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.

 

Last Sunday’s edition of the Sarasota Herald Tribune featured two separate front page articles that highlight the decisions that helped lead us into our current economic mess and threaten to keep our economy from recovering in the near future.

  • The first article focuses on a condominium project in Charlotte that finds most of its units "occupied" by "phantom purchasers" from Brazil who have not paid their maintenance fees and have left the few purchasers that actually live in the development facing substantial monthly expenses for the upkeep of the common areas.  While this is a lengthy report, I highly recommend it to members of resident owned communities.
  • The other article detailed the failure and refusal of many of our major financial institutions to make loans to small businesses and homeowners in spite of the clear message sent to these institutions by our President and Congress.   In its own way, this article is as depressing and maddening as the first.

I’d also like to recommend L. Jon Wertheim’s story in the most recent issue of Sports Illustrated.  It’s entitled "The Games of Their Lives" and it describes the efforts of two athletes to fulfill a final dream–to compete in the Beijing Paralympics.   This bittersweet but uplifting depiction of the triumph of the human spirit and the tremendous support given to these two champions (in many cases, by total strangers) gave me a very helpful dose of perspective during this time of the year.

As many of you know, we’ve just completed our first set of seminars for the 2009-2010 season.   Thanks to the over 200 residents from almost 55 different communities throughout the state for attending and to our hosts at Molokai in Leesburg, Old Bridge Village in N. Fort Myers, Sandalwood Park in Venice, and Westwinds Village in Bradenton for their great hospitality.   We’ll be posting the dates and locations for our next set of seminars within the next few weeks.   We hope to see you at one of those events!

 

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.

 

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

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

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

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

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

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

The managers and board members in the communities we work with have been faced with some rather interesting situations during the past few months.   Here’s a sampling–see if you can guess what they have in common:

  • A ROC manager receives a frantic call from one of the residents in her community about  another resident who wandering up and down one of the streets in the community waving a machete.   
  • A board member wants to stop cars that she feels are speeding in her community and tell the drivers that they are violating the rules and regulations in her community.
  • Another community is about to begin a substantial renovation of its clubhouse and one of its board members would like to be appointed as the "project supervisor" to oversee the general contractor and all of the work.
  • Several board members in another community are convinced that a resident requesting to have a pet reside with her as a "reasonable accommodation" for her disability is not disabled and have stated that they will vote against granting the resident’s request even if she provides the board with a statement from her treating physician verifying the disability and the need for the accommodation.

In each of these situations, ROC managers or Board members are being asked to or are volunteering to step well outside the scope of their  "job descriptions".   Neither  managers nor board members have the training nor should they attempt to disarm someone waving a machete, as that situation clearly calls for the local law enforcement authorities.   Likewise, even if a board member can be certain that someone is exceeding the speed limit in the community, the  appropriate action is to positively identify the vehicle and report the incident to the manager or, in certain circumstances, the police or sheriff’s department.

While it’s common for the community manager and one or more residents that have been appointed by the board to serve in an advisory capacity or as a "go between" with the general contractor and other professionals involved in a major community project, even if a board member has the qualifications (including any required licenses) to supervise the project, why would the association want to put itself in the position of being a defendant in a lawsuit filed as a result of damage or injury that occurs as a result of defective workmanship?    I have no doubt that the association would be sued on the grounds that one of its board members was supervising the project but I do have doubts that the association’s insurance would protect the association in this situation–precisely because the association allowed its board member to act outside of a board member’s "job description".  Also, what if the association is unhappy with the board member’s performance as the supervisor–how comfortable will be other board members and the other residents in the community be if the board has to terminate their fellow board member’s employment?

Finally, numerous court decisions involving Fair Housing Laws make it very clear that allowing board members to "play doctor" and substitute their judgment for that of trained health care professionals is a prescription for disaster.  While the association’s board is entitled to request documentation to establish the basis for a resident’s request for a "reasonable accommodation," once that documentation has been presented, a failure to make that "reasonable accommodation" may have serious and adverse financial implications for the community. 

ROC managers and board members have more than enough work within their "job descriptions" to keep them busy.   The community that allows or encourages its manager or board members to step outside of those "job descriptions" does so at its own peril.

 

Yesterday’s "Sarasota Herald Tribune" featured a column by Tom Lyons about a dispute between the board of a condominium association and one of its residents.   As I read the article (which was headlined "Condo flag fight needs a little common sense") I wondered whether this association’s directors had considered the negative publicity resulting from their decision to require the resident to remove five or six small flags that she had arranged in a circle around a tree located on the common area outside of her unit on the Sunday before Veterans Day.   The question as to whether the association was correctly interpreting Florida Statute Section 718.113 and its own governing documents seemed rather unimportant when compared with the desire of this resident to demonstrate her patriotism during the week of Veterans’ Day–especially since, according to Mr. Lyons’ column, the resident was the mother to two sons and daughters-in-law who were currently serving in the Navy and had lost two friends who died while serving in Vietnam.

Later that morning I spoke with a board member from one of the ROCs we represent.     She had just received a rather unique request from a couple that wanted to spend a month in the  recreational vehicle park operated by the association.   The rules governing the RV park and the rest of the community prohibited pets and the couple was aware of this because they had friends that lived in the park.   This couple trained guide dogs and they wanted to know whether the Board of Directors would make an exception to the "no pet" rules and allow them to bring the dog they were currently training with them during their stay.   While there were certainly other nearby locations where the couple could stay with the dog, both they and their friends hoped that the Board could grant their request.  

As we discussed this situation, it was clear that this board member had already read Florida Statute Section 413.08 which gives persons with disabilities rights to be accompanied by a "service animal" in "all areas of a pubic accommodation" that "the public" would normally be permitted to occupy.   However, the board member advised that the couple was not claiming that either of them had a disability nor could the dog they were training fit into the definition of a "service animal" at the time that the dog would be brought into the park.  How would I suggest that the board respond to the request?

I suggested that the board should weigh a number of factors, including the following::

  • While it did not appear that the board was required to grant the couple’s request under either state or federal Fair Housing Laws or Disability Laws, the board did, as always, have the authority to grant exceptions to the community’s "no pet" rules.
  • The couple would be staying in the park for a relatively short period of time (30 days).
  • The fact situation presented to the Board was certainly uncommon–how often would someone request an exception to the pet restrictions on grounds that the pet was being trained to be a service animal or guide dog?
  • The couple had presented the board member with documentation that sufficiently established that they were in fact qualified guide dog trainers and were training the dog for that purpose.
  • The couple had friends in the community and those friends and the other residents in the park would have the opportunity to learn about the work involved in training guide dogs and how these dogs help persons deal with their disabilities.

In short, I suggested that while I didn’t believe that the Board was required to make an exception to the community’s "no pet" rules, the Board could certainly justify an exception under these circumstances if it chose to do so.  I was most impressed by the efforts clearly being made by this community’s board of directors to weigh all sides of the issue before making a hasty decision.  I sensed that the members of this community’s board would apply common sense and compassion in its decision-making process and hope that all ROC boards follow this board’s example.

 

 

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.

Given my most recent entry about the difficult decisions that ROC boards are facing due to the struggling state of our economy, I hope you’ll find this article about the Red Hat Society that I read in  today’s Sarasota Herald-Tribune interesting.   It seems all of my visits to the communities we represent coincide with some Red Hat Society event and I have a feeling that many readers of my blog may already know about the debate over whether dues should be charged to every "Red Hatter".  

The President of one the many "55 and over" resident-owned communities we represent recently contacted me to discuss what is becoming an all too familiar situation:

The rules governing this community specify that at least one of the persons occupying a home had to be at least 55 years of age and that any other person occupying the home had to be at least 45 years of age.   Many, if not most, "55 and over" ROCs in Florida have similar provisions.

During the past year, several residents in the community found themselves opening their homes to children who had lost jobs or were otherwise suffering financial hardships.    This community’s rules were similar to many other ROCs and provided for a period of time (in this case, thirty days) where an underage person could occupy a home as a permitted "guest".   Unfortunately, none of these underage children were able to find affordable housing within that thirty day guest period. 

The residents had requested the Board for an extension of the "guest period" for their underage children and the Board had granted two separate extensions of ninety days and had advised each of the residents requesting these extensions that none of their current "guests" would be granted any further extensions.

All but one of  the underage children found affordable housing during the final extension period.  As can be expected, the members whose child was not able to secure housing outside of the community was now requesting that the Board grant yet another extension.  

I suggested to the ROC President that the Board should consider a number of factors in deciding whether to grant this latest request:

  • The "55 and over" exemption to the Fair Housing Laws was not an issue as the parents (both of whom were over 55 years of age) would remain in the home with the child. 
  • Since the "55 and over" exemption was not a factor, the real issue was whether the Board felt comfortable allowing a further exception to the community rules. 
  • The Board had expressly stated to the requesting members that no further exceptions would be allowed and the residents in the community could certainly view the granting of another extension of time as a sign of weakness or lack of concern with enforcing the community rules.
  • At the same time, every member knows the problems that our current economic crisis has created and a Board refusal to grant an additional extension might be viewed as heartless and insensitive.

I offered some guidelines that might help provide a solution–an extension for a shorter time period (perhaps thirty days) with the understanding that each and every request for an additional extension be accompanied by documentation establishing to the Board’s satisfaction that the underage child was continuing to make good faith efforts to find employment that would provide him with an income sufficient to find housing outside of the community.

Clearly, there is no quick and simple answer for board members when considering requests based on the economic hardship of underage children of residents in the community.    What is clear is that every community may find itself dealing with requests of this nature in the near future.

 

 

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.