Cooperative and HOA Boards Will Soon Have Emergency Powers

Florida's Governor has signed into law Senate Bill 807 which contains very important changes to the laws governing resident owned communities. I'll discuss many of those in future entries to this blog but since we're now into hurricane season, I thought I'd first highlight the creation of Florida Statute Sections 719.128 and 720.316, both of which are entitled "Association emergency powers".

These new sections allow the boards of directors in cooperative associations and mandatory homeowners associations to exercise certain powers and take certain actions in response to damage caused by an event for which a "state of emergency"is declared under Florida law in the area where the community is located, unless specifically prohibited by the association's governing documents.

These powers and actions include the following:

  • Conducting, canceling, or rescheduling board or membership meetings after notice of the meetings and board decisions is provided in "as practicable a manner as possible," which may be by numerous methods, including "any other means the board deems appropriate under the circumstances."
  • Designating assistant officers who are not directors
  • Relocating the association's principal office or designating an alternative principal office
  • Entering into agreements with counties or municipalities to assist with debris removal
  • Implementing a disaster plan which may include turning on or shutting off electricity, water, sewer, or security systems and air conditioners for association buildings

There are other important emergency powers that I'll discuss in my next entry.

I want to close with a few additional points:

  • These new sections extend to boards of directors in cooperatives and mandatory homeowners associations similar powers that were granted to condominium association boards several years ago.
  • The powers must be exercised so as to be consistent with Florida Statute 617.0830.
  • Included in the emergency powers for the board of directors of a cooperative association is the power to require the evacuation of the cooperative property in the event of a mandatory evacuation order in the area where the community is located. If a unit owner or other occupant of a cooperative fails to evacuate the cooperative property after the board has required that evacuation, the association is immune from liability for injury to persons or property arising from such failure. In other words, a unit owner or occupant remains in the home at his or her own risk--not the cooperative association's.  

These two new statutes become effective July 1, 2014 and I'll discuss some additional powers and limitations in my next blog entry.

Time for Co-op Board Member Training!!

Welcome to the new world of training for board members in our resident-owned cooperatives!

Annual meeting season has begun and new board members are being elected.  As you know, Florida Statutes now require that newly elected or appointed board members either certify in writing to the co-op’s secretary that the new board member has read the association’s bylaws, articles of incorporation,  proprietary lease, and current written policies, that the board member will work to uphold those documents to the best of his or her ability, and that the board member will faithfully discharge his or her fiduciary responsibility to the association’s members---or, instead of providing that written certification, a newly elected or appointed board member can submit a certificate of having satisfactorily completed a seminar approved by the Department of Business and Professional Regulation (DBPR) for training co-op board members.  This must be done within 1 year before or 90 days after the new board member’s election or appointment. 

I’m pleased and excited to announce that my course materials were approved by the DBPR late last year and I’ve scheduled my three hour program for 4 separate locations in the next few months:

  •  Wednesday, February 12, starting at 9:30 a.m. at Westwinds Village in Bradenton
  •  Wednesday, February 19, starting at 9:30 a.m. at Country Club Estates in Venice
  •  Tuesday, March 18, starting at 10 a.m. at Hammock Estates in Sebring
  •  Tuesday, April 8, starting at 10 a.m. at Molokai in Leesburg

My program is specifically designed for board members in co-ops and is NOT approved for certification of board members in condominium associations or homeowners associations governed by Chapter 720 of the Florida Statutes.

There is no admission charge and light refreshments will be served.   All co-op board members, whether or not newly elected or appointed, are encouraged to attend.  Even if those board members don’t need to be “certified,” I’m sure they’ll find the three hours worthwhile.  The price is right and everyone will have an opportunity to meet fellow board members from neighboring communities.

We do need to have a good idea of the number of current or new board members (or candidates for the board if your elections have not yet occurred) in order to make sure our host communities have enough refreshments and seating, so please RSVP to Karen Midlam (kmidlam@lutzbobo.com() or Kathy Sawdo (ksawdo@lutzbobo.com) at your earliest convenience.

Depending on the needs of our friends in Lee, Collier, and Pasco Counties, we’ll schedule either a board training program or one of our regular community association “roundtables” in those areas in the very near future.

I look forward to seeing many of you at one of these board training sessions in the next few months and I hope all of you are enjoying a very happy and healthy beginning to 2014.

 

A Follow Up on HOA Registration

In the week or so since my last entry, I've been contacted by managers and board members from several resident owned cooperatives who have received notices about the new recent requirement for mandatory homeowners associations to register with the State. 

I want to clarify that condominium associations formed under Florida Statute Chapter 718 and cooperative associations formed under Florida Statute Chapter 719 do not have to worry about this new requirement as these associations have already registered with Florida's Department of Business and Professional Regulation.

The new registration requirements apply to mandatory homeowners associations governed by Chapter 720 of the Florida Statutes --not condominiums or cooperatives.

I'd suggest that a manager or board member of any condominium or cooperative association that receives one of these notices contact his or her attorney and provide that attorney with a copy of that notice.   Other than the DBPR's press release, which was included in my last entry, I don't know of any other official notice that would be sent by the State and I'm concerned that one or more enterprising services may be offering to "help" an unsuspecting community register (for a fee, or course) even if the community is not required to do so.

Several of the resident owned cooperative associations we work with have the phrase "homeowners association" in their corporate name.  Those associations are nonetheless still cooperatives governed under Chapter 719 regardless of the fact that their unit owners refer to themselves as members of a "homeowners association". 

When it comes to some cooperatives (as well as some condominiums and non-mandatory homeowners associations), a rose by any other name may still be a rose.

Again, if you have any questions about whether these new registration requirements apply to your association, please contact your association's attorney.

 

Repairs versus Spending Limits in ROCs

Briny Breezes is a resident owned manufactured housing cooperative located in Palm Beach County.

Two of the community's sea walls that protected the cooperative property needed repairs and upgrades.   The directors of Briny Breezes, Inc., the cooperative association that owns and operates the community, hired an engineer who reported that the required repairs and upgrades to the seawalls would cost approximately $150,000.

While there were adequate funds in the association's reserve account to pay for these repairs, Briny Breeze's governing documents clearly prohibited the association's board of directors from spending more than $30,000 for capital improvements or spending more than $30,000 for replacement of capital assets in any fiscal year.  According to the association's governing documents, the affirmative vote of at least 51 per cent of the members was required for these expenditures.

Earlier this year, Briny Breeze's manager asked the Division of Florida Condominiums, Timeshares, and Mobile Homes (the "Division") to determine whether the association's board of directors could use the reserve funds to pay for the seawall repairs that were needed to protect the cooperative property without obtaining the approval of the association's members.

The Division, in its Declaratory Statement issued this May, held that the association could use its reserve funds to make the needed repair to the seawalls without a vote of the membership.

The Declaratory Statement cited Florida Statutes Section 719.104(5), a federal bankruptcy court decision interpreting Florida law, several decisions of our state appellate courts and a decision rendered by one of the Division's arbitrators. 

The Division noted that , even if expenditures result in alterations or improvements to the community's common elements, it is within the board's authority to authorize these expenditures without member approval where the expenditures for the alterations or improvements are needed to protect the common elements.

At the same time, the Division did caution that an association's directors might very well be precluded from unilaterally spending money for upgrades that constituted material alterations to the common elements and went beyond the repairs required to protect the common elements.

The Division concluded that, while the "safest course for the board is to get a unit owner vote", the board should not be limited to "simply repair the sea wall to protect the common elements."

Hopefully, this Declaratory Statement will provide ROCs with some guidance in the future.

I'll be discussing issues affecting aging members of resident owned communities this week on "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!

ROCs and the Komen/Planned Parenthood Controversy

Followers of this blog know that I frequently caution that almost all board meetings in resident owned communities must be properly noticed and open to association members.  There are specific provisions prohibiting board members from meeting "behind closed doors" in the statutes governing condominium associations, cooperative associations, and mandatory homeowners associations.

While it's clear that these statutory provisions focus on ensuring that association members are provided with adequate notice of matters that are to be considered by the board of directors, there's another very important consideration that can be illustrated by the recent difficulties faced by Susan G. Komen  For the Cure after its decision to no longer offer grants to Planned Parenthood for mammograms was made public.

From what I've read about the initial decision, there was little if any input requested from or given by  the many local organizations that help fund. Komen .  In fact, it appears that some of Komen's board members were unaware of the decision--which had been made in the latter part of 2011

As everyone knows, once Komen's decision became public, a firestorm of negative publicity erupted--and even though Komen apparently reversed its decision shortly after the media picked up on the story, I have to believe that most of us will no longer view Komen in quite the same way as we did before all of this occurred.

My assumption is that no law prevented Komen's leadership from meeting "behind closed doors" when it concluded that the grants to Planned Parenthood be discontinued.   When a board is allowed to isolate itself from its members it's all too easy--and unfortunately all too common--to make decisions in a vacuum that prevents any factors or considerations other than those of the board members from being heard..  If one or two of those board members are particularly overbearing, it's not too much of a stretch to see how a ROC board could find itself regretting a decision made "behind closed doors" once that decision is made public and legitimate concerns of the members are finally heard.

This is a very important "side effect"  of the laws requiring open board meetings and member input at those meetings--no "vacuum" can exist if those laws are followed.   Every resident owned community benefits when decisions are made only after the members have been given the opportunity to have their say.  

I wonder if Komen's leadership wishes it had given its supporters that opportunity before making its initial decision on the grants to Planned Parenthood

House Bill 1195 and Cooperative Associations (Part II)

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.

 

 

 

"Emergency" Board Meetings Require Real Emergencies

Those of you that have attended our seminars for resident owned communities know that I stress the importance of all board meetings being properly noticed and open to all association members.

I'm asked at least several times every year whether a ROC board can meet in "emergency" session and thus dispense with the requirements to post a notice of the board meeting at least 48 hours before the meeting (or, in certain situations, to provide the notice to the members at least 14 days before the meeting).  

Sometimes, the question involves an item that was not included in the agenda for an otherwise properly noticed board meeting but was considered or attempted to be considered by the board on an "emergency" basis.

The Florida Statutes governing condominium associations, cooperative associations, and mandatory homeowners' associations provide for the board to act in an emergency without first providing notice to the membership.   In fact, several years ago, the legislature added Florida Statute Section 718.1265 to the statutes governing condominium associations to specifically provide for a condominium association's emergency powers in response to "damage caused by an event for which a state of emergency is declared" under Florida law.

Neither cooperative associations nor mandatory homeowners' associations were granted the specific powers set forth in F.S. Section 718.1265 and an emergency situation could exist in a community even if a state of emergency has not been declared.

So exactly what constitutes an "emergency? 

Here's my simple rule of thumb:  Can the situation wait until proper notice is given?  In other words, will the community suffer severe damage that will be cost a substantial amount to repair or be impossible to repair if the board waits 48 hours before it acts?  

Here are a few examples of what I consider an "emergency":
 

  • The need for immediate response either before, during, or after a hurricane
  • The clubhouse is destroyed or severely damaged by fire or weather related event
  • A water main that serves the community breaks and sewage is running down the streets of the community

And, regardless of what board members may think, I don't believe any of the following constitute an "emergency":

  • An important issue must be voted on before the next scheduled board meeting and was not placed on the agenda for the board meeting that is scheduled for today
  • The association has an opportunity to buy a truck at a great price but has been told it must act today
  • A crack has developed in one of the shuffleboard courts and the contractor says he'll give the association a "bargain" price if the board can commit to him immediately

Board members should use a common sense approach when considering whether "emergency" action is permitted.   The members of community associations have the right to know when the board is meeting and what issues the board is considering--and unless a situation truly demands immediate action in order to protect the community, its residents, and its property, the board should simply schedule a "special" board meeting to deal with the situation and post the notice and agenda as required by Florida law.  

Better to wait that short period of time than deal with angry residents or have to explain to our Department of Business and Professional Regulation why the board violated Florida law.

 

 

 

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.

 

 

 

 

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!

Skype and ROC Board Meetings

Most ROC managers and board members know that Florida statutes governing condominium associations and cooperative associations allow directors to attend a board meeting by phone.  

While the statutes governing mandatory homeowners associations don't provide for an HOA board member to appear by phone at a board meeting, if the HOA is a not-for-profit corporation (and most are), the provisions of Florida Statute Section 617.0820(4) may apply and allow HOA directors to participate by "any means of communication by which all directors participating may simultaneously hear each other during the meeting".

The statutory provisions governing condominium and cooperative associations focus on the ability the directors not attending the meeting in person to hear and be heard by the board members attending in person as well as the unit owners present at the board meeting.  Both statutes (Section 718.112(2)(b)5 for condominium associations and 719.106(1)(b)5 for cooperative associations), in contrast to Section 617.0820(4), specifically refer to a "telephone conference" and the use of a "telephone speaker".

But what about Skype?

Many of my blog readers may know that Skype is a free computer program that allows its users to speak at no expense with other Skype users through their computers via the internet.  

One of the manufactured housing cooperatives we represent was thinking about using Skype as a substitute for phone conference calls for directors who could not appear in person for board meetings.   At the time, I hadn't sampled Skype and felt that the process might be too cumbersome and was concerned about statute's specific reference to the use of a telephone.

That was several months ago--before I retired the old but trusty laptop that my younger daughter had handed down to me and purchased a new laptop with a built-in web camera feature.   I thus had an excuse to try Skype and was very impressed with the audio and visual quality of the connection (no doubt to the amusement and mild annoyance of my daughters and one of my nieces who were the first three recipients of my Skype "test run" and who of course have used Skype for several years).

I visited Skype's website and it appears that Skype users can easily arrange for conference calls that will allow everyone on the call to hear and be heard.   I can certainly picture board meetings where there will be a laptop (rather than a telephone speaker) in the center of the table at the ROC clubhouse where the meeting is being held--all at no cost to the association other than the ongoing monthly charge for internet service and, if a member's laptop is not on that clubhouse table, the one-time charge for the association to purchase a laptop.

While using Skype rather than a telephone speaker may not technically constitute a "telephone conference," I would certainly hope that as long as all board members and unit owners can hear and be heard, a board meeting where some directors attend by Skype would meet the statutory requirements.

I'm can't wait for my next chat with that forward thinking ROC.

2008 Amendments Create Confusion for Members of and Candidates for Florida ROC Boards

The Florida Legislature substantially revised several sections of our state's Condominium Act last year.   One of the important revisions focused on the length of time a unit owner could serve as a board member without seeking re-election.   Effective October 1, 2008, the terms of all members serving on condominium association boards were considered to expire at the next annual meeting unless the majority of the unit owners approved an amendment to the association's bylaws (or confirmed an existing bylaw provision) that would provide for "staggered" two year terms.   This revision to Florida Statute Section 718.112(2)(d)1, was accompanied by the rather curious statutory amendment found in F.S. Section 718.112((2)(d)3 which required that any candidate for a board position sign a "certification form" attesting that he or she had read and understood, to the best of his or her ability, the association's governing documents, the provisions of F.S. Chapter 718 and any "applicable rules".

Needless to say, these amendments created quite a stir among board members and managers in resident owned communities.   I received more than my share of calls and emails from ROC board members and managers asking whether their particular communities were subject to these new revisions.

At least for the immediate future, the answer to whether a particular ROC is subject to these  restrictions on the length of terms for its board members and the certification form requirement turns on whether that ROC's community association is a condominium association as opposed to a cooperative association, mandatory homeowners association or some other type of corporation:

  • Condominium Associations fall within Florida Statute 718 and must comply with the statutory revisions to Section 718.112 governing the length of terms for board members and the certification form.
  • Cooperative Associations are primarily governed by Florida Statute Chapter 719.   For the most part, Chapter 719 remained unchanged during the 2008 and 2009 Florida legislative sessions and for now residents of ROCs that are cooperatives continue to have the ability to decide for themselves the length of terms for board members and do not have to sign certification forms in order to run for positions of their boards.
  • Florida Statute Chapter 720, which governs mandatory homeowners associations, also survived the 2008 and 2009 sessions of the Florida Legislature with no term length restrictions and no certification form requirement.

However, the 2010 legislative session looms in the not so distant future and I fully expect that attempts will be made to bring greater uniformity to the statutes governing the various types of community associations.  I'm not certain what will happen with the certification requirement but I won't be surprised if both cooperatives and mandatory homeowners associations find themselves subject to some sort of restrictions on term lengths by this time next year.   I'll keep you posted.