Florida ROC : Florida Mobile Home & RV Lawyer & Attorney : Scott Gordon : Lutz Bobo Telfair Eastman Gabel & Lee Law Firm : FL Condo & Homeowners Associations

Based on the responses I've received from my recent blog entries and presentations on  fines and suspensions of use rights, it's clear that these topics are "hot issues" in resident owned communities throughout Florida.

Although the Florida Statutes governing condominium, cooperative and mandatory homeowners associations all recognize an association's power to fine or suspend use rights of unit owners or parcel owners (or their tenants or guests), I'd suggest ROCs consider the costs and benefits of instituting these procedures.   Board members in community associations should weigh numerous factors when considering whether to use fines and suspensions, including the following:

Do the association's members want to give any of their neighbors the power to fine them or suspend their rights to use the common facilities?  I've been in several communities where the membership has clearly and convincingly expressed the concern that a member may be fined solely because of a grudge or other "agenda" of one of his or her neighbors that happens to serve on that fining or suspension committee.    Regardless of the type of safeguards that an association tries to build into its rules or policies governing the operation of that committee, many residents simply don't want to give any of their neighbors the power to assess fines against them that may reach $1000.

And what about the homeowners in a resident owned manufactured housing cooperative or condominium that are not shareholders in the cooperative or condominium association?   Those homeowners are not "unit owners" under Chapter 718 or 719 of the Florida Statutes and are thus not governed by the fining and suspension provisions of those Chapters.   Their responsibilities are governed by Chapter 723 of the Florida Statutes and the rental prospectus.  It's doubtful that many rental prospectuses allow the park owner (in this case, the cooperative or condominium association) to fine a non-shareholder homeowner or suspend his or her use rights--and even more doubtful that any such provision in a rental prospectus would be deemed legal and enforceable under current Florida law.    How does an association's board of directors justify a situation where the non-shareholders (who are not subject to fines or suspension of use rights) are treated more favorably than the shareholders?    I can certainly see that situation creating a great deal of controversy and making it more difficult for the association to market and sell membership shares in the cooperative, or units in the condominium, to prospective purchasers.

Those are just two points to consider when deciding if a community should institute or maintain a fining and/or suspension procedure.

Remember--just because a community is allowed to have a fining and suspension committee doesn't mean that the community must have one.

Finally, for those long time followers that recall my entries on the "music police," here's a link to a story that appeared this week in the Sarasota Herald-Tribune on a federal lawsuit filed by our friends at Broadcast Music Inc. against a tavern in the Manatee county community of Ellenton. 

And on that cheery note, my best wishes to everyone for a very happy and healthy holiday season!

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We've got a very busy five or six weeks ahead of us with several chances for managers and board members in resident owned communities to hear from us:

• I'll be speaking about fines and suspending privileges as well as pet issues at the Mid-Florida ROC meeting at the Molokai community in Leesburg on Tuesday morning, November 29th.

Bill Korp and I will be making presentations on elections, budgets, and a number of other topics at our upcoming ROC "roundtables":

• Thursday, December 1, at Horizon Village in N. Fort Myers
• Thursday, December 8, at Venice Isle Estates in Venice
• Thursday, December 15, at Westwinds in Bradenton

Our "roundtables" begin at 10 A.M. and end between noon and 12:30.  These events are great for board members that want to learn and also network with residents from other communities.  Refreshments are served and there's no charge.   If you're interested in attending and haven't already rsvp'd, please email either Kathy Sawdo (ksawdo@lutzbobo.com) or Karen Midlam (kmidlam@lutzbobo.com).  Just let either of them know which one of these "roundtables" you'll be attending, how many will be attending from your community, and whether you'll need directions to the host community.

I'll also be speaking at Tamiami Village in North Fort Myers on the morning of December 21 for the monthly meeting of SWFROC and will be presenting a seminar on the procedures and requirements for the election of directors in ROCs after the January 4 breakfast meeting of the West Florida chapter of the Community Associations Institute.

I hope to see you at one or more of these events.

Have a happy and relaxing Thanksgiving surrounded by friends and family.   Go Gators and Go Blue!

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My last blog entry discussed the rights of an association to assess fines and suspend rights to use facilities in a resident owned cooperative as provided in Florida Statute Section 719.303(3).   Both condominium associations (under F.S. Section 718.303(3)) and mandatory homeowners' associations (under F.S. Section 720.305(2)) have similar enforcement tools where a unit owner or parcel owner (or that owner's licensee, invitee or other occupant of the home) fails to follow the association's documents or the reasonable rules governing the community.

What about members of condominium, cooperative, or mandatory homeowners' associations that fail to fulfill their financial obligations to the community?

Board members in condominium associations can look to F.S. Section 718.303(4)-(6), co-op board members can rely on F.S. Section 719.303(4)-(6), and board members in mandatory homeowners'  associations have available to them F.S. Section 720.305(3)-(5).   Each of these statutes provides that, if a unit owner or parcel owner is more than 90 days delinquent in paying a monetary obligation due to the association, the board may suspend the right of that owner to use common elements, common facilities, or any other association property until the monetary obligation is paid in full.   There are several additional points that are very important in regards to the suspension of these use rights:

• The suspension applies to both the owner and the unit or parcel's tenant, licensee, invitee, or other occupant of the home
• In general, the right to use limited common elements used only by that unit or parcel, common elements needed to access that unit or parcel, utility services provided to that unit or parcel,  parking spaces, or elevators cannot be suspended under these provisions of the statutes

In addition, if an owner is more than 90 days delinquent in the payment of any monetary obligation  due to the association, the voting rights attributable to that owner or the unit may be suspended, until such time as there is full payment of all obligations currently due or overdue the association.

The suspension of these use and voting rights for failure to timely pay amounts owed to the association may be imposed without the hearing provided for where fines or suspension of use rights are being imposed for failure to abide by the association's governing documents or the community's reasonable rules.  All that's required is a properly noticed board meeting (and of course an agenda that clearly notes that the board is going to consider the suspension of the use and/or voting rights) and, once the suspension is approved, notification to the owner (and, if applicable, the occupant, licensee, invitee, or tenant) of the suspension by mail or hand delivery.

These suspensions can occur if an owner fails to pay "any monetary obligation"--not just maintenance fees or other regular assessments, and the notice of the suspension does not appear to have to sent by certified or registered mail.

Clearly, Florida's legislators have given managers and board members in ROCs some ammunition in the ongoing struggle for our communities to maintain financial health.

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Since we've just recently observed Labor Day and President Obama's "Jobs Plan" continues to make headlines, I thought I'd discuss three situations involving ROC employees that are all too common and can create some major problems for resident owned communities:

• Quite often,one or more of the association's employees is performing work "on the side" for residents in the community.   Even if the employee is truly doing this private work "after hours," what happens if the employee injures himself or others, or is accused of stealing from one of those residents, or does a lousy job and causes damage to the resident's home. What if the employee has used the association's tools or equipment (or one of the association's vehicles) while doing this "off the clock" work?  Allowing an employee to perform work "on the side" for residents in the community creates an absolute "no win" situation for the association--the association receives no benefit whatsoever from allowing its employees to perform "after hours" work for residents in the community and at the same time subjects itself to all types of potential liability that may or may not be covered by the association's insurer.  A resident who suffers property damage or injury because of the actions of the association's employee will be looking for a "deep pocket"--and I can almost guarantee my blog readers that the employee's pocket is not nearly as "deep" as the association's.
• It's never easy to discipline or terminate an employee.   When that employee is a resident in the community, what is already difficult becomes much more so--and runs the risk of dividing the community.   In many of these situations, the terminated employee (as well as his family, friends and neighbors) will spend a good deal of time and energy attempting to discredit the board of directors and the manager in an attempt to regain his job.   The fact that the employee was unable or unwilling to fulfill his job responsibilities is almost always overlooked in the emotional frenzy that infects the community.
• Do I even need to explain why allowing a member of the association's board of directors to be employed by the community is a prescription for potential turmoil and additional levels of association liability?   I doubt that any ROC board member would feel comfortable voting to terminate the person in charge of (for example) maintenance for the community-- and who also happened to be the association's President or another board member.

Just a few things to keep in mind as we'll be in our busy season before we know it!

Enjoy these first few weeks of college football.  As a Michigan alum, I sure am!

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My most recent entry summarized the some of the changes made by House Bill 1195 (which became effective on July 1 of this year) to several provisions of the laws governing cooperative associations in Florida.

House Bill 1195 created three new subsections to Florida Statute Section 719.303 that have the effect of extending to cooperative associations the same enforcement tools that have been given to condominium associations and mandatory homeowners associations in our state.

New Florida Statute Section 719.303(4) allows the association to suspend the right of a unit owner or that owner's occupant, licensee, or invitee to use common elements, common facilities, or any other association property until a monetary obligation is paid in full, subject to the following conditions:

• The unit owner must be more than 90 days delinquent in paying that monetary obligation
• The right to use limited common elements intended to be used only by that unit, common elements needed to access that unit, utility services provided to the unit, parking spaces, or elevators cannot be suspended under F.S. Section 719.303(4)

Cooperative associations are given the right to suspend the voting rights of a unit or member under  Florida Statute Section 719.303(5).   This new subsection provides that:

• The suspension is based on nonpayment of any monetary obligation due to the association which is more than 90 days delinquent
• A voting interest or consent right which has been suspended may not be counted towards the total number of voting interests for any purpose, including, but not limited to, the number of voting interests needed to establish a quorum, the number of voting interests required to conduct an election, or the number of voting interests needed to approve an action under Chapter 719 or the association's governing documents
• The suspension ends upon payment in full of all obligations currently due or overdue to the association

The suspensions imposed under these to new subsections are not subject to the notice and hearing requirements of F.S. Section 719.303(3).  Instead, the following requirements are provided in new Florida Statute Section 719.303(6):

• The suspensions must be approved by the association's board of directors at a properly noticed board meeting
• Upon approval, the association must notify the unit owner, and, if applicable, the unit's occupant, licensee, or invitee of the suspension by mail or hand delivery.

It will be interesting to see whether these new provisions encourage unit owners to pay amounts owed to cooperative associations.  I'll look forward to hearing from my blog followers that are members of cooperatives about this in the coming months.

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On June 21, Florida's Governor approved House Bill 1195.  The provisions contained in this legislation became effective on July 1, 2011.

HB 1195 was considered by many to be a "glitch bill" aimed a correcting oversights in laws passed in recent sessions of Florida's legislature.  However, HB 1195 does not expand the categories of "protected official records" in Florida Statute Section 719.104 to match those that were included in the 2010 amendments to F.S. Section 718.111(12)(c) and F.S. Section 720.303(5).   For whatever the reason, certain documents that are clearly "off limits" to unit owners in condominium associations and mandatory homeowners associations will continue to be accessible to a unit owner in a cooperative association that makes a proper request to inspect and copy them.  I've covered this topic in a previous entry in this blog and it's clear that cooperative associations have another year of uncertainty in dealing with requests to inspect and copy these "sensitive" official records.

However, HB 1195 did amend Florida Statute Section 719.303(3) to provide that::

• A cooperative association may now levy reasonable fines for the failure of the occupant of a unit (even if that occupant is not the unit owner) to comply with the association's "reasonable"  rules or any provision of the documents governing the cooperative.   The fine may not become a lien on the unit, may be levied on the basis of each day of a "continuing violation," and cannot exceed $100 per violation or $1000 total.
• In addition, a cooperative association can now suspend, for a reasonable period of time, the right of a unit owner, or unit owner's tenant, guest, or invitee, to use the common elements, common facilities, or any other association property for failure to comply with the association's "reasonable" rules or any provision of the cooperative documents.
• The cooperative association must give the unit owner (and, if applicable, the unit owner's licensee or invitee) reasonable notice and an opportunity for a hearing before a committee of unit owners and the committee must agree with the fine or suspension in order for the fine or suspension to be imposed. 

We'll discuss some  additional enforcement tools extended to cooperative associations through HB 1195 in my next entry.

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I was contacted earlier today by a manager whose association had installed a "wifi" system in the community's clubhouse that would allow residents and their guests to bring their laptops and other mobile devices into the clubhouse and connect to the internet.   A password would be needed to use the wifi system but this password would be given to any resident or guest that requested it.

The manager forwarded me a very recent blog entry from my colleague, Lisa Magill, from the Becker Poliakoff law firm, that raised the issue of whether a community association could be  liable if the wifi connection offered to its residents and guests was used to illegally download content.   Lisa's entry contained links to several articles, including a report on litigation being filed against thousands of persons for allegedly downloading pornographic movies illegally.

Regular readers of this blog may recall my discussions of how ROCs could potentially violate copyright laws by playing music or showing movies at community events and it appears that associations that offer wifi or other internet services to residents and guests may be entering the same dangerous waters.

While the safest course of action would be for an association to remove the internet service (or not install it in the first place), perhaps there are some steps that ROCs can take to bring the risk of potential liability down to a level that might be acceptable to an association's board of directors:

• The board of directors can pass a rule requiring that any residents and guests using the community's internet service do not commit any illegal activities
• The board can also require that no resident or guest be given the password or otherwise be allowed to use the internet service unless and until he or she signs a document agreeing that he or she shall not use the system for any illegal purposes, including downloading any material illegally, and that any such illegal usage shall result in that resident or guest immediately and permanently forfeiting his or her privileges to use the internet service.   This agreement should also contain specific language stating that the resident or guest will indemnify the association for any and all costs, expenses, and damages that the association incurs or suffers as a result of that resident or guest using the service for any illegal purposes.  
• The board should determine whether the resident or guest is required to click on an "I Agree" box prior to accessing the internet on his or her laptop.  If so, the board can have the requirements and agreements set forth in above two paragraphs included on that "sign in" page and the resident or guest will not be allowed to access the internet unless and until he or she clicks on that box.   I would still suggest having each resident and guest sign a "hard copy" of that agreement for the association's records and the association should maintain that document in a safe place.

Finally, each association should have a discussion with its insurer to determine whether the association's current policy would protect it in the event of a claim arising from the illegal use of its internet service by a resident or guest. 

We'll do our best to keep you advised of any further developments in this area.  

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I'm posting the links to three recent articles for my blog readers:

• The first story involves the efforts of a condominium association in Jupiter, Florida to use a dog's individual DNA to help identify canine offenders (and their owners) of the community's "pooper scooper" rules.
•  The aggressive approach taken by a  homeowners' association in Pembroke Pines to collect delinquent maintenance and other fees--brought about in no small part by the foreclosure crisis--is the focus of the second article.
• Finally, a very sobering report from the Palm Beach Post on the battle brewing between Florida's emergency managers and the Federal Emergency Management Agency as to whether every emergency shelter in the state is required to be in compliance with the Americans with Disabilities Act.   According to this article, the cost to bring each of the hundreds of emergency shelters in Florida into compliance with the ADA may exceed One Billion Dollars--and the last time I checked, our state doesn't have that kind of money in its cookie jar.

I hope you enjoy reading these three stories and look forward to your comments.

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The recently concluded session of Florida's legislature resulted in a new section of Chapter 514 of the Florida Statutes that substantially eases the financial burdens that would otherwise be faced by ROCs required to install anti-entrapment devices in community pools and spas as required by the Virginia Graeme Baker Act.

As many ROC managers and board members know, Florida's Department of Health has taken the position that the only anti-entrapment device that would satisfy its requirements was the gravity drainage system which, unfortunately was by far the most expensive corrective measure.  Many communities were faced with the prospect of having to spend over $25,000 in order to bring pools and spas into compliance with the Department of Health's standards.

Under proposed Florida Statute section 514.0315, owners of swimming pools and spas that must be brought into compliance by installing an anti-entrapment system or device can install any of the following:

• A safety vacuum release system that ceases operation of the pump, reverses the circulation flow, or otherwise provides a vacuum release at a suction outlet when a blockage is detected and has been tested by an independent third party and found to conform to certain specified standards
• A suction-limiting vent system with a tamper-resistant atmospheric opening
• The gravity drainage system that uses a collector tank (which, again, is the most expensive alternative)
• An automatic pump shut-off system
• A device or system that disables the drain

Section 514.0315 clearly specifies that it is the owner of the pool or spa (and not the Department of Health or any other state or local governmental agency) that can determine which of these five anti-entrapment systems or devices is appropriate. 

The anti-entrapment system or device must be installed by a contractor licensed under Florida Statute Section 489.105(3)(j),(k), or (l).

The Florida Manufactured Housing Association testified in favor of this legislation and believes that Section 514.0315, if enacted, will result in substantial savings to the owners of mobile home parks in our state.

It's anticipated that Governor Scott will have no objection to Section 514.0315 and, if approved, this new provision will become effective on July 1, 2011.

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Last week I posted an entry about attempts by some members of Florida's legislature to eliminate the  regulation of Community Association Managers as well as the Division of Florida Condominiums, Timeshares and Mobile Homes and (for good measure) end mandatory non-binding arbitration for certain disputes between owners and the associations governing their communities.

Proposed Committee Bill BCAS 11-01 moved quickly through the Business and Consumer Affairs Committee of Florida's House of Representatives and was then assigned a bill number, becoming House Bill (HB) 5005.   According to reports from Tallahassee, HB 5005 was being "fast tracked" and was destined to breeze through one or two other House committees. There was concern that HB 5005 would then join up with a companion Senate Bill and would be voted on and approved by both the House and the Senate before many of those most affected by this legislation would have been made aware of what was occurring in Florida's capital.

However, during the past week, HB 5005 somehow jumped off that "fast track".   Apparently, HB 5005 entered the Economic Affairs Committee of Florida's House of Representatives as a 280 plus page juggernaut and exited that committee as a much less imposing 63 page piece of legislation.

Substitute HB 5005 preserves the Division of Florida Condominiums, Timeshares and Mobile Homes as well as the mandatory non-binding arbitration program and maintains the laws providing for the regulation and licensing of Community Association Managers.

I would assume that our legislators heard from more than a few organizations over the past week or so (including the Federation of Mobile Home Owners and the Community Associations Institute).  I also have no doubt that a noticeable segment of the over three million residents of Florida ROCs made their feelings known to our representatives in Tallahassee.  

At least for now, HB 5005 is no longer a bitter pill for resident owned communities in Florida to swallow.  

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I've spent part of the past few days in email correspondence and telephone and person to person discussions about Proposed Committee Bill (PCB) BCAS 11-01 with fellow community association attorneys, ROC managers, and concerned board members.

As you may already know, earlier this week, the Business and Consumer Affairs Subcommittee of the Florida House of Representatives (by a 10 to 5 vote) passed PCB 11-01.  This bill will now be assigned a number and will be scheduled for additional committee hearings.   The concern is that this bill is on a fast track and will not have to undergo deliberations in more than one or two other House subcommittees and that, while no companion bill has been filed in the Florida Senate (at least as of earlier today), that Senate companion bill will be forthcoming in the very near future.

So what's the big deal about PCB 11-01?

How about these for starters--within this proposed bill's 281 pages, you'll find provisions that:

• Eliminate many agencies that license and regulate numerous professions in Florida, including Community Association Managers
• Eliminate what appears to be all or at least a substantial porton of the Department of Business and Professional Regulation's Division of Florida Condominiums, Timeshares, and Mobile Homes
• Eliminate the mandatory non-binding arbitration provisions found in Florida's statutes governing condominium and cooperative associations

Please check out the full text of PCB 11-01 if you want to verify the incredibly far-reaching language that's now being considered by Florida's lawmakers.  

If you are a homeowner or condominium owner in a resident owned community, you might want to contact your state legislators about this bill.

I'll have another entry later this week.

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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.

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While we wait for newly formed Fiona to decide where she's headed, I thought I'd share an article by John Bowe from the August 8, 2010 edition of the New York Times Magazine that I read while spending a bit of time away from the office (even dedicated bloggers need a vacation now and then).

The timing of the article could not have been better given my recent entry on ASCAP, BMI and SESAC.   I hope you'll enjoy the read.

I'll be presenting a seminar for managers on Reasonable Accommodations under the Fair Housing Act following the September 1 breakfast meeting of the West Florida Chapter of the Community Associations Institute and hope to post some exciting news within the next week about another event where I'll be speaking in October. 

In the meantime, it's good to be home and let's all keep alert as it looks like Hurricane season has really heated up!

Stay safe!

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The manager at one of the ROCs we represent recently sent me a "Performance License for RV Parks/Campgrounds" from a company called SESAC.   The manager wanted to know whether SESAC had the right to insist that the community obtain a license in order to play live or recorded songs in SESAC's music catalog at community events.

I know that several other communities (both with and without RV sections) have been contacted about the need to have a "performance license" to play music in the clubhouse or rec hall.   In addition, my friends at SWFROC suggested that other ROCs wanted to know more about these licenses. 

Federal copyright laws are based on the concept of property rights--and, in the case of songs and music, these laws view the songwriter's work (the creation of the song) and the publisher's work (the distribution of the song) as a "property".   In other words, the songwriter and publisher "own" the song and no one else can use the song without the permission of the songwriter and publisher.

There are three recognized "performing rights organizations" ("p.r.o.'s") that have been established to ensure that songwriters and music publishers are properly compensated when their songs are performed in public:  The American Society of Composers, Authors and Publishers ("ASCAP"), Broadcast Music, Inc. ("BMI") and the Society of European Stage Authors and Performers ("SESAC").   Basically, each of these organizations has compiled a huge catalog of music and protects the property rights of the creators and publishers of that music by collecting licensing fees from businesses that use any of that music and distributing those licensing fees as royalties to songwriters, composers, and music publishers in their catalog.

The "Frequently Asked Questions" section on ASCAP's website defines a "public performance" as a performance "that occurs either in a public place or any place where people gather (other than a small circle of a family or its social acquaintances)".  A "public performance" is also a performance "that is transmitted to the public" such as radio or television broadcasts, music-on-hold (yes, that means the music you have to endure while waiting for a real person to speak with you on the telephone), cable television, and by the internet.   

With a few very limited exceptions, any "public performance" requires the permission of the owner of the music or his or her representative--and that usually means ASCAP, BMI, or SESAC.

As far as the big three "p.r.o.'s" are concerned, any "public performance" of any music in their catalog that does not fall within these limited exceptions requires a license from that "p.r.o." and the failure to obtain that license is a violation of Federal copyright laws.

ASCAP, BMI, and SESAC will actively pursue businesses that violate these copyright laws.   For example, earlier this summer, ASCAP announced that it had filed 21 separate copyright infringement actions against nightclubs, bars and restaurants in 13 states.  Apparently, in each of these cases, the offending business either failed to obtain a license from ASCAP or had failed to pay the fees owed to maintain its license and publicly performed musical works of songwriters, composers, or music publishers in ASCAP's catalog.

The penalties for copyright infringement can be substantial--and in extreme cases may cost an offending business at least $100,000 in fines.   

In addition, having a license to play songs from the catalog of one "p.r.o." does not give a business the right to play songs from the catalogs of the other two "p.r.o.'s"--separate licenses will have to be obtained from those two "p.r.o.'s" to play songs from their catalogs.

Finally, a few other points to consider:

• Purchasing sheet music or a record or CD does not authorize that purchaser to publicly perform that music--for example, by performing that music live or playing the record or CD at a community event in the ROC clubhouse.
• ASCAP's "Frequently Asked Questions" section notes that some people "mistakenly assume that musicians and entertainers must obtain licenses to perform copyrighted music or that businesses where music is performed can shift their responsibility to musicians or entertainers."  According to the ASCAP site, the copyright laws say that "all who participate in, or are responsible for, performance of music" are legally responsible--in ASCAP's view, "since it is the business owner who obtains the ultimate benefit from the performance, it is the business owner who obtains the license.  Music license fees are one of the many costs of doing business."
• Associations that have "movie nights" for their residents and guests should be aware that copyright protection also extends to movie producers and distributors

Obviously, ROC managers and board members have some important factors that must be considered when events involving music are held in the common areas of the community.   

I've just skimmed the surface of this topic but would hope that every ROC consults with its attorney when faced with these issues.

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Several of the resident-owned communities we work with have had the great displeasure of dealing with complaints filed by residents under the Fair Housing Act.   Most of these complaints are without merit and are eventually resolved in favor of the community.  Quite often, the resident filing the complaint is simply trying to delay an eviction action, has a personal vendetta against the manager or one or more board members, or is attempting to prevent the association from exercising its rights to determine whether a "reasonable accommodation"should be granted to the resident.   

It's not a stretch to say that any resident that files a Fair Housing complaint is often regarded by many in the community as a major aggravation that is costing the association money and creating conflict and misery for his or her neighbors.   Occasionally, other residents in the community (and even a few board members) will strongly suggest that the ROC would be better off if the association simply filed an action to evict the complaining resident.

As most of you already know, such a course of action is a recipe for certain disaster.  The latest example can be found in a press release issued by the Department of Housing and Urban Development on July 16, 2010.   

The press release summarized the decision of a HUD Administrative Law Judge who ordered an Iowa landlord to pay $52,150 in damages and civil penalties for retaliating against a single mother of three by threatening to evict her because she filed a housing discrimination complaint.

The brief facts are as follows:

• The mother's fair housing complaint alleged that the landlord refused to rent her a three-bedroom apartment and unjustly charged her a higher security deposit because of her sex
• HUD found no evidence of sex discrimination
• However, HUD nonetheless charged the landlord and the landlord's management company with unlawfully retaliating against the tenant by terminating her lease and attempting to evict her because she filed the fair housing complaint

It's important to note here that it was the action of retaliating against the renter that formed the basis of this judgment--even in the absence of any finding of discrimination.

Please keep this case in mind the next time one of your residents confronts you and demands that the association evict the "gadfly" that's filed a fair housing complaint.  The last time I checked, $52,000 was still a lot of money--whether in Iowa or in sunny Florida.

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As many of my readers know, Senate Bill 1196 amended Florida Statute Section 718.116(1)(b) to provide that a first mortgagee or its successor or assignee who acquires title to a condominium unit by foreclosure or by deed in lieu of foreclosure is required to pay the unpaid assessments that became due before the mortgagee's acquiring title in an amount equal to the lesser of:

1. the unit's unpaid common expenses and regular periodic assessments which accrued or became 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

The provisions of amended F.S. Section 718.116(1)(b) may not apply in certain situations where the first mortgagee fails to join the association as a party in the foreclosure action.

Prior to SB 1196, a condominium association was only entitled to the lesser of 6 months' unpaid common expenses and regular periodic assessments or one percent of the original mortgage debt.

With this amendment, condominium associations find themselves granted the same relief as mandatory homeowners associations--the latter through the provisions of F.S. Section 720.3085.

What about cooperative associations?

I've searched through Chapter 719 (which governs cooperatives) and SB 1196 and can find no language that either establishes or limits the liability of any one acquiring title to a cooperative unit by foreclosure or by an assignment in lieu of foreclosure for unpaid common expenses or regular periodic assessments owed to the cooperative association.

This is one of many examples of the differences between Chapters 718, 719, and 720 of the Florida Statutes. 

When it comes to resident owned communities, one size truly does not fit all and a board or manager should consult with the association's attorney when dealing with these unpaid assessments--especially if the ROC is a cooperative.

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The Florida legislature has provided managers and boards of condominium associations, cooperative associations and mandatory homeowners associations with some help in collecting delinquent payments from unit owners and association members.

Senate Bill 1196, which goes into effect on July 1, 2010, provides that if a unit or parcel is occupied by a tenant and the unit owner or parcel owner is delinquent in paying any monetary obligation due to the association, the association may demand that the tenant pay to the association "the future monetary obligations" related to the unit or parcel.  For some reason, condominium and cooperative associations are required to make a written demand on the tenant while the language applying to Chapter 720 homeowners associations does not seem to require a written demand.  I assume that "future monetary obligations" refers to the tenant's obligations to pay rent to the unit or parcel owner.   In all cases, the demand is continuing in nature and the tenant must pay the monetary obligations (again, I assume this is the amount to be otherwise paid by the tenant to the unit or parcel owner) until:

• The association releases the tenant from making any further payments to the association
• The tenant discontinues tenancy in the unit or parcel

Condominium and cooperative associations are required to mail written notice to the unit owner of the association's demand that the tenant make payments to the association but again no such requirement seems to be included in the provisions for mandatory homeowners associations.  

A tenant who acts in good faith in response to a written demand from an association and pays his or her rent to that association is immune from any claim from the unit or parcel owner.

In addition, the revised statutes now appears to allow ROCs to evict tenants for failure to pay monetary obligations pursuant to the residential landlord-tenant provisions of Florida Statutes. 

There is a good deal more involved in these amendments and I'll post further entries on them this summer.  

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I'm posting two very different articles for the education and enjoyment of my blog readers:

• A horror story from a recent edition of the Fort Lauderdale Sun-Sentinel about a ROC board's disastrous decision to forego insurance coverage.
• A much lighter report from the May 16, 2010 edition of the St.Petersburg Times about the "Airstream Ranch" now featured along I-4 in Hillsborough County.

I hope you'll find these stories interesting and informative.  

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I received an email earlier this week from Jim Ayotte, the Executive Director of the Florida Manufactured Housing Association, about a bill passed last week by the U.S. House of Representatives.

The bill is H.R.5019, the "Home Star Energy Retrofit Act of 2010," and contains an amendment that promotes the purchase of new "energy efficient" manufactured homes by providing a $7500 rebate to homeowners of mobile homes or manufactured homes built before January 1, 1976 who purchase a new "Energy Star-qualified" replacement manufactured home.  The bill also provides an additional $2500 grant for decommissioning the older home.

Jim's email advised that the U.S. Senate could be considering this legislation as early as this week and stressed the importance of contacting our Senators immediately to urge them to vote in favor of the Senate's companion bill, which is S. 1320 and to include the Manufactured Housing Energy Efficiency provision.  

Since the FMHA estimates that there are about 350,000 manufactured or mobile homes in Florida that were built prior to 1976, the passage of this legislation could significantly benefit both homeowners and ROCs.

I am including a link to a sample letter that can be signed and then faxed or mailed to your Senators.   Jim's email noted that this letter must be faxed or mailed because emails with attachments will not be delivered.

If you wish to send this letter to our Florida Senators, their contact information follows:

The Honorable Bill Nelson--716 Hart SOB, Washington, DC  20510 Fax: (202) 228-2183

The Honorable George LeMieux--356 Russell SOB, Washington, DC 20510 Fax (202) 228-5171

Of course, letters sent to Senators in the home states of our "snow birds" would certainly be appropriate. 

This is a great opportunity to make a difference and benefit our communities.

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The headline of Sunday's edition of the Sarasota Herald-Tribune reads "Condo Groups in Financial Pain".  The story accompanying that headline details the severe economic problems many condominium associations face as a result of the ongoing foreclosure crisis.   The article is well worth reading and contains examples of how several associations are attempting to survive a substantial decrease in their members and maintenance fees.

Our resident owned communities, for the most part, have not been severely impacted by the foreclosure crisis.  One of the reasons for this is that the ROCs we work with truly are resident owned--our ROC members customarily live in their homes for at least part of the year (or have one or more members of their family in the home).   In other words, very few of the homes in any of the ROCs we represent can  be characterized as "investment properties".

Nonetheless, I'd like to offer a few suggestions that may help ROC managers and board members better deal with problems arising from residents that fail to make timely payments of rents, maintenance fees or assessments:

1. Given the current economic climate, it's important to strongly encourage all residents to make payments when they are due.   I suggest a policy that should be developed and consistently and uniformly followed to send written notices to all delinquent members no later than 5 to 10 days after payment is due.    Many of the rights given to ROCs by the Florida Statutes to file legal actions or record liens for unpaid assessments and fees are triggered by providing written notice to the homeowner and the sooner this notice can be given the sooner the association can exercise its statutory rights.
2. The association should not be shy about getting its attorney involved early in the process to assist in recording liens and the legal actions that may be needed to protect the association's interests.  While there are certainly expenses involved in these legal remedies, it's quite often necessary to send a message to the members of the community that the ROC board and manager will do whatever it takes within the limits of the law to collect delinquent fees and rents owed to the community.,
3. When the association is named as a defendant in a foreclosure action filed against one of its members by an institutional lender, I always advise the association to answer that foreclosure complaint.  The association's filing of that answer ensures that the association will receive copies of all of the important pleadings that will be filed in that law suit, including the certificate of title that is issued to the person or company that purchases the home at the foreclosure sale.   It's very important that the association determine the new owner of the home as quickly as possible as Florida statutes quite often require that new owner to pay at least a portion of the unpaid maintenance fees or assessments to the association.   The association may have no way to quickly determine the name of the new owner if it has not filed its response to that foreclosure action.

Let's hope that 2010 brings us all heath, prosperity and happiness and that the "foreclosure crisis" is just a dim memory by this time next year.

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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.

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We are now well into our "season" in Florida and most resident owned communities will be holding their annual meetings during the next few months.  It's thus a very good time to remind my blog readers that are members of condominium or cooperative associations of some of the important differences between ballots and proxies:

• In general, neither general proxies nor limited proxies can be used to elect the directors of a condominium or cooperative association.   The applicable provisions of the Florida Statutes that deal with the election of directors of condominium associations (F.S. Section 718.112(2)(d)) and cooperative associations (F.S. Section 719.106(1)(d)) specify that the members of the board of directors shall be elected by "written ballot or voting machine".   While the majority of voting interests in a condominium association with ten or fewer units or a cooperative association can provide in their association's bylaws for a different voting procedure that allows for elections to be conducted by limited or general proxy, I suspect that the bylaws governing most ROCs do not allow for this alternative procedure.
• F.S. Sections 718.112(2)(b) and 719.106(1)(b) provide that, unless the association's bylaws provide for a different percentage, the percentage of voting interests required to constitute a meeting of the members shall be a majority of the voting interests (in other words, 50 percent plus one) and that, unless otherwise provided in the association's governing documents or the applicable Chapter of the Florida Statutes (either 718 or 719), "decisions shall be made by owners of a majority of the voting interests represented at a meeting at which a quorum is present".    While limited proxies or general proxies can be used to establish a quorum as provided in Sections 718.112(2)(b) and 719.106(1)(b), ballots cannot be used for this purpose.   In other words, in order for a member to be counted as "present" in establishing a quorum at the annual meeting (or other membership meeting), that member must either be present in person at the meeting or have delivered his properly executed general or limited proxy to his proxy holder or the association prior to the meeting.
• Neither general proxies nor ballots can be used for votes to waive or reduce the statutory reserves otherwise required by statute or to waive the financial reporting requirements of F.S. Section 718.111(13) (for condominium associations) or F.S. Section 719.104(4)(b).  The only way a unit owner can validly vote on these matters is either by limited proxy or in person at the meeting where the voting occurs.
• The election of directors occurs at the annual meeting even If a quorum cannot be established at that meeting if at least twenty percent of the eligible voters have cast a ballot in that election, as provided in F.S. 718.112(2)(d)3 and F.S. 719.106(1)(d)1.

The provisions governing timeshares and mandatory homeowners associations are somewhat different and members of timeshare communities and subdivisions should consult with their association's attorney for additional information.

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Several ROCs have contacted me this summer about an increase in the number of residents that have not paid their monthly or quarterly rents or maintenance fees.   The effects of the economic crisis are now being felt in resident owned communities and there have even been several ROCs in Florida that have been forced to file for bankruptcy protection due in part to unpaid maintenance fees.

I often remind ROC board members that community associations are not banks.  ROCs that continually allow residents to pay rents, maintenance fees, or assessments after the due date function as a bank for those residents by giving those residents an interest free loan for the amount that's due--and each day that that loan remains unpaid puts greater economic pressure on the ROC and the residents that do pay on time.  

ROC managers know that the longer rent or maintenance fees remain unpaid, the greater the chance that the association will have to resort to legal action to attempt to collect the unpaid amounts--which will be growing with each missed payment.

I'd like to offer a few suggestions to help ROCs deal with this dilemma:

• Every ROC should have a policy for dealing with residents that fail to pay rents, maintenance fees or assessments on time.   Every resident should be made aware of the policy and board members should stress that the policy is necessary in order to allow the community to meet its financial obligations.
• This is not the time to "play favorites".  Unless there are extraordinary circumstances, all residents that are delinquent in payment of rent or maintenance fees should receive the same treatment.    For example, if the association's policy is to send a letter to any resident who is more than ten days late in making a payment, that letter should be sent to all residents that are ten days late, even those residents that have "always" paid in the past and "won't be a problem".
• ROCs should take immediate steps to put a resident on notice that he or she is delinquent in a payment.   Each of the statutes that provide remedies to ROCs when rents, maintenance fees, or assessments are not timely paid require certain written notices to be sent to the delinquent resident and the longer the association waits to send that first notice, the longer it will take for the ROC to be able to take the legal steps needed to help collect the unpaid amounts due.
• It's very important to find out as quickly as possible whether a lender has a secured interest in the home.   The ability of a community association to successfully recover amounts due and owing from a resident may be substantially impacted by the existence of a mortgage on or security interest in the lot, home or RV.   This determination should be made by the ROC manager or attorney prior to taking any legal action.  

Hopefully, we'll soon see better news on the economic front.    In any event, ROC managers and board members should continue to take the appropriate steps needed to protect the financial welfare of their communities.

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ROC board members and residents won't be happy with this answer, but I believe ROCs are violating Florida's gambling laws when their members conduct "50/50" drawings at community events.  Here's what leads me to this unpleasant conclusion--and, please remember, I'm only the messenger:

• F.S. Section 849.08 states that anyone who "plays or engages in any game at cards, keno, faro or other game of chance, at any place, by any device whatever, for money or other thing of value, shall be guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083".
•  While a person may participate in certain "penny ante games" conducted under specific circumstances, "50-50" drawings are not included in the definition of a "penny ante game" in F.S. Section 849.085(2)(a).
• The "50-50 drawing" appears to be a "drawing by chance" or "drawing," defined in F.S. Section 849.0935(1)(a) as "an enterprise in which, from the entries submitted by the public to the organization conducting the drawing, one or more entries are selected by chance to win a prize."  The only organizations that can conduct these drawings are those that are exempt from federal income taxation under certain categories of section 501(c) of the Internal Revenue Code.   I can't see any ROC fitting within any of those categories (such as being a charitable or religious not-for-profit organization).
• Even if a condominium, cooperative, or homeowners association somehow manages to qualify for 501(c) status, the ROC still has to comply with all the applicable provisions of chapter 496 of the Florida Statutes, which governs solicitation of funds--again, a difficult, if not impossible, task.
• And, if by some miracle, the ROC has the appropriate 501(c) status and also manages to comply with the applicable provisions of chapter 496 of the Florida Statutes, the provisions of F.S. Section 849.0935(3) and (4)  include the additional requirement that any ticket used in connection with the drawing conspicuously discloses that no purchase or contribution is necessary to participate in the drawing (although the legislature has generously allowed organizations conducting these drawings to suggest a "minimum donation" in connection with the drawing).
• Finally,  F.S. Section 849.11 provides that anyone who "sets up, promotes, or plays at any game of chance by lot or with dice, card, numbers, hazards or any other gambling device whatever for, or for the disposal of money" shall ( just as in F.S. 849.08) be guilty of a second degree misdemeanor.

We've all attended events where "50/50" drawings have occurred.  Many of us have purchased "50/50" tickets and a few of us may have even held one of the winning tickets.   No one is hurt, several lucky attendees walk away with a few extra dollars in their pockets, and the organization conducting the drawing makes a little money.   While it certainly seems improbable that any official of Florida's law enforcement agencies would be concerned about any not-for-profit organization (church, charity, ROC or otherwise) conducting these "50/50" drawings, even if the "50/50" drawing technically violates the law, I found this article over a year ago while researching the issue for one of the ROCs we represent.  Apparently, at least in Pasco County, ROCs might want to think twice before conducting "50/50" drawings.

In any event, I'll certainly understand if I'm not asked to draw the winning tickets at "50/50" drawings at the next ROC meeting I attend. 

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I read two articles in last Sunday's edition of the Sarasota Herald-Tribune that should be of great interest to resident owned communities.

The first article focuses on the "false sense of security" that many Florida residents may have when the next hurricane approaches because they purchased "home protection products" even though the claims that these products make homes "hurricane resistant" or even "hurricane proof" may never have been tested or may in fact were found to be false.   It's a lengthy report but well worth reading if for no other reason than to remind managers and ROC board members of the dangers involved in recommending products or service providers.   Remember, we live in a world where potential liability lurks just around the corner.   No ROC wants to be sued because it recommended a product or service to one of its residents and that resident was injured or suffered damage to his property because the product or service recommended by the ROC board member or manager didn't perform as advertised.

The second article concerns the foreclosure crisis and reports that many lenders have now decided to delay taking title to properties that are in the process of being foreclosed.   There are a number of reasons for this, including those I've listed below:

• Lenders are now being required by judges to produce more records and file more pleadings and this adds to the time involved in the legal proceedings
• Lenders already have much more foreclosed real estate in their portfolios than they can sell at this time
• Every lender knows that once that lender takes title to a property at the foreclosure sale, that lender becomes responsible for both assessments and fees for the parcel and the maintenance and upkeep of the property                                           
• Lenders have no desire to pay any amounts for properties that are "non-performing" (that is, properties that are generating no income for the lender) and thus many of them have decided to leave these "non-performing" properties in "foreclosure limbo" rather than taking title to them.

This article simply confirms conversations I've had with representatives of several lenders within the past few weeks.

What this means for ROC's is quite simply that whatever rights ROC's have to collect unpaid assessments under Florida Statutes Sections 718.116(1)(b) (for condominiums), 719.108(1)     (for cooperatives) or 720.3085(2)(c) (for mandatory homeowners associations), those rights are triggered by the acquisition of title to the property--and if the lender chooses to delay the foreclosure proceedings, that "trigger date" will occur later (in some cases, much later) rather than sooner.  During this "limbo" period, ROC's will be forced to deal with properties that may not be properly maintained and are not providing any income to the community's coffers.  This is already creating substantial hardship for many communities thoughout the country. 

I certainly cannot tell you that relief is just around the corner from the many problems being created by the foreclosure crisis and the epidemic of untested, unproven, or defective "hurricane protection products" but I'll do my best to keep you posted when I read about any further developments.

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