Stage Law Firm, P.A.

FLORIDA HOMEOWNERS ASSOCIATIONS

You need to know your rights and duties. Your best defense is to read and understand your association documents (the Declaration of Restrictive Covenants, the Articles of Incorporation, and the Bylaws) and to understand the Florida Statutes governing homeowners associations (Chapter 720 and Chapter 617 or Chapter 607).

• FORECLOSURE — Your association can foreclose on your home for unpaid assessments – there is no defense to not paying assessments. You cannot claim they are not maintaining the community as a reason to withhold assessments.
• FINES — Your association can assess a fine against you for non-compliance with the restrictive covenants [Fla. St. Ch. 720.305]
  • You have the right to a hearing within 14 days [Fla. St. Ch. 720.305(a)]
  • You have the right to be heard by a committee of at least three (3) people who are unrelated to members of the Board of Directors [Fla. St. Ch. 720.305(a)]
  • New for 2010 — your association can lien and foreclose on your home for unpaid fines in excess of $1,000
    
• SUSPENSION OF RIGHTS — Your association can suspend your right to vote and use of the common areas if you do not pay your assessments or comply with the restrictive covenants; however, your association cannot impair your right to get to and from your property or your right to park [Fla. St. Ch. 720.305(c)]
  • Your association can now collect rent from your tenants if you rent your home and are past due in your assessments
    
• NOTICE — Your association must notify you individually and post a notice in a conspicuous place at least 14 days in advance of the annual meeting and any meeting in which levying assessments will be discussed [Fla. St. Ch. 720.303(b)(2)]
  
• THE MONEY — The Board of Directors has the discretion to manage and operate the operating budget, including levying assessments to cover the operating costs
  
• RESERVES — This is different than the operating budget!!! The Board of Directors cannot move money from one reserve to another nor can they decrease or increase the amount of money in a reserve (except for adjustments for inflation). The Board of Directors cannot spend the money in the reserves for anything other than what the reserve was intended. Changing the reserves in any way requires a majority vote of the homeowners. There is a specific formula for calculating the amount in the reserves.[Fla. St. Ch. 720.303(6)]
  
• RECORDS — Every homeowner has the right to inspect and copy the records of the association with the exception of those records that are protected by attorney-client privilege, relate to the sale or lease of a parcel, relate to the discipline, health, insurance, or personnel records of employees, or relate to the medical records of property owners [Fla. St. Ch. 720.303 (4 & 5)]
  
• FIDUCIARY DUTY — The Board of Directors has a fiduciary relationship with the members (property owners) of the association per Fla. St. Ch. 720.303. This means they have a duty to act in the best interests of the community as a whole. Many board members have been told that the Business Judgment Rule protects them from being held accountable for their actions. This is true to a limited extent — they cannot be held responsible for bad decisions; however, they can be held accountable for willingly, wantonly, and knowingly acting in a harmful way to the community.

THREE WAYS TO CREATE NEW RULES & REGULATIONS OR RESTRICTIONS

The law states an association can create new rules and regulations as long as they are reasonable. There are three ways new rules and regulations or restrictions can be created:

(1) by a majority vote of the board of directors;

(2) by a majority vote of the homeowners; and,

(3) by approval of 100% of the homeowners.

The difference is that rules and regulations that the board of directors is allowed to pass without homeowner approval are generally rules and regulations that clarify existing restrictions that are already in the Declaration of Restrictive Covenants and Conditions. They are generally considered minor rules and the courts require the Board of Directors use the standard of reasonableness when creating such rules. In other words, would a reasonable person agree with the rule. An example would be requiring a fence around an air conditioning unit or requiring homeowners to pressure wash their homes once a year. They cannot be new restrictions that would normally be included in the Declaration of Restrictive Covenants and Conditions. The highest level of restrictions requires 100% of the homeowners to approve and these are new restrictions that infringe on your vested rights. The courts generally do not allow an association to infringe upon a vested right without your approval. Examples of vested rights could be a right of first refusal that requires you to offer your home for sale to the association before selling it to a new owner, or requiring you to get the association’s approval before leasing your home. Notice I say “vested rights could be.” This is because different courts in different jurisdictions within the state have not always ruled the same way, but generally the courts determine if a restriction is infringing on a vested right by using an analysis that determines if a reasonable person would not have purchased their home had that restriction previously existed. In other words is the restriction considered a deal breaker? The third level of rules and regulations or restrictions requires a majority of the homeowners to approve and falls in between those rules and regulations or restrictions that can be created by a vote of the Board of Directors or those requiring 100% of the homeowners to approve. They are generally amendments to the Declaration of Restrictive Covenants and Conditions that create new restrictions not previously included in the documents. They would include restrictions such as the prohibition against chain link fences. While the association could not prohibit fences completely, they could prohibit certain types of fences. Keep in mind that some association documents already have restrictions on the type of fences and prohibiting chain link fences could then be passed by a vote of the Board of Directors. A lot of times the answer depends on what is already in your Declarations. Another example could be prohibiting basketball goals. Again, it could depend on what restrictions are already in the Declarations.