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I recently answered a question on avvo.com from a unit owner being harassed by their condo association (COA) because they were wanting maintenance and repairs done which were the responsibility of the COA. I thought I should share my answer here. This will work for HOAs too except the part about noticing the COA of your intention to arbitrate. Currently the Dept. of Business and Professional Regulation (DBPR) does not have jurisdiction over HOAs. Hopefully that will change July 1, 2015 if we can get a bill passed.
One other point to note, arbitration is expensive. It’s not as expensive as litigation, but it still takes money if you want to be represented by a lawyer. I don’t recommend arbitration without a lawyer and you will see why in my answer below, which is:
Unfortunately your situation is not unusual in Florida. The associations have too much power to abuse and harass the owners.
First, document everything. Start gathering evidence. You have a statutory right to inspect and/or copy the records of the association by submitting a certified letter, return receipt with your request stating you are exercising your rights under FS 718.111(12). The association cannot ask you why you want to inspect the records and have ten (10) days to provide you access. Use a smartphone or some other device to scan the documents so you can avoid being charged for copies.
You can also submit a certified written inquiry and ask the association questions. This right is provided for under FS 718.112(2)(a)(2) and is unique to condo associations. HOAs do not have the same benefit. The association has thirty (30) days to respond. They have sixty (60) days if they send the request to the association attorney, but they have to provide notice of the request being turned over to the attorney within thirty (30) days.
Next, you should send a certified letter to the association outlining your dispute, the resolution you would like and your intention to submit a petition for the dispute to arbitration before DBPR pursuant to FS 718.1255 if the dispute is not resolved.
Finally, you can file a complaint with the Dept. of Business & Professional Regulation (DBPR) against the license of the CAM and the CAM’s firm, but you must be able to include proof of your allegations or nothing will be accomplished. The link is below.
While you can do all this without a lawyer, I don’t recommend it, especially for the arbitration, which has specific procedures for bringing an action. If you decide to send the letters, you may want a lawyer to review the facts of the case and the letters first so you can make sure you are requesting things which will support your case. If the request is overly broad you can end up getting nothing useful or nothing at all.
All too often I am asked for advice on dealing with associations filing a lien or foreclosing on a home and the first statement the homeowner makes is “I never received a notice.” Unfortunately, rarely will that work as a defense to save your home from being sold at a foreclosure auction by your association.
You have to give your association your address where you receive your mail! It’s foolish to think if you don’t update your address to get notices and payment coupons a judge not order a sale of your home. You have a duty to notify the association of your most current address. You also have a duty to ask for the amount due if you don’t receive a notice or payment coupon. The courts have ruled against homeowners consistently on these issues because if you live in a community that has a sign with the communities name on it at the entrance, you have notice your community is governed by an association and you pay assessments to that association.
Avoiding the mail or a summons does not work either. All the association has to do is prove they mailed the notice to the correct address. If you avoid a summons the courts allow the associations to serve you by publishing a notice in some obscure small newspaper no one reads. Its usually too late by the time you find out you have been served by publication because the court can then enter a default judgment against you. Plus this just adds to the attorney’s fees you are required by state law to reimburse the association (that’s if you can come up with the money to pay off the demand or judgment and save your home).
The bottom line is don’t be foolish. If you can’t afford to pay the association, call them and try to make payment arrangements. The association can foreclose on your home quickly and faster than a bank because the association is the original creditor and not a third party who took it by assignment.
We are proud to announce that our Brevard County office is now open in Viera. Conveniently located near the intersection of Murrell Road and Viera Boulevard. We look forward to working with you, Space Coast!
The Law Offices of Stage & Associates, P.A. is proud to announce the future opening of our satellite office in Brevard County, Florida in February of 2015.
Our firm has had the pleasure of representing clients and associations alike through-out the state of Florida. While centrally located in Orlando, Orange County, Florida, the Law Offices of Stage & Associates, P.A. has equally worked across the state in all of Central Florida, including Pasco County, Marion County, Volusia County, Polk County, Lake County, Hillsborough County, and many more. With the expansion of our firm to the Space Coast, we are looking forward to representing homeowners and associations alike in the cities that span along Florida’s east coast.
Tentatively opening on February 15th, 2015, our new location will be centrally located in Viera, Florida to expand our services conveniently to the residents of Viera, Suntree, Rockledge, and Melbourne, as well as all residents ranging from Titusville to Palm Bay and in-between. Our attorneys will be able to meet with clients at this satellite office on an as-needed basis and will be staffed full-time with a paralegal and notary for our client’s needs. Our new location is also conveniently located within miles of the Moore Justice Center as an added benefit.
We look forward to working within the various communities that make up our Space Coast. Please check back soon for all further information.
Pre-Suit Mediation or Not?
Disputes between an association and a parcel owner regarding use of or changes to the parcel or the common areas and other covenant enforcement disputes, disputes regarding amendments to the association documents, disputes regarding meetings of the board and committees appointed by the board, membership meetings not including election meetings, and access to the official records of the association shall be the subject of a demand for presuit mediation served by an aggrieved party before the dispute is filed in court.
A dispute over a financial obligation or enforcement of a settlement agreement are not subject to pre-suit mediation. Also, any dispute in which a party seeks an emergency injunction is not subject to pre-suit mediation. It is important to note that what you may think is an emergency is usually not one in the eyes of the court.
I don’t recommend going to pre-suit mediation without a lawyer. The HOAs usually have veteran lawyers who are very good at bulldozing over unrepresented parties.
Here’s a crash course on the Marketable Record Title Act (MRTA) and revitalization process governed by Fla. Stat. 720.403 – 720.407:
1. It is possible for the Declarations to be valid against some lots, but not all. The Declarations can be preserved by being specifically referenced in a deed by the Official Record Book and Page Number or by reference to a plat that has the deed restrictions recorded on the plat. An analysis of each lot is required to determine if the deed restrictions have been extinguished by MRTA against that lot because the last reference is more than 30 years old.
2. Revitalization can be used to breathe new life into the Declarations if they have ceased to govern one or more lots.
3. The Declarations have no force and effect against those lots where the deed restrictions have expired and there is no duty to obey the restrictions or pay assessments. If the Declarations are revitalized they are not retroactive — meaning the HOA cannot go back and collect assessments for the period of time between expiration and revitalization.
4. It takes at least a majority of the homeowners to approve revitalization. It could be more if the Declarations require more than a simple majority to approve amendments to the Declarations.
5. Revitalization is a very strict process which requires the HOA to appoint an organizing committee and to have a court reporter present at a meeting to vote on revitalization. While written consents can be used to gather the votes, if the bylaws and articles of incorporation do not provide for written consent the HOA is required to hold a meeting so homeowners can vote in person or by proxy (if proxies are allowed).
6. If revitalization is approved by the homeowners the HOA has to apply to the Dept. of Economic Opportunity (DEO) for revitalization and, if granted by DEO, re-record the Declarations, index them against each lot and deliver a copy of the revitalized Declarations to each homeowner. The revitalized Declarations cannot be more restrictive than the original Declarations, although there are a few exceptions in the statute.
To answer your question, in the interim the HOA still has bylaws and articles of incorporation which must be honored, including having elections and annual meetings.
The revitalization statute was recorded in 2004. My opinion is this statute presents a constitutional issue on property rights and contract impairment for anyone who purchased their property before the statute was enacted. Statutes cannot be applied retroactively to change existing contracts and the Declarations, bylaws and articles are contracts between the HOA and the homeowner. This issue has not, to my knowledge, been litigated.
If you feel your HOA is not following the procedures for revitalization properly you should consult with a HOA lawyer for an opinion. If revitalization is granted by DEO and you feel the HOA did not follow the procedures in the statute and any requirements in the Declarations, bylaws and articles (which is required by the revitalization statute), you have a very short period of time to petition DEO for an administrative hearing to challenge the revitalization.
In the past few weeks I have been contacted by community associations regarding issues they have with their community association managers (“CAM”) making decisions on behalf of the association without the board of directors being involved. This seems to be an alarming new trend as certain CAM firms have started their own maintenance companies and terminate contracts with vendors to give their own companies the contract for services – all without the board’s knowledge or approval. In one instance a CAM actually refused to allow a board member to vote and provided a legal opinion the board member was ineligible, which is clearly the unlicensed practice of law. In another instance, which I have seen before, a CAM took it upon himself to take action against an owner despite the board voting to table the issue until they had a chance to talk to the association’s lawyer.
A CAM does not have the authority to make board decisions. The CAM works for the Board of Directors, not in place of it. CAM contracts have indemnification clauses, which means the association is liable for the CAMs actions and must pay for a legal defense should someone try to sue the CAM. Owners cannot sue the CAM in most circumstances because the owners are not in “privity of contract” to sue the CAM, as established in the case of Greenacre Properties. v. Rao, 933 So. 2d 19(Fla. Dist. Ct. App. 2d Dist.2006), meaning the owners are not a party to the CAM contract. This shield against liability means there are not many consequences for the CAM acting outside their scope of authority.
In my opinion, CAM firms being allowed to set up their own maintenance companies to provide services to the associations is not a good idea. There is an inherent conflict of interest. The CAM usually controls the association’s bank account. The CAM will then make sure their maintenance company is paid, even if the work is not satisfactory. I have come across instances where the work was not satisfactory, but the board was not aware of the issue because the CAM did not inform the board. Why would they complain about their own work?
When the associations hire a CAM it is now important to inquire if the CAM firm has its own maintenance company and review the contract thoroughly to see how much control the board will relinquish to the CAM in hiring vendors or other actions which create liability for the association. Many CAM contracts also provide the CAM with a “bonus” of 10% of the value of the contract for procuring a contract on behalf of the board. I think it’s more of kickback then a bonus, but this is a common practice in Florida.
Selecting a CAM is an important task for associations. It is up to the board of directors to perform their due diligence and make sure the contract is clear regarding decision-making activities. The actions of an overzealous CAM could be costly and lead to litigation against the association.
I know it’s been a long time since I wrote a blog, but I have to say it’s not due to laziness, but rather success. I have come up with a creative way to deal with HOAs and COAs (condo associations) pre-suit and business has been brisk. I did answer an interesting question on www.avvo.com just now and I feel I need to share this one. Here it is:
My HOA has recently enacted a “fine committee” after the recent change in law (720.305)2). I have tried in vain to find any details of what this committee does, its scope of work, a list of violations and fines and who the members are. There is nothing in meeting minutes and nothing has been added to the documents of the association that I can find. Does the HOA have the obligation to notify all homeowners and post the detailed information and process of each committee it forms? Or can it operate in secret on a need to know basis? They have done something similar with a very brief bullet in one newsletter that refers to a “stated late fee and collections Board policy” none of which I can find anywhere. Neither issue is covered in the rules and regs. Thank you for your time.
Your question set off numerous red flags for me when I read it. The whole purpose behind many of the revisions to Chapter 720 of the Florida Statutes, the Homeowners Association Act, was to create transparency. When governments operate in secret there is a chance for corruption and dictatorships to form. The same goes for HOAs, which despite court rulings, rule like quasi-governments.
First, your HOA cannot impose fines against the owners unless the authority to do so is included in the governing documents (Declarations, Bylaws and Articles of Incorporation). An older version of the statute provided rules for fining “if the governing documents so provide.” The statute was revised to remove the language allowing fines to become liens and foreclosures if unpaid. Later it was revised to add that language back in if unpaid fines were more than $1000, but it also did not include “if the governing documents so provide.” This did two things. The HOAs began claiming they had a right to fine by statute and instead of fines being $100, we now see fines of $1000 and more. The HOAs do not have a right to fine by statute. The statute in existence at the time the HOA was formed governs unless there is language in the HOA documents which say it is governed by Chapter 720 “as amended for time to time” or something similar.
All committees are required to keep minutes and if the committee has decision-making authority, then the meetings must be open to members and properly noticed. The exception is fining committee hearings, which are not meetings, in which an owner is requested to appear and the committee will consider a fine.
Board meetings and committee meetings which will consider and adopt policies must be open and properly noticed. Any meeting which will adopt a policy or rules and regulations affecting parcel use must be noticed by sending the owners individual notices to their address of record 14 days in advance of the meeting. Policies and rules cannot be adopted without an open board meeting.
If the Board of Directors is meeting in secret to adopt policies and rules, or adopting these by corresponding with email, they are violating state law. The problem is there is no agency to regulate the HOAs and their violations are a civil matter, not a criminal matter. Your only recourse is to ask for pre-suit mediation and then sue them if they don’t settle, or start talking to your neighbors to get involved — they need to wake up and pay attention to what is going on now. If they wait until it affects them personally, they are liable to find themselves on the wrong end of a court
Pineda v. Wells Fargo, 2014 WL 3608886 (Fla. 3d DCA 2014); decision rendered July 23, 2014
The homeowners received a discharge in bankruptcy, releasing them from personal liability from all debts including their first and second mortgages. A foreclosure sale was held on the second mortgage. A third party bidder purchased the property, subject to the first mortgage, for nearly $100,000 more than the second mortgage’s foreclosure judgment. Pursuant to Florida Statute § 45.032(2) the owner was supposed to get the nearly $100,000 surplus.
However, the third party purchaser petitioned for the surplus and promised to use the money to pay down the first mortgage. The purchaser argued that the owners would be unjustly enriched if they received the surplus because they no longer had any liability for the first mortgage note and would keep the money. The trial court, claiming it was equitable,agreed and ordered the surplus disbursed to the purchaser with the requirement that the purchaser to use the money to pay down the first mortgage.
The District Court of Appeals held the case was a “cautionary tale to bidders at foreclosure sales” and reversed because “[t]he statute is clear: the owner of record at the time of the recording of the lis pendens is entitled to any surplus proceeds.” The bankrupt owners are to receive the nearly $100,000 surplus and they can spend it anyway they want to.