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          OUR ATTORNEYS:

Barry Silver, Esq.

Boca Raton

(561) 483-6900

barryboca@aol.com 

Barbara Billiot Stage, Esq.
Orlando, FL
(407) 926-0263

barbara.billiot.stage@stagelaw.com

Eric M. Glazer, Esq.

Glazer &Associates P.A.

Hollywood, FL

(954) 983-1112

Eric@condo-laws.com 

ARCHIVED QUESTIONS:

Q & A

Question:

I am a member an HOA in Ocala , Florida and our Board is struggling to do the right thing.  It seems opinions are plentiful but facts are hard to come by.  If you could help with a quick question it would be appreciated.

 

Do the Florida Statutes 720 for HOA or 617 for Not-For-Profits, which I understand are the governing statutes for our HOA, dictate that a homeowners’ association is required to maintain a specific amount of money or a specific percentage of its budget as a reserve fund or for any other reason?  

 

Though it makes perfect sense to maintain a reserve fund for emergencies or for normal operating ease, I have not seen a rule specifying an amount or a percentage BUT I keep hearing rumors from a few homeowners that a reserve is required by  Florida statues.  Can you shed some light on this? M.C., Ocala

 

Answer:

It is not required if one has not been previously established, but if not provided, a disclosure must be given to homeowners stating that there is no reserve and that there is the risk of a special assessment in the future. Specifically, the statute reads: 

"If reserves are not provided, each financial report for the preceding fiscal year required by subsection (7) shall contain the following statement in conspicuous type: THE BUDGET OF THE ASSOCIATION DOES NOT PROVIDE FOR RESERVE ACCOUNTS FOR CAPITAL EXPENDITURES AND DEFERRED MAINTENANCE THAT MAY RESULT IN SPECIAL ASSESSMENTS. OWNERS MAY ELECT TO PROVIDE FOR RESERVE ACCOUNTS PURSUANT TO THE PROVISIONS OF SECTION 720.303(6), FLORIDA STATUTES, UPON THE APPROVAL OF NOT LESS THAN A MAJORITY OF THE TOTAL VOTING INTERESTS OF THE ASSOCIATION."

If you want to establish a reserve account, a majority of the homeowners must vote to approve the action to do so. Once established, the fund can be used only for the repair or improvement it is designated for. Any change in the rate of funding or use of funding requires a vote of a majority of the homeowners. The board only has power to make adjustments for changes in funding due to inflation or a change to the useful life of the asset. 

 

EXAMPLE:  You want to establish a fund for major repairs or replacement of a wall around the neighborhood. You expect the wall will need to be replaced in 15 years. You know the wall cost $100,000 five years ago so the useful life is 20 years. The $100,000 is funded at a rate of 1/20 per year if you had started when it was built, but since you only have 15 years left to replacement it will be 1/15 a year until a new wall is built or refurbished and then it will be 1/20 after the wall is finished. If you know the new wall will cost $120,000 in 15 years because of inflation then the rate is 1/15 of $120,000.

Barbara Billiot Stage, Esq.


Question:

Our condo rules state that "the owner, at his discretion, can install hurricane shutters" not more than 7 days prior nor 7 days after an official storm. Due to our physical handicaps we wish to install accordion or roll down shutters.  We are unable to carry, lift and hang the requested Lexan or metal type shutters.  And we can't depend on any vendor to be on call to do that work within the board’s time frame, especially if there are numerous storms within the same season.  Additionally, we've promised that, if approved, we would not close our shutters outside that time frame. We submitted the required form and vendor bid, along with our letter of explanation on 7/28/09.  A member came and got a vendor brochure and color sample.  We've heard verbal comments, questions, and concerns, but no written denial or approval. I understand the board has right to make rules, but doesn’t the board have to make reasonable allowances for handicapped residents? We'd like to know what action to pursue. Thank you.

J.S., North Point

 

Answer: Let the board know that you are requesting "reasonable accommodations" under the Americans with Disabilities Act of 1990. If the board members try to argue they are private property --or a private corporation -- tell them that they are not exempt from federal law and you can prove it. I have case law with court rulings that I can send you should it come to that. The only issue I see they might have is the maintenance of the shutters. The condo is responsible for maintaining everything on the outside. You could sign a waiver that you would be responsible for all maintenance and/or repairs, if that is the issue.

Barbara Billiot Stage, Esq.


Question:

I read the responses regarding attendance, but none seem to fit my situation.
I am a Director on a subdivision Board (FS 720) and three members of the Board are trying to "blend" (merge) the Subdivision into the Master Association without the benefit of all homeowners in the Association voting on it. The intent is to have three of the five Board members approve the merger. To
placate myself and the other Board member opposed to  merger at this time, we plan on having a "Town Hall" meeting. I would like the members of the Master Board to attend, but again, three Board members (two of whom are husband, who is also our Treasurer and President of the Master, and his wife, our Secretary) do not want the other Master Board members to attend. My contention is, as the discussion is to involve merger, they all should be in attendance to hear what the subdivision homeowners have to say. Can they legitimately be kept out?
J.L., Clermont

 

Answer: All meetings are required to be open to all members. Board members are also regular members of the association. The real question is:  How does a merger get approval?  A merger requires an amendment to the Declaration of Restrictive Covenants and it would take a majority of the members to approve in accordance with the procedures for amending the declarations, as outlined in the provision under the subheading "amendments." The board does not have authority to take such action unless the declarations allow for the board to approve amendments. Any meeting to vote on amending the declarations must be noticed by sending a meeting notice to each homeowner at least 14 days in advance. The notice must contain a conspicuous statement\ that the purpose for the meeting is to hold a vote to amend the declarations and a copy of the proposed amendment should be included. It would be wise to include an explanation of the amendment and the purpose of the amendment as well.

Barbara Billiot Stage, Esq.


Question:

Does the parking spot get resigned every year?
The condominium is playing musical chairs with the parking spots, and the board members assign themselves the best spots.

Does the parking spot belong to the owner or the association?

Some owners do not own cars, can they profit from the parking spot or does the money belong to the association for the building.

I also have other question to my understanding to finish a building and start selling them by law they have assign parking spot and register them, to who and can we find out the original spots that were assigned. Below is the address for the condominium.

Answer:

The answer is "it depends."
 
The right of an association to reassign parking spaces depends on what the declarations of condominium, bylaws, articles of incorporation, and rules and regulations ("the governing documents") state. A large number of condominium documents do not address this issue and parking assignments are at the discretion of the board. If the board members are frequently reassigning spaces and giving themselves the best spots a case can be made for breach of fiduciary duty based on self-dealing. The board is probably counting on their misguided idea that they can never be held personally liable as some attorneys have been known to advise board members of this, which is incorrect, or they are counting on no one spending large sums of money in legal fees to hold them accountable.
 
The ownership of the parking space also depends on what is stated in the governing documents. Some condominiums have attached the assigned parking space to the deed of the condo unit. In these situations there is usually a clause that states the parking space cannot be conveyed, transferred, or sold except in conjunction with the condo. While the condo owner does own that parking space, they are not free to do whatever they want with it. If the parking space is not connected to the deed then the condo owner has an exclusive easement to property belonging to the association. Again, whether the owner or the association can profit from the sale/lease of a parking space depends on the governing documents.
 
Barbara Billiot Stage, Esq.


Question:

At the annual meeting may the board state that only members attend the meeting?


We would like everyone to check in at the door and if a person is not a paid member with the right to vote, we do not want him or her at the meeting. This is the only meeting the non-members would not be allowed to attend. We allow non-members to attend all other meeting the rest of the year.
  
This was a very sore point at our last meeting.  Some people were saying that the board has no right to tell people (even the non-voting non-members) that they were not allowed to attend the annual member voting meeting.
  
If you could answer this question before our December meeting, we would greatly appreciate it.


Answer:

Generally, the annual meeting is a members' meeting and the members are ones to have a say in how it is to be conducted. The Board of Directors will usually have a meeting afterwards to handle usual business.

Members are defined in the Florida Statutes as anyone who has an ownership interest in a parcel or has an obligation to pay dues. Therefore, a member is not limited to just one person in the household who will vote. It includes anyone who is named on the deed and can include a parent, sibling, child or anyone else that the homeowner chose to include on the deed for whatever reason. Therefore, anyone named on the deed has a right to attend all meetings, whether they are board meetings, member meetings, annual meetings or special meetings.

Also, a member cannot be excluded from a meeting because he or she is past due on assessments.  A member can have voting privileges suspended if he or she is past due 90 days or more, but the member still has the right to attend meetings.
 
Additionally, a homeowner can appoint a representative to attend the meeting for him or her if he or she is not able to attend. This often happens with renters who have out-of-town landlords. The owner may request that the renter attend the meeting and let him or her know what occurred during the meeting.  The owner can even appoint the renter to vote by proxy vote.
 
The other thing to consider is that the association will appear as hiding something if it tries to exclude attendance. Today’s homeowners are demanding more transparency and accountability.
 
Now let me switch gears from my pro-homeowner stance to my association attorney perspective.  Are you having a particular problem that may justify excluding non-members?  If there is a problem with non-members being disruptive, problems with the capacity of the meeting place, or people bringing handguns to meetings (I actually have an association with this problem), you can adopt reasonable rules regarding meetings. I would suggest that the board have a meeting, present a resolution and have the board vote on the resolution. There should be a discussion of why the board feels it necessary to adopt the resolution and all of this must be recorded in meeting minutes.

Just keep in mind that you cannot exclude a member because of past due assessments. All property owners are members, and a member can appoint a representative to attend in his or her place.

Barbara Billiot Stage, Esq.


Question:

I live in a homeowners' Association. We have some homeowners who rent or lease their property. Now that the property is rented and the renter has all the rights to the recreational facilities, can the homeowners who rented their place come back and use all the recreational facilities too? We are trying to change some of our rules and this question came up. So can we put this in the new rules, that the owner of a leased or rented home loses all rights to the recreational facilities?
A.B., New Smyrna Beach


Answer:

There is nothing in the Florida Statutes that would prevent you from amending your association’s HOA documents to include such a rule, but you would have to follow the procedures outlined in your documents.  Usually a certain percentage of the HOA owners must vote YES to approve a new rule.

Barbara Billiot Stage, Esq.


Question:

I owned rental property in South Florida . Prior to renters moving in, they had to be approved by the board. I live in Altamonte Springs and asked about the board screening applicants who wanted to rent a condo in my complex and was told this is illegal. My nephew just bought a condo in Maitland and the HOA told him if he wanted to rent it, they would have to screen the renters. Is my HOA just blowing smoke?

P.P. , Altamonte Springs


Answer:

The Florida Statutes do not prohibit condo associations from screening applicants who want to rent a condo from a unit owner and even provide for charging a fee for processing the application. However, an association cannot screen applicants unless there is a provision in the bylaws, articles of incorporation or declaration of covenants and restrictions allowing for screening. If these documents do not contain this provision, then the association is breaking the law by screening.

Barbara Billiot Stage, Esq.


Question:

We successfully recalled our entire board. Our newly
elected board is now ready to start healing our community.  HOA
property was turned over to us, but how do we know we have everything?

   
We have been meeting resistance.  Even requests for copies of
financial reports have failed.  We don't even have access to bank accounts until the new board members sign cards that will give us access to previous records.

  

We knew this would be hard work, but I just wish we had guidelines to help. We don't even know if the books are correct. Should we have all books audited?
I'll start with these questions.   Thank you for your help

L.Z.


Answer:

All HOA documents are the property of the association and not the board. Therefore, the previous board has a duty to turn over all documents to the new board. You should send each member of the previous board a letter by certified mail with return receipt requested, giving them a deadline to provide the documents. If they do not comply, you will most likely have to hire an attorney, unless you can get cooperation from the State Attorney's Office in your area.

You should definitely have the books audited to make sure you limit your liability as much as possible for a previous board's errors.

Barbara Billiot Stage, Esq.  


Question:  

Audit of the fiscal year 05/06 year-end financial report was done by an accounting firm CPA that has worked for the condominium for over 10 years and has always provided accurate and timely reports. The board had shown on the monthly financial reports an entry: "due to reserves from operating account" up to $165,000. The audit returned showing $115,277 due to the reserves. The board does not accept this figure, thinking it is too high. The board and management company are reviewing the figures and say they are coming up with a figure for what is really owed to the reserves. The board has made such statements as, "The CPA who did the audit did not account for reserve expenditures and the audit was a year late." The board has never voiced any concern about the CPA's competency, accuracy, or any other reason for why the board wants a different figure. My position is that I, as an owner, will not accept any changes not done by a CPA in the audit figures. I will not accept figures of an audit done by a CPA but then changed by the board and management company. (Note when I let the board know my position, I got a really hostile reply.) Is the board allowed to change these audit numbers? Do we owners have to accept these changes?

K.B., Tampa

Answer:

This is a question that should be submitted to a CPA or a tax attorney for an expert opinion; however, I will provide some basic information. The real question that needs to be addressed is the reason for funds due to the reserves from the operating account. There are two reasons I can think of for the operating account to owe funds to the reserves. The first would be where assessments collected were credited to the operating account and the portion of the assessments that are for replenishing the reserves need to be transferred to the reserves. This is a fairly common practice. The second reason would be that the funds in the reserves were used for purposes that should have been covered by the operating account, which would be a violation of Florida Statutes §720.303(6)(h) unless approved by a majority vote at a board meeting at which a quorum is present.

To answer your question, it is necessary to explain the purpose of an audit. Not all homeowners associations are required to prepare audited financial statements. Only those associations with annual revenues of $400,000 or more are required to prepare audited financial statements. The purpose of an audit is to ensure that there is no material misstatement of the organization’s financial position and performance and to ensure that the organization is following the Generally Accepted Accounting Principles (“GAAP”).

Florida statutes provide that the amount in reserves must be maintained in accordance with a formula that is based upon the useful life of the asset for which the reserve was established and the replacement cost of that asset. The association may adjust the replacement of reserves to account for changes in the useful life of the asset or changes to the cost of replacing the asset.  While the board cannot change an audited financial statement, if it does not transfer the amount indicated by the CPA to the reserves, the figures will need to be reconciled on the next financial statement. Whether or not the board is allowed to transfer a different amount is the ultimate question for a CPA or tax attorney.

Barbara Billiot Stage, Esq.


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Disclaimer: The content of this column can not be considered legal advice.

This column is not a substitute for consultation with legal counsel. 

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