association at the lesser of 12 months' past due assessments or 1% of the original mortgage debt. You might ask why this occurred. Well, lenders will tell you the statutory cap was needed to encourage them to continue making loans in condominium communities. Association members will tell you that the cap is there because bankers have one of the strongest lobbies in our state and that is the case in most other states as well.  The genesis of the Safe Harbor cap is not as important at this point as the fact that it is THE LAW as interpreted in this and other cases.

Due to the wrangling with the association over the non-conforming estoppel certificates, the bank was forced to delay its closings on the units and filed post-judgment motions against the association requesting that the Safe Harbor statutory cap be applied and seeking an award of attorney's fees. It is important to note that both trial judges ruled for the bank on the merits of their case with one judge referring to the association's position as "frivolous".

The 3rd DCA ruled that the bank was entitled to an award of its attorney's fees since it owned both units and it was the prevailing party in its dispute with the condominium association.

There are not many associations out there who are feeling overly generous with banks right now. Most associations would appreciate having the statutory cap removed entirely so banks who take title to these delinquent properties would be forced to pay all amounts owed, not just the lesser of 12 months' past due or 1% of the original mortgage debt. Since that legislative change is not likely to happen any time soon, if ever, the most prudent course of action is for an association to follow the law when it comes to demanding amounts owed from lenders who meet the statutory threshold. Yes, there are some lawyers and collection companies that will tell you that there is enough wiggle room in the statute to demand more than just past due assessments and they will also tell you that their arguments have prevailed before. However, that doesn't do much for the Caribbean Towers Condominium Association that just got slapped hard and is paying the price. Rest assured, banks' counsel never come cheap and these association members must now foot the bill.

The Ocean Bank appellate decision is binding on all trial courts throughout Florida unless and until a conflicting appellate decision is issued.

Stay tuned and if you are thinking about pushing the boundary on Safe Harbor, get an indemnification from the person or firm doing the pushing that is worth more than the paper it is written on or, better yet, operate within the safe boundaries of the Safe Harbor law. 

Monday, August 12, 2013

Community associations and property insurance: many questions, many concerns.

Last Thursday, I was fortunate to participate on a panel at State Senator Eleanor Sobel's request to discuss property insurance issues at the Hallandale Beach City Hall.

Joining me on the panel were:
  • Robin Smith Westcott, Florida's Insurance Consumer Advocate
  • Alexander Dopazo, President of the Latin American Association of Insurance Agents
  • Carlos Lacasa, former chairman of the Board of Governors of Citizens Property Insurance
  • Bill Newton, Executive Director of the Florida Consumer Action Network
  • Jay Neal, President and CEO of the Florida Association of Insurance Reform (FAIR)
Naturally, there was a lot of discussion about rising rates, shrinking coverage (particularly regarding sinkholes) and the fiduciary duties volunteer board members have when selecting insurance coverage and pursuing claims for damages. Not surprisingly, most of the people in attendance and many of the panelists found it difficult to easily understand the terms and provisions of their insurance policies. The suggestions provided were quite good including the need to always shop around for the best agent and the best coverage which seems to be such basic advice but is not all that common for some boards who have become complacent over the years with both their agents and their coverage.

So what did I have to say about property insurance and Florida associations?

One of the biggest problems for shared ownership communities is the fact that the policies they purchase to protect the common areas falls within the commercial-residential category. As a result, association boards have fewer consumer protections when it comes to understanding the terms of those policies. Unlike a purely residential policy, a commercial-residential policy is not required to have the same bold disclosures regarding pricing and terms. In addition, an association's common property (the roof, the clubhouse, etc.) is not eligible for the mitigation credits that have lowered premiums for countless residential policyholders.

Property insurance concerns for a board of directors include the following:
  • How much coverage do we need?
  • Can we afford it?
  • Do we really understand what our out-of-pocket costs will be if our community does sustain a loss?
  • What can we do if our claim is denied or underpaid?
Property insurance concerns for the association members include the following:
  • Has our board purchased sufficient insurance coverage for the items for which they are responsible? Incredibly, one Hallandale community was unaware that the condominium president had failed to renew the building's property insurance policy and the building was subsequently devastated by a fire.
  • Has our board comparison shopped for our agent, our insurance company and our coverage?
  • Does our board understand how to properly file and diligently pursue a claim should we suffer a loss?
  • Assuming our board is not comprised of insurance experts, have they reached out to the proper professionals to guide them with the foregoing decisions?
  • How much could I be forced to pay via special assessment for our deductible, uninsured losses, etc.?
Association directors and managers continue to advise that insurance premiums are the single largest line item on their budgets each year. Since that doesn't seem likely to change any time soon, doesn't it make sense for all association members to become much more engaged with their public policy makers regarding insurance availability and affordability?

Sunday, August 4, 2013

Where does your condominium, cooperative or HOA board hold its meetings?

All the shared ownership statutes provide that association members have the right to attend meetings of the board, certain committee meetings and, naturally, the annual membership meeting. However, the statutes don’t specify a particular place where those meetings must be held.
The Florida Condominium Act states that the annual meeting must take place within 45 miles of the condominium property but other than that, the statutes don’t provide much guidance about wise or convenient choices for meeting venues.  Sometimes, an association’s governing documents will specify where meetings must be held. However, if the documents do not, boards would be well advised to give some due consideration to the location selected. After all, the goal should be to encourage, not discourage, attendance and participation at your meetings.
Here are some of the locations I’ve seen used over the years for association meetings:
  • The community’s clubhouse: this one is a logical choice. However, please be sure the lights and air conditioning work. Believe it or not, I once attended a meeting in a clubhouse with no electricity.
  • Director’s home or unit: this one is more problematic as the size of the residence could pose a problem depending on how large the potential turnout. Some people would also not feel comfortable attending a meeting in a director’s home if they happen to be feuding with that particular director.
  • Management company: this location is usually selected when the board fears a meeting might get out of hand. Boards contemplating using this venue should consider the costs, if any, involved to do so and the inconvenience factor depending on the office location.
  • Attorney’s office: See above.
  • House of worship: this choice can be uncomfortable for those association members who are of a different faith.
  • Library:  usually a good choice so long as it is close to the community.
  • Denny’s:  yes, I once attended a board meeting at a Denny’s. It was neither convenient nor tasty.
  • Pool deck: this could be a delightful choice during our gorgeous winter months in Florida but being outside in our steamy summer months could very well mean fewer folks showing up. The reverse is true for our northern neighbors selecting meeting venues.
  • Under a tree: yes, in one HOA, the board selected a large oak tree in one of the community’s parks as the place where meetings should be held. While it had a certain amount of charm, there were weather, seating and bug issues.
  • Rooftop:  one of our cooperative clients routinely held meetings on their roof which was beautifully finished in a garden-like setting. However, a couple in the building was afraid of the height and complained relentlessly about the meeting location until it was changed.
So where does your board hold its meetings? Is the locale selected for your convenience or the members?  Is any thought given to the room temperature, time of the meeting, available bathroom facilities and other factors that might influence whether or not people look forward to attending?
Meetings should be an opportunity for your board to shine. Why not design them to showcase your hard work by encouraging maximum attendance and participation with a little thoughtful planning in advance?

Monday, July 29, 2013

Think before you hit send:Directors, Managers and Emails.

Not a day goes by that I do not receive an email communication from a director or a manager which requires a response and which has multiple addressees attached. Who all these people are is usually anybody's guess.

In the business world, we often preach the benefits of "closed end" communications-you send email only to those who need to be included on that particular topic. Knowing to whom you are communicating helps avoid a lot of problems down the road. The same holds true for association communications and yet far too many directors and even some managers will include people on an email query whom they would not want included in a response.

Most association directors and managers do the lion's share of their work via email. That is just a fact of life these days and certainly is a topic for another blog as to whether or not these electronic communications are unfairly squeezing out the communication that needs to take place in front of the membership.

Directors and managers need to be aware of the following when sending and receiving email communications:
  • Emails sent from or received by an email address set up for association-related communications become part of the official records and subject to inspection by the membership unless the content is otherwise privileged.
  • When adding multiple people into an email communication, there should be an identification of those people and the reason they are included on the email. For example, if you are asking your attorney for an opinion on a parking matter, you may want to advise your attorney that you've included Bob and Mary, your fellow board members, Joe the manager and Mrs. Smith who has requested the accommodation to move to another spot.
  • Remember if you include a non-board member like Mrs. Smith on your email communication, you have jeopardized your attorney-client privilege.
  • Auto complete can be a very dangerous thing, particularly if you are sending email communications on sensitive topics. You may think you have sent your email to Joe Warren when in fact you have sent it to John Walsh. Again, auto complete can result in the destruction of attorney-client privilege as well as just being a source of embarrassment should a communication wind up in the wrong inbox.
  • Ask yourself why you are adding ten people on an email communication. Will doing so help achieve your board's objective or is it being done to either grandstand or as a "cover your tracks" tactic?
  • Know that most people who receive an email with many listed recipients will automatically hit "Reply All" to that message. If having the reply go to everyone was not your intention, then you need to either state in the email to whom the response should be sent or resist the urge to send open-ended email communications in the first place.
  • Naturally, blind copying people on your email communications usually results in hurt feelings or worse.
So what do I do now when I receive emails with recipients listed with whom I am not familiar? I ask via return email to all to identify themselves prior to sending a substantive reply.

Sunday, July 21, 2013

What is keeping people from serving on their community association boards?

I just returned from a weekend in Gainesville where I met a pleasant, intelligent woman who was lamenting the uninformed state of her current board of directors. Lucy described a litany of abuses, mostly stemming from her board's unwillingness to read the governing documents and enforce them uniformly. When I asked her why she and her neighbors did not consider electing a new board or running for the board themselves, I got the answer I always get:

"No one wants to run for the board!"

That answer is hardly surprising but what is really behind the sentiment? What is keeping far too many people from serving on their community association boards?
  • Time Constraints People often cite their jobs, families and outside interests as reasons for not wanting to fill a director seat in their community. Board service does take time and the commitment varies depending upon the community type and location. Even many retired people who traditionally made up the majority demographic for volunteer directors are no longer as willing to commit precious spare time to the endeavor of community service. Sometimes all it takes is holding the regular board meetings on the same night as one's favorite TV series to make board service an impossibility.
  • Fear: Let's be honest; the press associated with being a condominium or HOA director has not been all pretty. Some would-be directors may fear being seen as the proverbial "condo commando" or may fear that covenant enforcement and delinquent assessment collection will prove confrontational. Some potential candidates for board service also may fear the legal liability associated with the role even with the safeguards of Directors' & Officers coverage in place.
  • Philosophy:  Some people who are willing to live in a shared ownership community still have a profound distrust and distaste for board service. For these folks, they are just as happy to allow someone else to handle the distasteful job of being the "enforcer".
  • Ineligibility:  Most of us agree that it is a good idea to set some ground rules about who can serve in a fiduciary position as a community association director. These parameters in Florida have evolved over the years to exclude convicted felons whose civil rights have not been restored, delinquent owners and co-owners. Although the pool of eligible candidates has been narrowed over the years, it is still not narrow enough for some people who would like to see seasonal residents added to the list of folks who cannot serve on the board.
  • Hostile Environment:  Most people do not enjoy being uncomfortable or upset and they tend to avoid situations where those feelings might occur. Dysfunctional communities who are most in need of a change in leadership are the ones least likely to secure the best candidates for directors since the messy politics has poisoned the pool. It takes a tenacious soul ready to jump into shark-infested waters to make a real change.
The foregoing are some of the most common reasons why people avoid board service like the plague. Even if your community is generally a peaceful one, the thought on most directors' and candidates' minds is that the job is a thankless one and it would be better if someone else had time to do it!

Sunday, July 14, 2013

What will Trayvon Martin's legacy be for community associations?

The widely watched criminal trial of George Zimmerman was concluded this past weekend.   The civil action brought by the family of Trayvon Martin against the homeowners' association where their son died has also been resolved, allegedly for a 7-figure sum.

What will the long-term impact be on volunteerism in shared ownership communities throughout the country?

The most obvious result should be a higher level of scrutiny of the purposes for various volunteer activities and the individuals recruited to perform same. Previously, boards worried most about their volunteers being injured while performing a service for the community, not about their volunteers harming others. In my own HOA, we have had a number of volunteer committees over the years including a Garden Committee and a Social Committee. The purpose of the Garden Committee was to beautify the community (and save money) by having volunteers do seasonal flower plantings and regular garbage pickup in our common areas. The biggest concern at the time the committee was created was that a volunteer might get heat stroke. Our Social Committee was tasked with creating a variety of community events throughout the year as well as preparing and mailing out the association's newsletter. This committee also did not seem to raise any red flags in terms of potential liability although I have since heard of other communities where social activities were designed to exclude certain residents, thereby exposing the association to a potential lawsuit.

Why do many communities use and/or encourage volunteer activity? With association finances as tight as they have been over the last few years, volunteerism is a way to continue providing essential community services on a diminished budget. However, the Trayvon Martin case proves that not every volunteer activity is safe. Many communities will now reach the conclusion that security is one area where volunteers are not a wise choice.

However, if a community is intent on looking to enhance its current security measures with a Neighborhood Watch program, it is essential that certain preliminary steps be taken:
  • The association's insurance agent should be contacted to ensure that the association is protected for the actions of volunteers;
  • The local police department should be enlisted to teach the Neighborhood Watch program what can and cannot be done legally. Typically, this includes a strict adherence to an "Observe and Report" protocol;
  • The volunteers for the Neighborhood Watch should be screened to ensure that they have not had problems in the past with violence;
  • Written guidelines should be created specifically outlining the scope of the Neighborhood Watch's authority and the role of each volunteer on the Watch;
  • The volunteers should sign releases protecting the association  in the event they are injured or killed while undertaking their Neighborhood Watch duties; and
  • The association should regularly check on the Neighborhood Watch's activities to ensure that the program is safe and that all volunteers are complying with the protocol.
It is not advisable for an association to know about a volunteer activity but to take no responsibility for same by saying they are not endorsing it. If a dangerous activity, volunteer or otherwise, is taking place on property over which the association has authority or control, the board of directors must get involved to either regulate or stop that activity.

Hopefully, Trayvon Martin's legacy in community associations will not be an end to all volunteerism but a renewed focus on the activities neighbors can undertake together which result in a healthy, harmonious community.

Monday, July 8, 2013

Do you know the Top 10 Costliest U.S. Natural Disasters from 1980-2010?

Before Superstorm Sandy, the top 10 costliest U.S. natural disasters between 1980 and 2010 caused more than $501.1 billion in damage and up to 22,240 deaths, according to the National Weather Service and the Insurance Information Institute. These events impacted both coasts and most parts in between. 

There have been many ongoing pleas for years now to convert the federal flood insurance program into a national catastrophic insurance program which would cover all natural disasters including wildfires, tornadoes, earthquakes, hurricanes, floods and ice storms. Of course, the countervailing argument points out the paucity of coverage under the national flood program as well as the fact that this federal program is essentially bankrupt from year to year.

·         Hurricane Katrina, 2005
Biggest impact:  Alabama, Florida, Louisiana, Mississippi
Damage:  $145 billion
Deaths:  1,833

·         Drought and Heat Wave, 1988
Biggest impact:  Central and Eastern U.S.
Damage:  $76.4 billion
Deaths:  5,000 to 10,000

·         Northridge Earthquake, 1994
Biggest impact:  California
Damage:  $67 billion
Deaths:  60

·         Drought and Heat Wave, 1980
Biggest impact:  Central and Eastern U.S.
Damage:  $54.8 billion
Deaths:  10,000

·         Hurricane Andrew, 1992
Biggest impact:  Florida, Louisiana
Damage:  43.5 billion
Deaths:  61

·         Midwestern Floods, 1993
Biggest impact:  Central U.S.
Damage:  $32.8 billion
Deaths:  48

·         Hurricane Ike, 2008
Biggest impact:  Louisiana, Texas
Damage:  $28.4 billion
Deaths:  112

·         Hurricane Wilma, 2005
Biggest impact:  Florida
Damage:  $18.6 billion
Deaths:  35

·         Hurricane Charley, 2006
Biggest impact:  Florida, North Carolina, South Carolina
Damage:  $17.9 billion
Deaths:  35

·         Hurricane Ivan, 2004
Biggest impact:  Alabama, Florida, Louisiana, Texas
Damage:  $16.7 billion

Deaths:  57

Given the losses we've already suffered over the last few decades and the likelihood that these will continue or even escalate, perhaps it is time to roll up our sleeves and finally make a national catastrophe policy a reality?