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.

 

 

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

Governor Crist signed Senate Bill 1196 into law last week and I’ll be posting several entries about the amendments to Florida’s statutes affecting condominiums, cooperatives, and mandatory homeowners’ associations in the coming weeks. 

I’d like to first mention a provision in Senate Bill 1196 that corrects a "glitch" in the statutes governing cooperative associations.

SB 1196 amends Florida Statute Section 719.106(1)(d)6 to provide that, unless a cooperative association’s bylaws provide otherwise, a board member appointed or elected to fill a vacancy on the board that occurs before the expiration of the term serves for the full remaining term of the seat being filled.   Although the Florida Administrative Code Section that expanded on F.S. 719.106(1)(d) specifically provides for a vacant seat being filled for the full remaining term, because the statute itself was silent on the issue, there was some uncertainty as to whether the vacancy was filled for the full term or only until the next annual meeting.   This amendment removes any potential inconsistency between condominium associations and cooperative associations on the issue of filling a vacant position on the board that occurs before the expiration of the term.

SB 1196 further amends the statutes governing retrofitting for fire sprinkler systems in both condominiums and cooperatives by prohibiting local authorities from requiring completion of fire sprinkler system retrofitting before the end of 2019.   This is a five year extension from the date provided for prior to this amendment.   The association membership still has the right to "opt out" of retrofitting.

SB 1196 also adds several categories of information that is not to be made available to members or parcel owners in mandatory homeowners associations.

In my next entry, I’ll discuss some changes found in SB 1196 that are intended to help ROC boards and managers deal with our foreclosure crisis.

 

ROC managers, board members and the professionals that advise them quite often long for the "good old days" when the Florida Statutes governing condominium associations (Chapter 718) and cooperative associations (Chapter 719) were almost identical in provisions concerning elections, eligibility to run for the board, and waivers of financial reporting requirements. 

Those days are, for better or for worse, long gone.   Here’s a quick sampling of the just a few of the important differences that now exist between the statutes governing cooperatives and condominiums:

  1. Terms of board members:   F.S. Section 718.112(1)(d) now provides that the terms of all members of the board of directors of a condominium association expire at the annual meeting unless a majority of the unit owners approve a provision in the bylaws that permits staggered terms of no more than two years.   F.S.  Section 719.106(1)(d) imposes no such term limitation on board members in cooperative associations.
  2. Eligibility to serve as a board member:   F.S. 718.112(1)(d) also prohibits co-owners of a unit in condominium associations with more than 10 units from serving on the board at the same time and also prohibits persons who are more than 90 days delinquent in payments of any fees or assessments due to the association, and many persons convicted of a felony from such service.  There is also a rather curious requirement that any candidate for the board of a condominium association sign a form certifying that "he or she has read and understands, to the best of his or her ability, the governing documents of the association" as well as the provisions of Chapter 718 and any " applicable rules".   Any member of a cooperative association that wishes to run for the board of directors will find that Chapter 719 does not contain any of these eligibility requirements or prohibitions if he or she wishes to serve his or her community.
  3. Financial reporting requirements:  F.S. 719.104(4)(b) allows cooperative associations that are larger than 50 units  to waive the requirement that the association’s financial statements compiled, reviewed or audited.   This waiver must be done annually by the vote of a majority of the voting interests present, in person or by proxy, at a duly called membership meeting.   F.S. 718.111(13) now prohibits a condominium association’s membership from waiving these financial reporting requirements for more than 3 consecutive years.

I’ve just highlighted a few of the many differences that now exist between Chapters 718 and 719.   We haven’t even touched on Chapter 720 HOA’s or those "hybrid" ROCs that may or may not be governed exclusively by the provisions of Chapter 617, Florida’s statutes for not-for-profit corporations.   With the next session of the Florida legislature just a few months away, we’ll just have to wait and see if there’s any hope of returning to those "good old days".

Stay tuned.

 

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.

 

Our first set of ROC seminars for the 2009-2010 "season" have been scheduled.   We’ll discuss how the new "Red Flag" identity protection rules will affect resident owned communities, cover election procedures and the differences between ballots and proxies, provide some updates on developments in the Fair Housing area and recent court cases and highlight proposed legislation that may impact community associations.   In addition to that rather full agenda, as always, we’ll devote some time to an "open forum" for questions from our attendees. 

The seminars are scheduled as follows:

  • Tuesday, November 17, 2009 at the Molokai community in Leesburg.
  • Wednesday, November 18, 2009 at Sandalwood Park in Venice.
  • Thursday, December 3, 2009 at Old Bridge Village in North Fort Myers.
  • Thursday, December 10, 2009 at Westwinds Village in Bradenton.

The seminars start at 10 a.m. and end at 12:30 p.m. and all of the seminars will be held in the clubhouse at each of these communities.  We plan on covering the same topics at each of these locations so you can choose the date and location that’s most convenient.

While the seminars are free of charge to all attendees, because we do serve refreshments and want to make sure that there is enough seating and space for everyone,  please notify us in advance if you wish to attend.   Also, please note that the seminar at Molokai is being held in conjunction with the monthly meeting of the Mid-Florida ROC group and if your community is located in or near Lake or Sumter County and is not yet a member of that group, please let us know when you make your reservation and we’ll provide you with the contact information for one of the Mid-Florida ROC officers.

If you are interested in attending one of these seminars and your community hasn’t already reserved seats, please email either Karen Midlam (kmidlam@lutzbobo.com) or Kathy Sawdo (ksawdo@lutzbobo.com).  They’ll be able to provide you with directions and answer any other questions you might have.

We’re looking forward to seeing you at one of these seminars and if you have any topics you’d like to have us discuss at future seminars, please email me at sgordon@lutzbobo.com.