A Change to the Financial Reporting Requirements

Lost in all of the controversy surrounding the recent amendments to Florida's laws governing community associations--and, in particular, the changes to condominium association laws enacted by House Bill 1237--were revisions to the financial reporting requirements for condominium and cooperative associations.

House Bill 6027 became effective on July 1 and amends provisions of Chapters 718 and 719 of the Florida Statutes.   House Bill 6027 is a "two edged sword":

  • On one hand, it removes the "fewer than 50 units" exception that allowed community associations to simply prepare a report of cash receipts and expenditures instead of either compiled, reviewed or audited financial statements regardless of the association's annual revenue.  House Bill 6027 also removes this exception from F.S. Section 720.303, which governs financial reporting for mandatory homeowners associations.
  • On the other hand, condominium and cooperative associations are no longer prohibited from waiving the statutorily provided financial reporting requirements for more than 3 consecutive years.   This prohibition against associations waiving these reporting requirements more than 3 years in a row was a fairly recent addition to Florida statutes.  House Bill 6027 effectively "turns back the clock" and allows associations to waive those financial reporting requirements on an annual basis for as long as the association's members see fit.

At least in regards to these financial reporting requirements, "what the legislature giveth, the legislature taketh away".

I hope all of you had a safe and restful 4th of July and that we'll have another uneventful hurricane season.


Estoppels, Estoppels, Estoppels!

Effective July 1, 2017, Florida's condominium, cooperative and mandatory homeowners' associations (and the management companies hired by those associations) will have some certainty and guidance when dealing with requests for estoppel certificates.

Florida Statute Sections 718.116, 719.108, and 720.30851 have all been amended.

Here are just a few highlights of those amendments:

As I said, these are just a few of the "highlights".

  • The estoppel certificate must now be issued within 10 business days after the association receives the request (rather than 15 days as previously provided)
  • Each of the amended statutes now specifically provides that the estoppel certificate contain certain information and each further provides that the information is to be "substantially" in a form provided in each of these statutes
  • A thirty or thirty-five day effective period (depending on how the estoppel certificate is sent to the requesting party) is provided for in each of these amended statutes
  • The association or its authorized agent (such as its management company) may charge a "reasonable fee" for the preparation and delivery of an estoppel certificate. Where there are no delinquent amounts owed on the date the certificate is issued, that fee cannot exceed $250. If the certificate is requested on an "expedited basis" and delivered within three business days after the request, an additional $100 may be charged, and, if a delinquent amount is owed to the association for the unit or parcel in question, an additional amount not to exceed $150 can be charged
  • There are provisions governing calculating the amounts that can be charged for estoppel certificates for multiple units or parcels owned by the owner

If you are interested in reading the full text of Senate Bill 398, you can link to it here.

Please feel free to contact me through this blog if you have any questions.

Are You Ready for E-voting?

 Effective July 1, 2015, voting and the conduct of elections in resident owned communities in Florida may be done electronically.  There are numerous conditions that must be met before a unit owner can vote electronically--not the least of which is that the unit or parcel owner must consent to that electronic voting.

Earlier this year, Florida's legislators created three new statutes to provide for the use of an "Internet based online voting system":

  • Florida Statute Section 718.128 for condominium associations
  • Florida Statute Section 719.129 for cooperative associations 
  • Florida Statute Section 720.317 for mandatory homeowners' associations

In addition, existing statutes were revised to allow electronic transmission of notices of most board meetings, membership meetings, and committee meetings even if the association's bylaws don't expressly allow for electronic transmission of these notices.

Moreover, Chapter 617 of the Florida Statutes, which governs not-for-profit corporations, was amended to provide that a copy, facsimile transmission, or other "reliable reproduction" of an original proxy can be used instead of the original proxy as long as that copy, fax, or reproduction is a "complete reproduction" of the original proxy--even if the association's bylaws or articles of incorporation prohibit its use.

As you can imagine, there are more questions than answers raised by these new laws allowing for "online voting".   I have a feeling that community association attorneys (as well as managers and board members) are going to have a very interesting "election season".

Copying Official Records? Get Out Your Smartphone!

The recent revisions to Florida's laws governing condominium associations, cooperative associations, and mandatory homeowners' associations updated the procedures for producing, inspecting and copying an association's "official records".

Effective July 1, 2013, an association in Florida's resident owned communities can satisfy the requirement that it make its official records available for inspection and copying by:

  • making the records available to a member electronically via the Internet or
  • allowing the records to be viewed in an electronic format on a computer screen and printed upon request

Board members and managers in resident owned communities should note that the association is not responsible for the use or misuse of the information provided to a member or that member's representative when it complies with the requirements to produce official records for inspection or copying unless the association has an affirmative duty not to disclose that information--for example, if that information falls within the category of "protected" official records.

In addition, associations must now allow a member or his or her authorized representative to use portable devices, including smartphones, tablets, portable scanners, or any other technology capable of scanning or taking photographs, to make an electronic copy of the official records instead of the association providing that member or his or her representative with a copy of those records.  The association may not charge that member or his or her representative for the use of a portable device. 

Again, board members and managers should remember that certain information--while part of the association's official records--is not to be produced to members and great care must be taken to carefully inspect all records and to remove or redact all information that is required to remain confidential or otherwise protected before those records are produced to the member or his or her representative.

When faced with requests to produce records for inspection or copying, an association should strongly consider consulting with its attorney before responding to that request.

We'll be discussing hurricane preparedness and Citizens Insurance this Saturday from 11 to noon on Community Matters and I hope you'll listen live or by podcast.

Update on the 2013 Florida Legislative Session on "Community Matters"

As many followers of this blog may already know, House Bill 87 was signed by Florida's Governor last Friday.  This bill provides community associations with some hope that the foreclosure process--which seems to take an eternity before it concludes--will be expedited and that an association can have a meaningful voice in the foreclosure action. 

I discussed House Bill 87 and several other bills affecting resident owned communities last weekend with lobbyist Travis Moore on our inaugural hour of  "Community Matters," which airs every Saturday from 11 a.m. until noon on Sarasota TalkRadio, WSRQ--1220 AM and 106.9 FM.

In addition to providing our listeners with an explanation of House Bill 87 and its effect on the foreclosure process, Travis summarized a number of other provisions, including the following:

  • Changes to the fees to be paid by communities to the State of Florida for submerged land leases
  • A requirement that mandatory homeowners associations be registered with the State
  • Updates to statutes governing a unit or parcel owner's right to copy the association's "official records" which will expressly allow for such copying to occur by use of an iPad, tablet,  iPhone or similar device.
  • Provisions clarifying what information about a unit owner or parcel owner an association can safely include in its membership directory
  • Amendments to the statutes governing cooperative associations that will provide those associations with the same protections in regards to personnel matters and personnel records as found in the statutes governing condominium and mandatory homeowners associations
  • An additional amendment to Chapter 719 of the Florida Statutes requiring newly elected or appointed board members of cooperative associations to meet the same certification or education standards as board members in condominium associations

If you'd like to hear last Saturday's show--here's the link to the podcasts for "Community Matters": sarasotatalkradio.com/community-matters/  .  Just click on "read more" and you'll find the podcast.

We'll be discussing hurricane preparedness for the next two weeks. I hope you'll listen live or to our podcasts and I'll look forward to your questions and your suggestions for future topics for "Community Matters".

ROCs and the Effective Dates of Bylaw Amendments

Here's yet another example of how the statutes governing condominium associations differ from those governing cooperative associations:

The members of a community association have just approved an amendment to the association's bylaws.  Exactly when does the amendment to the bylaws become effective?

Florida Statute Section 718.112(1)(b) provides that no amendment to the bylaws of a condominium association is valid unless properly recorded in the public records of the county where the declaration of condominium is recorded.  

No similar provision exists in Chapter 719 of the Florida Statutes, which governs cooperative associations.  Florida's Department of Business and Professional Regulation correctly notes that the question of when an amendment to the bylaws of a cooperative association becomes effective is not addressed in Chapter 719.

However, F.S. Section 719.106(1)(h) requires that the bylaws of a cooperative association provide for the method for amendment "consistent with the provisions" of Chapter 719 and if the bylaws do not provide a method for amendment, this section contains the "default" method to be used.

Most of the bylaws of cooperative associations that I've either prepared or reviewed do provide for a method of amendment and also provide for an effective date, which is quite often the date that a copy of the amendment and a properly signed certificate which confirms that the bylaw amendment was adopted by the members at a membership meeting is recorded in the public records of the county where the community is located.   This process is consistent with Chapter 719 and gives both unit owners and title examiners certainty as to the effective date of the bylaw amendment.

Thanks to the members of Mid-Florida ROC for their questions, comments and hospitality during my presentation at their meeting earlier this week at Country Club Manor in Eustis.

Our next community association seminar is scheduled for Tuesday morning, December 5, at Paradise Bay Estates in Bradenton.  If your community is located in the area and you'd like to attend, please send an email to kmidlam@lutzbobo.com or ksawdo@lutzbobo.com.    As always, there's no charge for the event and you''ll have the chance to network and have some refreshments. 

I'll be posting the dates and locations of other upcoming seminars and presentations in my next blog entry.

I hope you enjoyed your Thanksgiving and look forward to seeing you soon!

The Fate of HB 319 and SB 680 and Continued Confusion for ROCs

Florida's state senators and representatives have concluded their 2012 legislative session in Tallahassee.

While House Bill 319 was overwhelmingly approved, Senate Bill 680--the companion to HB 319--never came before the Senate for a vote, thus effectively preventing either of these bills from becoming law.

Whether the failure of either bill to make its way out of this legislative session is good or bad is a matter of opinion

However, managers and board members in cooperatives should be reminded that, at least for the immediate future, the "status quo" will continue--as will important differences between Florida's statutes governing cooperative associations and those provisions governing condominium associations (and in many cases, the statutes governing mandatory homeowners associations), including the following:

Newly elected or appointed board members in cooperatives are still not subject to the certification/education requirement found in Chapter 718.

The statutes governing cooperative associations continue to have no "safe harbor" provisions for first mortgagees that take title to a unit through foreclosure or assignment in lieu of foreclosure.

Finally, certain privacy protections recently afforded to owners and employees in condominiums and mandatory homeowners associations were once again not extended to members of cooperative associations and the employees in cooperative communities.

I suspect we'll be discussing these issues again at the same time next year.  

If you're attending the PM-EXPO on March 27 at the Charlotte County Harbor Event & Conference Center in Punta Gorda, please stop by our booth and say hello to us!



An Update on House Bill 319 and Cooperatives

As most of the followers of this blog know, Florida's legislature is currently in session in Tallahassee.

The bill that may be of most interest to community association managers, homeowners, and those of us that provide legal assistance and advice to ROCs--House Bill 319--has been making its way through the various legislative committees.

The latest version of this bill--as of the close of business on Monday, February 27--has two very interesting "tweaks" that will impact cooperatives:

First, there is now an amendment to Florida Statute Section 719.108 that will extend the "safe harbor" provisions found in the condominium association and mandatory homeowners' association laws to cooperative associations.  These "safe harbor" provisions will limit the liability of a first mortgagee or its successors or assignees who acquire title to a cooperative unit by either foreclosure or by deed (or assignment?) in lieu of foreclosure for the unpaid assessments that became due before the mortgagee's acquisition of title to the lesser of:

  1. the unit's unpaid common expenses and regular periodic or special assessments which accrued or came due during the 12 months immediately preceding the acquisition of title and for which payment in full has not been received by the association, or
  2. one percent of the original mortgage debt.

There's been a good deal of controversy and discussion about whether this "safe harbor" prevents an association from trying to recover from the mortgagee other costs and expenses, such as amounts charged the association by law firms or other companies trying to collect the unpaid amounts from the delinquent unit owner.  Cooperative associations have, for the most part, not been involved in this battle as no "safe harbor" provisions existed in the statutes governing cooperatives.  

A very curious revision in the most recent version of 319 is the removal of the requirement that newly elected or appointed members of the board of directors of cooperative associations either:

  • sign a document certifying that they have read the association's governing documents and will faithfully abide by those documents and his or her fiduciary responsibilities to the association in serving on the board or
  • attend and successfully complete a board member certification course that has been approved by Florida's Department of Business and Professional Regulation.

This requirement was incorporated into Chapter 718, which governs condominium associations, several years ago and was in the first version of HB 319 that I reviewed a few months ago.  I'm not sure exactly why this latest version of House Bill 319 no longer contains this requirement.

In any event, there's much more to HB 319, and I'll continue to post entries on its progress.

Stay tuned...


Ballots, Proxies, and the Annual Meeting

I've been spending a good deal of time recently attending the annual membership meetings of a number of the ROCs we represent and helping many of our communities prepare for these meetings.

I thought I'd list a few reminders for board members and managers of condominium and cooperative associations preparing for annual meetings:

  • The annual meeting is a meeting of the members--it's not a board meeting.   While it's common for the board members at the annual meeting to sit and face the unit owners, the directors should remember that it's the membership that will be voting on the issues on the agenda.
  • The agenda should concisely and clearly list what business will be considered by the membership.  Only items on the agenda can be considered by the members.
  • Ballots are NOT proxies and cannot be used to establish a quorum.   While only twenty per cent of the unit owners are needed to cast ballots in order to conduct an election of the association's directors, other items that require the approval of the unit owners at the annual meeting must occur at a meeting where there is a quorum of the membership's voting interests present.  That quorum requirement is usually a simple majority of the voting interests.
  • As we all know, the quorum requirement can be satisfied through the use of proxies that allow a unit owner who does not attend the meeting to appoint a proxy holder to cast that absent unit owner's vote.   Florida statutes governing condominium associations and cooperative associations allow both limited and general proxies to be used to help establish a quorum.

Occasionally, a cooperative or condominium association will have an annual meeting where the unit owners will not be voting on any item that would have to be included on a limited proxy form.  Communities that are fully funding reserves and conducting annual audits would thus not be voting to waive those requirements and might have no other issues requiring a unit owner vote requiring limited proxies.  However, managers and board members in these communities should still deliver a general proxy form to the unit owners and take great care to stress to the membership the importance of properly completing and returning those general proxies.   Keep in mind that if the unit owners decide that there's no reason ton attend the annual meeting (since "nothing important" is happening) and not enough of those unit owners return completed proxies to the association, the association may not be able to conduct any official business at the annual meeting because a quorum was not obtained.

Hopefully, problems of this nature will remain extremely rare in Florida's resident owned communities.

We'll be posting the dates and locations of this season's last set of seminars as well as several speaking engagements within the next two weeks and hope you'll be able to attend one of those events.





"Meet the Candidates" Events: A Bad Idea for ROCs

I cringe every time a member of a resident owned condominium or cooperative association mentions that an event has been scheduled to "meet the candidates" running for the board of directors of that community. 

It's clear from the Florida Statutes governing the election of directors in condominium associations and cooperative associations that there is a very specific process that must be followed.  For example, if a candidate requests that the association include an information sheet with the election materials to be sent to the unit owners, that sheet must be no larger than 8 and 1/2 inches by 11 inches, and must be furnished by the candidate to the association at least 35 days before the election.

The applicable Florida Administrative Code sections are even more specific and make it clear that the role of the association is to remain completely impartial in regards to any and all candidates.   Both cooperative associations and condominium associations are expressly prohibited from editing, altering, or otherwise modifying the content of that information sheet and the original copy of that sheet becomes part of the association's official records. 

The intent that the association remain completely impartial during the election process is also evident in the requirements set forth in the Florida Administrative Code that the association must obtain the consent of two or more candidates before "consolidating into a single side of a page the candidate information sheets submitted by those candidates". 

Of course, the requirements that the ballot itself only indicate the candidates in alphabetical order and that the ballot not indicate which candidate or candidates are incumbents on the board (as well as the prohibition of write-in candidates) is further evidence of the desire for a purely impartial election process free from interference or influence by the association.

Now, what happens if, in the midst of this process, the association decides to sponsor or schedule a "meet the candidates" event--and one or more of the candidates is unable to attend?  Or one candidate is not allowed to speak as long as the other candidates?  Or perhaps the sound system goes out after the first two candidates speak and the other candidates are not able to be heard by all of the members in attendance? 

How about a candidate (or one or more of his followers) that wants to pass out (or does in fact circulate) additional campaign materials at this event?  Can the association allow this at an association sponsored event?  If so, are these materials now part of the "official records" of the association?

Finally, what happens when one of the candidates who is not elected to the board of directors complains that he lost the election because:

  • he was unable to attend the "meet the candidates" event and notified the association but the association refused to reschedule,
  • he wasn't allowed to speak for as long as the other candidates,
  • other candidates were distributing additional campaign materials at the event and he was not told this would be allowed,
  • the sound system went out while he was speaking, or
  • he didn't feel he needed to attend the event since he had already provided the association with his information sheet

I'm not sure any condominium or cooperative association wants to find out whether an arbitrator with the Department of Business and Professional Regulation or a judge in one of our county or circuit (or appellate) courts will agree with that candidate when he argues that the association, by sponsoring that "meet the candidates" event, violated the provisions of the Florida Statutes and the Florida Administrative Code that seek to protect and preserve the impartiality of the election process.

Hopefully, ROC boards will consider these concerns when deciding whether to sponsor or schedule "meet the candidates" events in the future.

A Plea for Civility

I'm surely not alone in trying to understand the tragedy that occurred just over a week ago in Tucson.   Regardless of one's political views, it's certainly worth considering the clear lack of civility and common courtesy that seems to be the rule rather than the exception throughout our country today.

Several days after the shootings in Arizona, I attended a meeting at one of the communities we represent in Southwest Florida and was saddened to observe a level of disrespect and rage that simply has no place in ROCs.   After the meeting, several residents mentioned to me that had I not attended, the meeting would have been disrupted by a number of unit owners.   Several other members approached me after the meeting and stated that I had been "duped" and hadn't heard the "other side" of the story.

As an attorney that represents many community associations, I've often had to explain to unit owners that we don't have "a dog in the fight".  In other words, my role is not to take sides on any particular issue being considered by a community--I may point out factors to an association's board of directors and membership that should be considered but assuming that the actions being discussed by the association do not violate any state, federal, or local laws, my job is to help ensure that the process that leads to the result is proper and legal.

Board members are volunteers and it's very troubling to attend unit owner meetings where residents fail to treat a director with even a minimal amount of courtesy and respect.    When a board member is shouted down or where his or her name is met with hisses or jeering, I find myself wondering what causes unit owners to demonize one of their neighbors and refuse to listen to any opinion other than their own?

How can a resident owned community survive if members no longer treat other members with simple courtesy and respect?   Does any resident want to live in a community where issues are allowed to fester and be fed by rumor mongering and unfounded criticism of the motives of board members until those issues explode?   Wouldn't that resident much rather live in a community where issues are resolved by civil discussion and debate?

Every member of a resident owned community has the right to attend almost every association meeting and can inspect numerous records of the association.  For example, Florida Statutes Sections 719.106 and 719.104 call for open cooperative association board meetings and access to a cooperative association's official records.

At the same time, every association member has an obligation to be fully informed about issues that come before the board, and to treat all board members--and all unit owners--with courtesy and respect.

In a month where we cope with the carnage in Tucson and commemorate the life and death of the Reverend Martin Luther King, Jr., I truly hope that we all rediscover the art of listening and treat each other with the civility that every one of us deserves.



ROC Board Meetings: Coming to a TV Screen Near You?

I was contacted by a board member of a resident owned cooperative earlier this month with a rather interesting situation.  One of the unit owners was videotaping the board meetings and now wanted to broadcast those videotapes on the "in house" channel that served the community.   Was the association's board required to allow the unit owner to broadcast these videotapes?

The statutes governing condominium, cooperative, and mandatory homeowners associations provide that a member is entitled to videotape board meetings.  For example, Florida Statute Section 719.106(1)(c) provides in part that "any unit owner may tape record or videotape meetings of the board of administration."

However, the right to record or videotape does not create a right to broadcast that tape recording or videotape and there is clearly nothing in any of the applicable statutes or Florida Administrative Code sections that requires the association to allow an association member to broadcast the videotape or recording on the association's "in house" channel.  

Here are a few reasons why I suggest that a resident owned community not broadcast board meetings (either live or by video or audio replay) on the community's "in house" channel:

  • Many board members and unit owners may feel inhibited by the knowledge that their every word and action at the meeting will be broadcast throughout the community.  Some people simply don't feel comfortable speaking or otherwise participating when they are being videotaped.
  • There's a real danger that board meetings--where the business of the association is supposed to be conducted--will become "media events" or "performances".  While CSPAN certainly has helped open the doors to the workings of our Federal government and the meetings of many governmental boards and agencies are televised, community associations are a different animal--ROC board members are volunteers and Florida's 'government in the sunshine" law doesn't apply.  I'd suggest that many unit owners in a resident owned community would be less willing to serve on the ROC board knowing that the board meetings would be broadcast on the "in house" channel.
  • Unless there is very controversial item on the agenda, many, if not most, unit owners simply don't attend board meetings.  Unit owner participation is both encouraged by Florida's statutes and important to the overall health of resident owned communities and my suspicion is that even fewer unit owners will attend board meetings in person if these meetings are broadcast.

I'm also concerned that the taping won't accurately reflect the meeting--perhaps the video or audio quality won't be sufficient, or perhaps the person taping the meeting will alter the tape for innocent (or not so innocent) reasons. 

And if the association decides to supervise the taping and broadcasting of the meetings, wouldn't that tape now become an "official record" of the association?  Does the association really want to be responsible for safeguarding these tapes as "official records" and producing them in response to a unit owner's record inspection request?

Obviously, if a unit owner wants to make a video or audio tape of a board meeting available to the other members of a ROC he or she can certainly do so--but I'd suggest that an association and its board is better served by not allowing those tapes to be part of the programming on the association's "in house" channel.

ROCs, Record Inspection Requests, and Privacy

We just finished a busy two week stretch of very well attended seminars.   Thanks to our friends at Paradise Bay Estates in Bradenton, Imperial Bonita Estates in Bonita Springs, Village at Riverwalk in North Port, and Hammock Estates in Sebring for hosting those events.

One of the topics we discussed involved how to balance the rights of a member of a resident owned community to inspect and copy the association's "official records" with the rights of each resident of the community to have certain information remain confidential and protected.

I wanted to highlight several important points made during my presentation on this topic:

  • Almost any document currently located in the association's offices falls within the definition of an "official record" under the Florida Statutes governing condominium, cooperative, and mandatory homeowners' associations.
  • However, certain documents that are "official' records are nonetheless protected or :"exempt" and even if a member requests to inspect those documents the association shall not allow that member access to those records. 
  • Florida's legislators recently amended the statutes governing condominium and mandatory homeowners' associations and added several new categories of these protected or "exempt" documents.   However, the legislators failed to amend the statute governing cooperative associations and, as a result, a member of a cooperative association may still be entitled to inspect personnel records as well as obtain information about other residents--such as email addresses, telephone and fax numbers, and northern addresses--that are now clearly "off limits" to members of condominium associations or mandatory homeowners associations.
  • All managers and board members should remember that a member cannot simply show up in the office one day and demand that he immediately be allowed to inspect one or more of the association's "official records".  There is a specific procedure that is to be followed under Florida's statutes and all members should be required to follow those procedures.

We always suggest that any request to inspect an association's "official records" be immediately forwarded to the association's attorney.  The attorney can help the association properly evaluate and respond to request and assist in ensuring that the association complies with Florida's statutory requirements while not violating its members' privacy rights.

The dates, locations and topics for our January seminars will be announced within the next week.  Stay tuned and try to keep warm!

New Privacy Provisions of Senate Bill 1196 Do Not Extend to Members of Cooperatives

It appears that, effective July 1, 2010, members and employees of condominium associations and mandatory homeowners' associations in Florida will be entitled to some additional privacy protections thanks to Senate Bill 1196

The Florida legislature, through Senate Bill 1196, has revised Florida Statute Sections 718.111(12) and 720.303(5) to provide that the following records--in addition to those already protected--shall not be accessible to condominium unit owners or subdivision parcel owners:

  • Personnel records of association employees, including, but not limited to, disciplinary, payroll, health, and insurance records
  • Social security numbers, driver's license numbers, credit card numbers, electronic mailing addresses, telephone numbers, emergency contact information, any addresses of a unit or parcel owner other than as provided to fulfill the association's notice requirements, and other personal identifying information of any person, excluding the person's name, unit or parcel designation, mailing address, and property address
  • Any electronic security measure that is used by the association to safeguard data, including passwords
  • The software and operating system used by the association which allows manipulation of data, even if the unit or parcel owner owns a copy of the same software used by the association.

However, for some reason, Florida Statute Section 719.104(2), which governs the official records of a cooperative association, was not amended by Senate Bill 1196.  

Members and employees of cooperatives thus will now have less privacy protection than their counterparts in condominiums and subdivisions.

I assume that this was not intended by Florida's legislators and that a "glitch bill" will be introduced at the next session in Tallahassee to ensure members and employees in all categories of resident owned communities are given equal privacy protection. 

In the meantime, members of cooperatives might want to bring this to the attention of their state legislators.

ROC Members Have Rights to Employees' Salary Information

Can unit owners in resident-owned communities discover what the association is paying its employees, including the manager

We are asked this question frequently each year, especially when the association is in the process of preparing its annual budget.   Obviously, the association's employees would prefer that information about the compensation they are receiving be kept private and confidential and many board members and managers are uncomfortable disclosing this information to residents in the community.  Directors are concerned--quite often, with justification--that the residents in the community do not understand that a salary paid to a ROC employee in Ohio twenty years ago would not be a competitive salary in a community in Florida in 2009.

However, Florida's statutes governing condominium associations, cooperative associations, and mandatory homeowners associations make it clear that information about the compensation paid to an employee and the other benefits that an employee receives falls within the "official records" of the association.   Any association member is entitled to inspect and copy this information.

I have a few suggestions to help board members and managers maintain some amount of privacy for the association's employees without violating Florida statutes:

  1. Florida's statutes require that an association member's request to inspect or copy official members be made in writing and that the association has a number of days to respond to that request.  This allows a manager confronted at the office by a unit owner demanding salary information to request that the unit owner submit his request in writing prior to allowing that unit owner access to that information.
  2. The requirement that requests to inspect official records be submitted in writing allows the President or Chairperson to advise any member insisting upon disclosure of an employee's salary during a meeting of the board or membership that any unit owner  wishing to obtain this information is free to do so by submitting a written request as provided for by Florida's statutes.
  3. It's also very helpful if the association's board of directors can assure its members that its employees' wages, salaries, and benefits are in line with those paid to employees in comparable communities in the area.  The board or manager can often obtain this information from its accountant or through networking with neighboring communities.   Local chapters of the Community Associations Institute and regional groups such as Mid-Florida ROC or SWFLROC  would provide an association's board members the opportunity to gather this information on an informal basis.

Finally, any member that does inspect or copy information about an employee's compensation and benefits should be gently but firmly reminded that any employee of the association deserves the courtesy of not having his or her salary broadcast throughout the community indiscriminately.   No unit owner would enjoy having his financial information freely discussed at the pool or in the clubhouse and any member that obtains an employee's salary information channels should respect that employee's privacy. 

In addition, ROC members living in communities where not all of the residents are members of the association (such as resident owned mobile home cooperatives where some home owners are not members of the cooperative) should keep in mind that a unit owner who divulges an employee's salary may in fact be providing that information to non-member homeowners who are not entitled to that information and who may try to use that information to damage the  association--for example, by challenging an increase in the annual rent to be paid by the non-member mobile home owners and citing the salary information that was intentionally or unintentionally disclosed to that non-member.

Clearly, every member of the association owes both the association's employees and all of the other residents in the community a high degree of discretion when that member obtains information about the compensation and benefits paid to association employees.


Implementation of "Red Flag" Identity Protection Rules Delayed Until June 1, 2010

Those of you that attended our recent ROC seminars at the Molokai community in Leesburg and Sandalwood Park in Venice know that the Federal Trade Commission has delayed the implementation of the "Red Flag" Identity Protection Rules until June 1, 2010.  I briefly summarized my understanding of these rules and how they may impact resident owned communities at those two seminars and will present the same summary at our upcoming seminars at Old Bridge Village in Fort Myers and Westwinds Village in Bradenton.

The Community Associations Institute recently published an article that may help ROC managers and board members determine whether their association will have to comply with the "Red Flag" rules and, if so, the type of identity protection program the association will have to adopt and maintain.

A number of factors will have to be considered, including:

  • Whether the association is a "creditor" because it accepts installment payments of maintenance fees or assessments (while this does not seem to include rent payments, a cooperative association that finances residents' purchases of membership shares would appear to be a "creditor")
  • Whether there is a risk of identity theft as measured by factors, including the volume of identity-related information that is received by the association and the number of association employees and board members that review that information

The CAI's article provides an outline of a basic identity protection program that associations might want to consider.   The association should consult with its attorney to help prepare and implement the community's identity protection plan.

A great deal of uncertainty still surrounds the "Red Flag" rules and I would not be surprised if the FTC decides to delay the implementation of these rules again as the June 1 deadline approaches.  However, managers and board members should strive to protect the privacy of every resident in their communities.  Please remember that the association's attorney should be consulted whenever a question involving a request to provide a resident's "private" information arises as the provisions of the Florida Statutes governing condominium associations, cooperative associations, and homeowners' associations may require the production of information that a resident, board member, or manager considers to be "private".

"Pet Lists" Do Not Violate Federal Privacy Rules

One of our ROC managers recently contacted me about a resident who claimed that the community was violating the Health Insurance Portability and Accountability Act of 1996 (often referred to as the "HIPAA laws").   While the community's rules and regulations did not allow pets, several exceptions to the "no pet" rules had been granted.   The manager and the board had compiled a list of the names and addresses of each person permitted to have a pet in his or her home and the complaining resident was certain that by creating  this list the community had violated HIPAA.

The HIPAA laws create a "privacy rule" that prohibits certain "protected health information" from being disclosed.  This "privacy rule" applies to the following persons and businesses that have been defined by the U.S. Department of Health and Human Services as "covered entities":

  • Individual and group health plans that provide or pay the cost of medical care
  • Every health care provider, regardless of size, who electronically transmits health information in connection with claims, benefit eligibility inquiries, referral authorization requests, or certain other transactions
  • Health care clearinghouses such as billing services, repricing companies, and community health management information systems

ROCs would seem to fall well outside of any of the categories of these "covered entities" and as such would not be bound by the HIPAA privacy rules.

In addition, as I advised the community's manager, the mere fact that a resident is allowed to have a pet doesn't necessarily mean that the pet is in the home for medical or health reasons.   I thus did not see how the existence of this list violated HIPAA's privacy rules.

However, I did remind the manager that if a member requested a list of all residents in the community that had pets and the association had in fact compiled such a list, the association would have to produce that list as required by Florida's statutes governing condominiums, cooperatives, or homeowners associations.  

If a community does have a list of homes with pets--especially if the community is a "no pet" or a pet restricted community--I suggest that the list remain with the manager and that it not be distributed to the board or other members in the community.   This will take pressure off of the board and eliminate the danger that a board member may be accused of violating a resident's privacy rights.  Even if that accusation proves to be unfounded, it's an added aggravation and may result in expenses to the association that could have been avoided.

Does Florida's "Sunshine Law" apply to ROCs?

One of my blog readers recently emailed me and wanted to know whether Florida's "Sunshine Law" applies to meetings between less than a quorum of the members of the board of directors of an ROC.

Many members of resident owned communities incorrectly believe that the meetings of their ROC board or ROC committees are governed by Florida's "Sunshine Law," which can be found in Chapter 286 of the Florida Statutes.   It's clear from the provisions of this chapter, and in particular Section 286.011, that Florida's "Sunshine Law" only applies to meetings of boards or committees of state, county, or municipal agencies or other similar political subdivisions and not private enterprises.  In other words, only a very few ROCs (those that are agencies of state or local government--such as a community development district) are subject to Florida's "Sunshine Law".

Thus, in most situations, I see nothing wrong with a ROC President or other board member meeting with other board members as long as less than a quorum of the board is present during that meeting, even if the purpose of that meeting is to determine how the board members at that meeting are going to vote on a matter coming before the board in the future.   An effective President or board chairperson should already have a pretty good idea of how his or her board is going to vote on important matters before the board meeting and it's certainly logical that he or she contact the other board members in advance to find out how each member intends to vote and the reasons for that member's vote.

As long as there is less than a quorum of board members in the room where the meeting is occurring, even if ROC business is being discussed, there is no violation of the applicable provisions of Florida Statutes Chapters 718, 719, or 720.  I do want to remind ROC managers and board members that an illegal meeting occurs when a quorum of the board finds itself on the same conference call, receiving an email sent to them simultaneously, or in a "chat room" or other internet "meeting" area if that meeting was not properly noticed and made open to all members and does not fall within the limited exceptions that allow "closed" meetings.   The State's Department of Business and Professional Regulation will not take kindly to any such illegal meeting--even if it was held in "cyberspace".

Do ROCs have to provide members' "summer addresses"?

I recently received an email from a board member of one of the resident owned communities we represent.   One of the members of this ROC had requested a list of all of the "summer addresses" of the residents in the community.   The board member wanted to know whether the ROC had to provide the member with those addresses and whether it was appropriate to mail that member a list containing those addresses.

  • Florida Statutes Section 718.111(12)(a)7, which applies to condominium associations, and Section 719.104(2)(a)5, which applies to cooperative associations, are identical and provide that  the association shall maintain "a current roster of all unit owners and their mailing addresses, unit identifications, voting certifications, and, if known, telephone numbers".   The statutes provide that this roster is part of the association's "official records".    The applicable provision of Chapter 720 governing mandatory homeowners associations almost mirrors its Chapter 718 and 719 counterparts.   
  • Based on language of these statutes, and the "catch all" provisions in Sections 718.111, 719.104, and 720.303 (4), which include almost every other written record in the association's possession that is in any way connected with the operation of the community, once a member gives the association his or her "summer. address,"  that address becomes part of the association's official records and any other member can request to inspect and copy that address.
  • The association is not required to mail the roster to requesting member.  The association's obligation in response to an appropriate record inspection request is simply to allow the member to inspect and copy those records.  However, I see no problem with the association mailing the roster to a member as long as any other member requesting the roster is notified of this option.  In other words, all members requesting the roster should be treated equally.   Obviously, if the roster is consistently kept current, the association can minimize time and inconvenience to its office staff by simply mailing the roster to the member and the member can be charged a reasonable cost for copying the list.

ROC members should understand that whatever addresses and telephone numbers they give to the association will have to be produced to another member that properly requests them.   ROC managers and board members should immediately contact the attorney representing their community upon receiving a request to inspect or copy records.