Comments: Comments Off on Exclusive Savings On Fountains & Aeration Labor Day is over but the deals aren’t! Purchase a new fountain or aeration system and receive FREE installation.
We believe balanced, healthy waterbodies help create meaningful experiences on and around the water. That’s why we are excited to extend this exciting offer that will help enhance your waterbody (and save you money)…
You read that right… Save up to $700 with this exciting offer! Purchase any new fountain or aeration system and receive FREE installation services*. Set your lake or pond up for success in the new year with a beneficial fountain or aeration system. Enhance your waterbody while saving money!
Deal expires October 31. Maximize your savings NOW.
*Free basic installation, or $700 off installation, with purchase of new fountain or aeration system. Offer valid for contracts signed after 09/07/21. Installation must be prior to 12/31/21.
Comments: Comments Off on Can Remote Meetings Be Held Now That the State of Emergency Has Expired?
Can Remote Meetings Be Held Now That the State of Emergency Has Expired?
The “state of emergency” that had been imposed by Governor DeSantis in light of the COVID-19 pandemic expired on June 26, 2021. As a result, the “emergency powers” given to condominium, cooperatives, and homeowners’ associations in Sections 718.1265, 719.128, and 720.316, Florida Statutes, respectively, are no longer in effect. The emergency powers that were in effect during the COVID-19 state of emergency included conducting board meetings and membership meetings with notice given as is practicable, but did not specifically give associations the authority to conduct meetings remotely. Nevertheless, many associations did hold meetings remotely in an effort to slow the spread of the virus and to protect its residents and employees. (NOTE: The emergency powers statutes were amended effective July 1, 2021, and now specifically provide that during a declared state of emergency, the association may conduct board meetings, committee meetings, elections, and membership meetings, in whole or in part, by telephone, real-time videoconferencing, or similar real-time electronic or video communication.)
Now that the state of emergency has expired, what meetings can associations hold remotely, either in whole or in part?
With regard to board meetings, the statutes specifically address the board members’ participation by telephone or videoconferencing, but do not address whether owners may participate remotely or whether the owners can be required to participate remotely. The statutes do provide that meetings of the board must be “open” to all owners. If your board wishes to hold remote board meetings, the board can allow owners to also participate remotely in the same manner as the board members by giving the owners the call-in number or videoconference link. The law is unsettled as to whether a remote only meeting is valid, as some owners may not have the capability or desire to participate remotely.
With regard to owner meetings, the statute governing corporations not-for-profit, Section 617.0721(3), Florida Statutes, provides that owners and proxyholders may participate remotely and can also vote remotely if authorized by the board of directors, and subject to such guidelines and procedures as the board may adopt. But as with Board meetings, none of the statutes indicate whether “remote only” meetings, which require the owners to participate remotely, are valid. (Note that this type of “remote voting” contemplated by Section 617.0721(3) is different than the electronic/online voting that is permitted by Sections 718.128, 719.129, and 720.317, Florida Statutes).
For owner meetings at which an election will be held, the issue is more difficult. The Condominium and Cooperative Acts require owners to vote by “secret ballot” and many homeowners’ associations governing documents also have a secret ballot requirement. In that case, an owner participating remotely would be unable to vote on the election of directors unless the owner voted in advance of the meeting or unless the association had authorized electronic/online voting pursuant to Sections 718.128, 719.129, and 720.317, Florida Statutes). Further, in condominium and cooperative associations, the “election committee” that opens and counts the election ballots must be physically together, and owners are entitled to observe the ballot counting process in the owners’ “presence”.
Because of these legal issues, a “hybrid” approach where owners are given the option to participate remotely, but are not required to participate remotely, is the best approach. Some meetings lend themselves to remote participate more than others. For instance, board meetings and non-election owners’ meetings are the types of meetings that can be managed remotely. However, if there is an election, there will need to be additional considerations.
Boards should discuss these issues with the association’s attorney so that all of the necessary board authorizations can be prepared and approved by the board.
Comments: Comments Off on Budget. Reserves. Insurance. Collections. How your community association addresses these will determine its financial health and well-being for years to come.
Budget. Reserves. Insurance. Collections. How your community association addresses these will determine its financial health and well-being for years to come.
To ensure the financial well-being of the association, boards and managers should focus on at least four factors in the association: budget, reserves, insurance, and collection practices. This article will take a brief look at each of these, but this is not a finite list. It is recommended that you consult with your association attorney and accounting professionals to ensure you are doing all that you can to address these and any other financial facets of the association in the best way possible for your community.
Budgets
Without sufficient funds, the association cannot carry out all the duties it is required to undertake pursuant to the Florida Statutes or its governing documents. The association obtains these funds from its members. Unfortunately, many associations tend to try to keep the budgets as lean as possible to keep the assessments as low as possible. While no one likes to pay high maintenance fees if that can be helped, no one is served well by an association maintaining an artificially low budget to keep the monthly assessments low either.
The budget process should be an honest evaluation of the known and expected expenses the association will have in the coming year, and the ultimately adopted budget should reflect as much. A budget committee can be formed to help the board with the budgeting process. The Florida Condominium Act requires the proposed annual budget of estimated revenues and expenses to be detailed and to show the amounts budgeted by accounts and expense classifications.
Rather than minimizing anticipated expenses in the hopes they won’t be needed after all or creating a budget on an expectation that certain expenses may be negotiated for a lower price in the future, the association should budget on what things are actually expected to cost. Thereafter, if the lower price is negotiated, the budget can be amended downward. Most owners will agree that an amendment to lower the budget is much more palatable than a surprise special assessment because the anticipated expense did not go down as previously hoped.
Properly budgeting the association is the first step in securing the financial well-being of the association.
Reserves
The next step in ensuring the financial well-being of the association is to ensure the monies necessary will be available when expensive, but expected, repairs and maintenance are needed. This is the concept of reserve funding. Florida community association law requires associations to establish and collect “reserves” as part of their annual budgets. This means that an association must create a separate budget that will ensure it collects enough money every year so that when the estimated useful life of the component is expired, the association will have saved the amounts necessary to replace the component without the need for a special assessment.
For example, condominium associations are required by law to collect reserve amounts for the roof, building painting, and pavement resurfacing, regardless of the amount of the replacement costs of these and for any item for which replacement or deferred maintenance will exceed $10,000. The monies in these reserve accounts must be used for the purposes they were collected unless the owners vote to approve their use for alternative purposes.
While associations must include full funding of statutory reserve accounts in each year’s budget, the statutes allow the owners to vote to waive full funding of reserves. In such a vote, or in a vote to use reserve monies for other purposes, the statutes require warning language to be printed on the voting documents to advise owners that voting to use reserve money for another purpose or waiving reserves altogether may lead to special assessments in the future.
Reserve funding should be part of the budgeting process. Maintaining proper reserves ensures the association’s ability to handle its expected needs effortlessly by saving for this over time.
Insurance
In the case of the association’s financial well-being, two kinds of insurance are important. The most obvious may be the property and/or liability coverage that every association should have to cover damage to property or persons due to casualty or other unanticipated events. This kind of insurance is extremely important because, besides the fact that insurance is required by law or the association’s governing documents, an association can suffer untold damage that could create substantial financial strain on its members if they must pay for the repairs or damages out of pocket because the association did not carry the proper insurance.
In addition, however, it is also very important to remember that among the numerous provisions in the Florida Condominium Act and the Florida Homeowners Association Act, there is a requirement that the association carry fidelity bonding/insurance. For example, Florida Statute §718.111(11)(h) states:
The association shall maintain insurance or fidelity bonding of all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this paragraph, the term “persons who control or disburse funds of the association” includes, but is not limited to, those individuals authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost of any such bonding.
These fidelity policies help protect the association against the financial loss in cases of defalcation of association funds.
Collection Practices
The association should have fair, but effective, collection practices and policies in place. While associations often feel the need to give some owners time to catch up with payments, or delay “sending the file to the attorney” to “help out” the owner, this can create a number of unanticipated problems for the association’s finances. First, an uneven application of “giving an owner time” can lead to potential defenses to legal action by those who were not “given time.” Second, many boards woefully underestimate exactly how long collections and foreclosure processes can take from start to finish.
Prior to the 2021 legislative session, the statutes already required the association give notice to owners far in advance of the association filing a claim of lien and then again waiting a long time before proceeding to filing a complaint for foreclosure of the claim of lien. The 2021 statutory changes have further expanded the timelines. Now, associations must give an owner a 30-day notice before even sending the file to the association attorney for collections. Once the attorney receives the file, it must give the owner 45 days’ notice of the association’s intent to file a claim of lien for delinquent assessments.
Thereafter, if the owner still has not paid the delinquent amounts, another 45-day notice must be sent to the owner advising of the association’s intent to foreclose the lien, prior to filing the complaint to foreclose. All told, a condominium association, for example, would have to wait at least 120 days after it decided to send the file to the attorney for collections before it would be able to even just file a complaint to foreclose a claim of lien for delinquent assessments.
Associations should consult with their legal and accounting professionals to ensure they have and consistently implement a collections policy to rein in delinquencies and send out the appropriate notices to owners as soon as possible to avoid even longer and more drawn-out collections of needed funds.
Again, this is not a finite list of considerations an association should take into account related to the association’s financial well-being. However, these issues do form the base for the association’s economy and should be top of mind for boards and managers.
Lilliana Farinas-Sabogal is a Board Certified Specialist in Condominium and Planned Development Law and a shareholder in Becker’s Community Association and Business Litigation practice groups. In addition to her experience assisting community associations with day-to-day management and operation of governing their communities, she advises Boards of Directors, unit owners, and community association managers on how best to resolve their contractual and transactional disputes and issues. To learn more about Lilliana, please click here.
Comments: Comments Off on BOARDS ARE NOT POWERLESS WHEN IT COMES TO COVID By Eric Glazer, Esq.
BOARDS ARE NOT POWERLESS WHEN IT COMES TO COVID
By Eric Glazer, Esq.
It’s hard to believe that we have been dealing with COVID for a year and a half now. It’s harder to believe that it looks like we will be dealing with it for at least another year and a half. It’s a never ending nightmare with no end in sight apparently. Who would ever have thought this could happen?
While we are constantly being told about social distancing, wearing masks, getting vaccinated and avoiding gatherings, as many of you know it is extremely difficult to mandate and practice these objectives in a condominium setting. Now that the State of Emergency has been lifted (obviously too soon) it is even harder, because the Boards of Directors don’t have the emergency powers any longer.
So what do we do now? Are Boards prohibited from making rules that protect the health, welfare and safety of the community in regards to COVID, simply because the emergency powers statute is no longer in play? I say HELL NO.
Florida Statute 718.123 (for condominiums) states the following:
The entity or entities responsible for the operation of the common elements, common areas, and recreational facilities may adopt reasonable rules and regulations pertaining to the use of such common elements, common areas, and recreational facilities.
Florida Statute 720.304 (for HOAs) states the following:
The entity or entities responsible for the operation of the common areas and recreational facilities may adopt reasonable rules and regulations pertaining to the use of such common areas and recreational facilities.
In Hidden Harbour Estates, Inc. v. Norman, 309 So.2d 180, 181–82 (Fla. 4th DCA 1975), the court explained the unique character of condominium living which, for the good of the majority, restricts rights residents would otherwise have were they living in a private separate residence:
It appears to us that inherent in the condominium concept is the principle that to promote the health, happiness, and peace of mind of the majority of the unit owners since they are living in such close proximity and using facilities in common, each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property. Condominium unit owners comprise a little democratic sub society of necessity more restrictive as it pertains to use of condominium property than may be existent outside the condominium organization. Neuman v. Grandview At Emerald Hills, Inc., 861 So.2d 494, 497 (Fla.App. 4 Dist.,2003)
The statutory test for rules regarding the operation of the common elements of the condominium is reasonableness. Neuman v. Grandview At Emerald Hills, Inc., 861 So.2d 494, 497 (Fla.App. 4 Dist.,2003)
There is no doubt in my mind that at this point in time, an association may continue to impose rules and regulations regarding the common elements that the association previously had in effect during the State of Emergency. I doubt highly that an arbitrator or judge would say that limitations on the number of people in the pool, elevator, clubhouse or exercise room during this pandemic is an unreasonable rule. I can’t imagine requiring masks in the common areas would be considered an unreasonable rule, especially when the CDC is recommending it. There are obviously other rules that absolutely may be considered reasonable, especially if you’re in a 55 and over community and the population is at great risk.
I’m getting calls from associations who are wondering if they are now powerless to take necessary precautions to avoid the spread of COVID. Again, the answer is you are not powerless and on the contrary, never lost your ability to continue to make reasonable rules to protect your community.
So what do you need to do? Put the proposed rule on an agenda for a properly noticed Board meeting. At the board meeting, make it extremely clear why the rule is being made. Put in on the record and in a resolution or motion that the Board is making this reasonable rule taking into account the health, welfare and safety of the community. Leave no doubt.
And if you’re wrong? I always say that it’s better to be tried by 12, than carried by 6.
Comments: Comments Off on Learn Everything about Reserve Funds For Homeowners Associations
Although reserve funds are often not mandatory, an ample reserve can play a big role in protecting a community’s long-term financial health.
To function as intended, a homeowners’ association (HOA) must rely on assessment revenue from its members. Most communities calculate assessments, at least in part, based on an annual budget of anticipated expenses. These typically include the costs involved in performing all of the HOA’s maintenance duties, procuring necessary insurance, and covering overhead, along with any other fixed or reasonably foreseeable outlays. The resulting gross budget is then divided among the members of the association, and homeowners are assessed accordingly.
When creating an annual budget in this manner, it’s generally a good idea to be as precise, analytical, and transparent as practically possible. However, a budgeting approach that relies exclusively on predetermined, repeating, line-item expenses doesn’t leave much room for error. After all, what if an essential common element is unforeseeably damaged—resulting in significant repair or replacement costs—and there’s no money in the budget or insurance to cover the loss? Or it may be that the association has some legal issues arise and incurs attorney’s fees much higher than could have been reasonably anticipated. And, of course, some common elements don’t need maintenance every year, but, when maintenance time comes, it’s costly.
Rather than get caught scrambling for cash when an unexpected contingency or major maintenance need arises, many communities maintain “reserve accounts” or “reserve funds,” as a sort of back-up savings slated for emergencies, long-term upkeep costs, and irregular expenditures. Although reserve funds are often not mandatory, an ample reserve can play a big role in protecting a community’s long-term financial health.
What are Reserve Funds?
We’re all familiar with the differences between checking and savings accounts. Aside from cash itself, a checking account is as liquid as assets get. You use it to pay bills, buy groceries—the sort of everyday expenditures it takes to run a household. A savings account, on the other hand, serves as a rainy-day fund you can tap when something unexpected arises—like, say, your vehicle needs a new catalytic converter.
Most homeowners’ associations have an operating account or similarly designated checking account to cover the routine expenses. Office supplies and regular maintenance of common elements, for instance, are typically paid from the operating fund.
An HOA’s reserve fund, in contrast, is an account dedicated to unanticipated and deferred expenditures, particularly large ones. The association allocates money toward its reserve account over time so that, when a costly repair or comparable outlay becomes necessary, cash reserves are available to handle the expense without sacrificing day-to-day functions.
By way of example, an HOA might pay out the costs of routine snow removal from its operating account. If the community expects to need plowing a few times each winter, the board will build the costs into the annual budget. But when all the plowing over the years leaves a significant portion of the development’s roads in need of repaving, the money is more likely to come from a reserve fund.
Reserve requirements are not addressed under every state’s HOA laws. And some states that do address them, leave a lot to the board’s discretion. More commonly, reserve account standards are found in a community’s declaration or bylaws. Statutes governing condominiums are usually more explicit in setting forth precisely what is required of an association with regard to reserves.
The Purpose of Reserve Funds
An association’s annual budget takes into account reasonably foreseeable expenses like landscaping, equipment upkeep, and payroll if the HOA has employees. But when an association-owned building needs a new roof, the community pool requires a major repair, or all the equipment in the fitness center starts breaking down, the unbudgeted costs will need to be paid from reserves.
A reserve fund can also be used to cover expenses that are not necessarily unforeseen, but arise infrequently enough that it wouldn’t make sense to include them within annual budgets. If the community’s tennis courts need to be resurfaced every ten years, the board might hold back in reserve around ten percent of the cost each year so that, when the time comes, the resurfacing costs can be paid outright. Of course, it’s not always so easy to predict precisely how much money will be needed.
Boards and Reserve Accounts
For the most part, deciding just how much cash a community needs to hold in reserve is the responsibility of an association’s board. Under state HOA and condominium statutes, board members owe a “fiduciary duty” to the association. See, e.g., Fla. Stat. §§720.303(1), 718.111(1); 765 ILCS 605/18.4. The obligations of a fiduciary are among the highest recognized by the law. In carrying out their responsibilities, a board and its members must act in good-faith, prudently and loyally, and always in furtherance of the association’s best interests. Id.
“Board members must avoid conflicts of interest when budgeting and allocating reserves.”
The duty of good-faith loyalty includes not wasting or misappropriating an association’s money, including reserves. HOA funds should only be used for their intended purposes and in the best interests of the community. Anything less potentially breaches the board’s fiduciary obligation. Condo associations in Florida, for instance, can only expend reserve funds for authorized reserve expenditures or if a specific outlay is approved in advance by majority vote of the association. Fla. Stat. §718.112(2)(f)(3).
In furtherance of their fiduciary duties, board members must avoid conflicts of interest when budgeting and allocating reserves. If a board member, family member, or related business could potentially bid on or otherwise benefit from an association contract, that board member should recuse him or herself from any discussion or voting related to that contract. See, Tex. Prop. Code § 209.0052.
The duty of prudence means taking reasonable steps to avoid a scenario where a cash-strapped HOA is unprepared for a major expense it should have seen coming. This means budgeting realistically and ensuring the association has sufficient reserves. Deciding what is “sufficient,” though, can be difficult because, by definition, reserves pay for expenses that are irregular and not reasonably foreseeable. Even a board making a good-faith effort to act prudently might not recognize all potential expenses a reserve fund needs to cover.
When setting reserve requirements, the key questions board members need to ask are (1) what unbudgeted expenses are likely to arise over an extended timeline; (2) how much are those expenses likely to cost; and (3) how much additional savings will that necessitate per year. Most board members are volunteers just trying to help keep their communities running on all cylinders, so it’s probably unrealistic to expect them to know the answers without some professional assistance—especially in large communities with substantial common elements. Fortunately, though, there are accounting professionals who specialize in “reserve studies” designed to calculate the cash-reserve needs of HOAs and similarly situated organizations.
Reserve Studies for Homeowners’ Associations
Reserve funds present something of a conundrum for HOA boards. If you maintain reserves for the express purpose of paying expenses that are unanticipated and infrequent, then how does the board decide how much it needs to hold in reserve? If the association holds back too much, it is essentially over-taxing its members. But if reserves are inadequate, then the HOA might find itself insufficiently liquid to meet its obligations without imposing a costly special assessment or taking out a loan—neither of which is likely to be popular with homeowners.
Reserve studies are intended to help Goldilocks (i.e., the HOA board) find the porridge (i.e., the reserve amount) that’s just right. A reserve study is an examination conducted by a consultant or accounting firm for the purpose of analyzing probable long-term expenses. The idea is to use the analysis to estimate the community’s reserve needs as scientifically as possible.
Along with reviewing the association’s assets (including current reserves), budget, and anticipated revenue, the auditor will survey community equipment, buildings, and other common elements. Based on all available information, the auditor comes up with a long-term schedule of expected repairs, replacements, major maintenance, and any other relevant liabilities likely to affect the HOA’s bottom line.
Once the study is concluded, the board uses the estimates to calculate the level of regular homeowner assessments needed to maintain the optimal reserve account balance. For instance, if the study estimates that a parking lot within the community will need new asphalt in ten years, and that the cost will be around $20,000, the board might adjust the budget and assessments to hold back $2,000 in additional reserves each year. That additional $2,000 is divided among all members’ annual dues so that, when the time comes for new asphalt, the funds are already available in the reserve account.
Of course, a study will in all likelihood identify numerous potential expenditures over the relevant period, and the reserve recommendation will be based on the aggregate anticipated long-term cash needs—not just any single item. But the principle is still the same.
Reserve studies cost money, so they don’t make sense in every situation. In a small association with only minimal commons and simple maintenance duties, a reserve study would probably cost more than the value it could reasonably be expected to provide. At the same time, a large association with elaborate commons and extensive duties would be imprudent not to use a reserve study or other means of scientifically calculating reserve needs.
Reserve Funding Requirements
The appropriate dollar balance for any given community’s reserve fund depends in large part on the size of the association, the nature of the common elements, and the extent of the HOA’s obligations. Some state HOA and condo laws establish specific reserve requirements, but funding needs are more commonly set by the board in accordance with standards detailed in the association’s governing documents. A reserve account is “fully funded” if it covers 100% of the community’s reasonably foreseeable expenses. Many communities choose to set reserve requirements at a percentage of anticipated expenses, as estimated by the board or identified in a reserve study. So, for example, an association might require the board to hold in reserve at least 75% of anticipated expenses at any given time, adjusted based on the schedule for deferred maintenance.
A few states establish specific funding requirements for reserves stated as a percentage of the association’s overall budget. See, e.g., Ohio Rev. Code §5311.081(A)(1) (requiring annual reserve contributions of at least 10% of budget, but allowing waiver by majority vote). More commonly, states adopt statutory principles for reserves but leave the specifics to the discretion of the board or community as a whole. Generally, condo laws go into much more detail when it comes to reserve requirements.
Florida’s condo statute requires an association’s annual budget to include reserves for “capital expenditures and deferred maintenance … [including but not limited to] roof replacement, building painting, and pavement resurfacing,” and any other deferred maintenance or replacement cost exceeding $10,000. Fla. Stat. §718.112(f)2a. For each included item, the calculation must be based on the “estimated remaining useful life and estimated replacement cost or deferred maintenance expense.” Id.
Though Florida’s condo statute requires reserves by default, it also allows a condo association to waive reserve requirements, or require a lesser amount, by majority vote. Id. Florida’s HOA statute likewise makes reserves optional. If a community opts for reserves, the reserve account funding must be calculated based on each asset’s estimated deferred maintenance or replacement cost divided by its predicted useful life remaining. Fla. Stat. §720.303(6)(g).
California requires associations to maintain reserve balances based on reserve studies conducted at least once every three years and including diligent, on-site inspections. Civil Code §5550. The study must, at a minimum, identify all major components the HOA is obligated to maintain, the estimated costs and useful life associated with each, and the annual reserve contribution necessary to defray the costs. Id.
Similarly, Washington requires calculation of reserve contributions in communities with “significant assets” (defined as assets valued at 50% or more of the association’s gross budget) based on regular reserve studies. Wash. Code §64.34.020. At least every three years, the study must be conducted by an independent professional who visually inspects the relevant assets. Notably, though, the Washington statute merely “encourage[s]” HOAs “to establish a reserve account… to fund major maintenance, repair, and replacement of common elements.” Wash. Code §64.34.380.
State legislation routinely recognizes the importance of reserve funds to homeowners’ associations but doesn’t make them mandatory. However, deferred maintenance, repair and replacement of major elements, and surprise expenses will inevitably come up. When adequate reserves aren’t available, a community will need to employ alternate means of paying for these significant costs.
Alternatives to Reserve Funds
Boards often face a temptation to underfund reserves—or even dip into reserves to pay for what would normally be regular operating expenses—to cover increasing operating costs without raising assessments. Homeowners often object to additional assessments or reject them altogether. But paying a little extra up front to make sure sufficient cash-flow is available for adequate reserves can actually save money over time. And, the alternatives—special assessments, loans, and putting off repairs and replacements—are not particularly attractive options.
“The duty of prudence means taking reasonable steps to avoid a scenario where a cash-strapped HOA is unprepared for a major expense it should have seen coming.”
With a special assessment, the community is paying all-at-once what it could have paid over time. In effect, current owners are footing the bill for costs that were rightfully the responsibility of prior owners. And, of course, special assessments often require member approval. A rejected special assessment is just as helpful to a board facing a major expense as an unfunded reserve account.
If an HOA can’t cover unexpected expenses and long-term maintenance directly from member assessments, there’s also the option of taking out a loan in the name of the HOA. Obtaining a loan probably won’t be too difficult for an association with regular revenue and relatively little debt, but it may require the use of community assets as collateral. And, just as significantly, loans require interest.
Even assuming the HOA can secure a loan with a competitive interest rate, the cost of repaying the loan still ultimately comes from assessments, but members end up paying a lot more than the actual expense cost due to interest and transaction costs. By contrast, an adequately funded reserve account itself earns interest, leading to the opposite result—members pay less out of pocket because money applied to reserves is earning interest up until the expenses become necessary.
And there’s also the option of simply not paying for maintenance, repairs, and replacements that aren’t included in the annual budget. In this scenario, homeowners lose access to benefits of the community. If the pool needs an overhaul, but there’s no money to pay for it, members and their families no longer have a neighborhood pool to swim in. Not to mention, property values may decrease, as the allure of living in a community with a pool is reduced when the pool is inaccessible.
Kicking the can down the road by underfunding reserves almost always leads to losses in the end. With this in mind, Florida’s HOA statute requires associations without reserves to notify members annually that no reserves are held and that special assessments may be enacted to pay for capital expenditures and deferred maintenance. Fla. Stat. §720.303(6)(c).
Inadequate funding can lead to safety concerns as well. Association-owned equipment or facilities that are not receiving scheduled maintenance due to insufficient reserve funding can increase the risk of injury and create unnecessary liability exposure.
Under the right circumstances, insurance coverage can help defray some of the costs caused by underfunded reserves. Many states mandate that HOAs carry insurance coverage. Arizona requires property damage coverage for at least 80% of the value of common elements and liability insurance with coverage limits decided by the board. A.R.S. §33-1253A(1) – (2). Eight states (Alaska, Colorado, Connecticut, Delaware, Minnesota, Nevada, Vermont, and West Virginia) have adopted the Uniform Common Interest Ownership Act (“UCIOA”), which has requirements similar to Arizona’s, along with mandatory fidelity insurance. See, e.g., Conn. Gen. Stat. §47-255.
Insurance, though, isn’t foolproof. A policy won’t cover every major expense that comes up. A property policy might cover losses due to accident but not if damage results from inadequate maintenance. A major expense like a new roof might be needed as a result or ordinary wear and tear that a regular property damage policy excludes from coverage.
And for insurance to help, you have to actually procure a policy. State condo association laws often require insurance, but it’s frequently optional for HOAs. Even in states that ostensibly require insurance like Arizona and the eight UCIOA states, there’s a limitation—a policy must be obtained “to the extent reasonably available.” Id.
HOA insurance is generally a good thing to have; it’s just not a foolproof substitute for reserves. Ideally, it’s more of a supplement, avoiding a scenario in which a catastrophe like a fire or major storm completely saps a community’s reserve funds or forces the association to write off common elements that were once valuable community resources.
Reserve Disclosure Requirements
Most state HOA laws require associations to make regular budgetary disclosures to members, usually including the status of reserve funding. Florida HOAs, for instance, must prepare yearly budgets estimating anticipated expenses and revenue and identifying any reserve accounts or funds set aside for deferred expenditures. Fla. Stat. §702.303(6)
In Washington, the statutorily mandated annual budget report must state amounts currently held in reserve, estimate year-end reserve balances, propose a plan for funding reserves, and project future reserve balances if the plan is adopted. Wash. Code. §64.38.025. Colorado requires a similar disclosure of present reserve balances, along with the board’s proposal to ensure the community’s reserve needs are adequately funded. Col. Rev. Stat. §38-33.3-209.5.
California requires a detailed reserve report based on the most recent reserve study, including the remaining useful life of each major component, estimated repair or replacement costs, and the amount of reserve money held by the HOA. Civil Code §5565. California HOA members also have a right to notice of “the mechanism or mechanisms by which the board of directors will fund reserves … including assessments, borrowing, use of other assets, deferral of selected replacements or repairs, or alternative mechanism.” Civil Code §5300.
Particularly in condo associations, prospective purchasers often have a right to receive notice of current reserve balances. Tex. Prop. Code § 82.157; A.R.S. §33-1260. Absent an affirmative disclosure requirement, homeowners have a right to request inspection of association records. See, e.g., Fla. Code §720.303(4). Records subject to an inspection typically include financial records and budgets.
Homeowner Recourse
A homeowner who believes an association’s board is mishandling or underfunding reserves has a few options. First, the homeowner can bring up reserve issues at the next homeowners’ or open board meeting, or informally discuss concerns with a board member. A formal records request can also help provide detailed information about how reserves are being maintained and used and whether there is in fact a problem.
Because of the democratic character of community associations, there’s also the option of running for the board in the next election or organizing a campaign to amend the association’s declaration to include more stringent or specific reserve requirements. If misconduct or fiduciary lapses are involved, an individual homeowner or group of homeowners usually have standing to pursue legal claims against the board or its members, depending upon the specifics of the situation and whether actual damages have been incurred. It’s almost always a good idea to consult with an experienced attorney before asserting or pursuing legal claims.
In situations involving outright fraud or embezzlement, homeowners should bring the matter to the attention of local law enforcement agencies. Misappropriation of funds entrusted to an individual is criminal conduct in every state, though, of course, the precise standards vary by jurisdiction.
Comments: Comments Off on EVERYONE IS AN EXPERT By Eric Glazer, Esq.
EVERYONE IS AN EXPERT
By Eric Glazer, Esq.
I agree that a “reserve study” should be done by an accredited firm following the industry standard guidelines. We have used both Association Reserves and Reserve Advisors. The fact remains that both these and most other competent firms are in fact comprised of engineers and architects.
There is an larger issue in this: In a majority of cases, board members are qualified in NOTHING: Not in construction, not in finance, not in personnel management, etc. Which is why they should use a management company. And even so, how can they possibly assess the value of an opinion issued to them by a construction expert, a financial advisor etc…
Being a board member is a huge responsibility, and I always thought they should be qualified or certified before being admitted in a board.
Imagine a world where accountants can examine your heart and give you an opinion regarding its condition and your life expectancy. Suppose an auto mechanic can examine your kidneys and liver and give his opinion on whether or not they are healthy. Perhaps one day you can walk into my office and one of the attorneys here can take your blood and talk to you about your blood pressure, sugar and cholesterol. If this all sounds crazy, it should. This is exactly how the health of our buildings are determined. Not by qualified experts like architects, engineers and general contractors, but by former cab drivers, teachers, nurses and the like. Now these people may be the absolute best in their trained professions, but they certainly are not qualified to make a determination of the condition of the condominium property and the life expectancy of things like the roof, structure and electrical systems. Yet, this is what is going on in Florida as we speak.
For about a two year period of time, condominiums were required to have a reserve study performed by an architect or engineer. But in 2010 Governor Charlie Crist signed a bill which repealed that requirement. So since then, the reserve study analysis can be performed by the butcher, baker and candle stick maker.
We all know that the analysis is a joke. If a new Board comes in that wants to save money and decrease assessments, suddenly the roof has a greater life expectancy than before. Somehow, like fine wine, the roof got better with age. It’s a miracle!
The current law is dangerous on so many levels. It’s so obvious that it would be insulting to all of you to even have to explain further.
Next legislative session I urge all of you to contact your legislators and demand that Florida Statute 718 be amended to again require that reserve studies be performed by an architect or engineer. Unless your Board has an architect or engineer serving, the Board is simply not qualified to do the analysis.
Many associations now install security cameras on the common areas to guarantee video evidence of any intentional vandalism or negligent actions which result in damage to the common areas, such as a vehicle running into the gate of a gated community. Some association want to install security cameras as a way of deterring criminal acts or violations of the governing documents.
Florida law does not prohibit video surveillance of the common areas. However, both State and Federal laws prohibit audio cameras in certain circumstances.
Florida law makes it illegal to intentionally intercept oral communications through the use of a device if one does not have the prior consent of all parties. This is commonly referred to as wiretapping. Florida’s wiretapping law is a “two-party consent” law which makes it a crime to intercept or record a “wire, oral, or electronic communication” unless all parties to the communication consent.
However, there is an exception for in-person communications when the parties do not have a reasonable expectation of privacy in the conversation, such as when they are engaged in conversation in a public place where they might reasonably be overheard. Arguably, this exception applies to the security cameras installed on the common areas. However, the best and safest approach would be to only install security cameras with video and without audio.
Further, while video security cameras are not prohibited, such video security cameras should be pointed in the direction of the common areas and should avoid individual units or lots. Section 810.14, Florida Statutes, prohibits anyone from looking into a person’s house, structure, or conveyance or from looking at a person’s intimate areas that are protected by clothing from the public view. This is referred to a video voyeurism and is a criminal offense. Florida’s Video Voyeurism law is not violated if the video camera is
recording the non-private common areas,
not recording inside any dwelling/unit or even a motor vehicle, and
not recording in portions of the common areas where a person has a reasonable expectation of privacy or might be expected to be in a state of undress (bathrooms, locker rooms, etc.).
Elizabeth “Beth” A. Lanham-Patrie’shas been practicing law since 1993, and she has focused on representing community associations since June of 2001. Beth provides a variety of legal services to condominium, homeowner, and cooperative associations and is a transactional attorney with extensive experience drafting and amending governing document, and preparing and reviewing contracts. Beth is also involved in resolving disputes between associations and owners. Ms. Lanham-Patrie is also one of only 190 attorneys statewide who is a Board Certified Specialist in Condominium and Planned Development Law.
Comments: Comments Off on The Subtle and Not-So-Subtle Differences Between Homeowners and Condominium Associations
The Subtle and Not-So-Subtle Differences Between Homeowners and Condominium Associations
Florida has created an abundance of legislation governing homeowners’ and condominium associations. You would think that, by now, laws affecting both types of communities would have more parity than they actually do. (Please note that that commercial condominiums are not addressed in this article.)
Perhaps the most appreciative difference between a homeowners association and a residential condominium association is that the homeowners association exists in common law, but the condominium only exists because of legislation adopted by the Florida Legislature. That said, homeowners associations are subject to Chapter 720, Florida Statutes, and condominium associations are subject to Chapter 718, Florida Statutes. There is both parity and significant differences between these two Acts, the latter of which are further addressed below. We begin by examining bidding.
Bidding: A homeowners association is only required to obtain bids if the aggregate cost of the project (referring to the materials, work, and/or services) exceeds 10 percent of the total budget including reserves, if any. On the other hand, condominium associations are required to obtain bids if the aggregate cost of the project exceeds 5 percent of the total budget including reserves, if any. Please note, there is no requirement in the legislation for a community association to obtain a definitive number of a bids. Therefore, at least two would be appropriate. Also remember, there are exceptions to the bidding requirement for professional services such as attorneys, accountants, and landscape architects.
Certified Written Inquiry: A condominium association owner has the right to send a certified written inquiry to the board, and the board is obligated to answer it within 30 days (or 60 days if the certified written inquiry is provided to the community association’s lawyer to respond to). A failure to respond means that if the owner files a legal action over the item for which certified written inquiry was provided and loses, the owner will not be responsible to pay for the association’s prevailing party attorneys’ fees. There is no similar provision for a homeowners association.
Common Areas: Common areas in a homeowners association are owned by the association itself. In other words, no owner can claim an ownership interest in a homeowner association’s common areas. However, as to condominiums, the equivalent of the homeowner association’s common area is referred to as “common elements”. All of the unit owners of the condominium association own an indivisible interest in the common elements.
Disputes: In a homeowners association, disputes between an association and a parcel owner regarding use of or changes to the parcel or the common areas and other covenant enforcement disputes, disputes regarding amendments to the association documents, disputes regarding meetings of the board and committees appointed by the board, membership meetings not including election meetings, and access to the official records of the association must be the subject of a demand for pre-suit mediation served by an aggrieved party before the dispute is filed in the local court. Before a homeowners association can commence litigation where the amount in controversy is in excess of $100,000, the approval of a majority of a quorum of the membership is required. There is no similar provision as applied to condominium associations.
In a condominium association, prior to the institution of court litigation, a party to a “dispute” (as such term is hereinafter defined) must petition the Division of Florida Condominiums, Timeshares, and Mobile Homes of the Department of Business and Professional Regulation for non-binding arbitration or, as of July 1, 2021, avail themselves of the presuit mediation process as set out in Chapter 720. “Disputes” subject to mandatory arbitration or presuit mediation include 1) the authority of the board of directors, under this chapter or association document to: i) require any owner to take any action, or not to take any action, involving that owner’s unit or the appurtenances thereto ii) alter or add to a common area or element; or 2) the failure of a governing body, when required by this chapter or an association document, to: i) properly conduct elections ii) give adequate notice of meetings or other actions iii) properly conduct meetings iv) allow inspection of books and records; and 3) a plan of termination pursuant to §718.117, Fla. Stat.
Elections: Elections in a homeowners association take place as per the bylaws, while elections for condominiums take place following the regime set out in chapter 718, Florida Statutes, more specifically §718.112, Fla. Stat., and the provisions of the Florida Administrative Code. In order to hold a homeowners association election, a quorum must be attained unless the bylaws provide otherwise. No quorum is required to hold a condominium election, but rather 20 percent of the eligible voters need to cast a ballot in order to hold the election. In a condominium association of more than 10 units, co-owners of a unit cannot serve on the board at the same time unless there are not enough candidates, or they own more than one unit. Commencing July 1, 2018, condominium association board members cannot serve more than eight consecutive years absent certain exceptions (note, this statute is not retroactive in its application). There is no similar co-owner prohibition and term limit restriction for homeowners associations.
Elections by acclimation: In a condominium association if the same number of candidates, or less, run for the board as the number of seats available, then there is no need to have the election. This is referred to as an “election by acclimation” which means, those candidates will comprise the present board upon the annual meeting. If the election is contested because there are more candidates than seats available and at least 20 percent of the eligible voters do not cast a ballot, then last year’s board rolls over.
As to homeowners associations, if the election process allows candidates to be nominated in advance of the meeting, the association is not required to allow nominations at the meeting. An election is not required unless more candidates are nominated than vacancies exist. If an election is not required because there are either an equal number or fewer qualified candidates than vacancies exist, and if nominations from the floor are not required pursuant to the statute or the bylaws and write-in nominations are not permitted, then the candidates who nominated themselves in advance shall commence service on the board of directors regardless of whether a quorum is attained at the annual meeting. Otherwise, if those conditions are not met and a quorum is not attained for a homeowners association’s election, then last year’s board rolls over to this year’s board.
Elections, Voting: Unless otherwise set out in the bylaws, homeowners association members vote in the election for the board by proxy and/or ballot. On the other hand, condominium association owners cannot vote for the election of directors by proxy but rather must vote themselves by secret absentee ballot using the the inner and outer envelope system. A homeowners association only needs to use the inner and outer envelope system when the bylaws call for secret absentee ballots.
Fines: A condominium association cannot levy a fine greater than $1,000 for any one violation and cannot lien and foreclose the fine under any circumstances. In a homeowners association, an association can foreclose to collect a fine if both i) the fine is $1,000 or more and ii) the authority to lien is set out in the declaration.
Frequently Asked Questions and Answers Sheet: As to condominium associations §718.504, Fla. Stat., requires that a “Frequently Asked Questions and Answers” sheet be made available to prospective purchasers and to owners who request it. It must be updated annually and must include the following questions along with the answers to these questions: 1) What are my voting rights in the condominium association? 2) What restrictions exist in the condominium documents on my right to use my unit? 3) How much are my assessments to the condominium association for my unit type, and when are they due? 4) Do I have to be a member in any other association? If so, what is the name of the association and what are my voting rights in this association? Also, how much are my assessments? 5) Am I required to pay rent or land use fees for recreational or other commonly used facilities? If so, how much am I obligated to pay annually? 6) Is the condominium association or any other mandatory membership association involved in any court cases in which it may face liability in excess of $100,000? If so, identify each such case. There is no similar provision or requirement for homeowners associations.
Leasing Restrictions: Effective July 1, 2021 as to HOA leasing restrictions, any restriction that prohibits or regulates rental agreements applies only to (i) an owner who acquires title to a parcel after the effective date of the governing document or amendment, or (ii) an owner who consents, individually or through a representative, to the governing document or amendment. As to condominium associations, according to §718.110(13), Fla. Stat., an amendment prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period, applies only to unit owners who consent to the amendment and unit owners who acquire title to their units after the effective date of the amendment.
Liens and Foreclosures: In a homeowners association, prior to recording a lien against a delinquent owner’s lot, the owner must be provided a statutorily compliant warning letter at least 45 days prior to recording the lien, warning the homeowner that if the assessment is not paid a lien may be recorded. Then, the owner must be provided a second letter at least 45 days prior to filing the foreclosure lawsuit warning that if the lien is not satisfied (paid-off), then a lawsuit to foreclose the lien may be filed anytime thereafter. For a condominium association the warning/waiting periods for both letters was 30 days. Effective July 1, 2021 this was changed to 45 days.
Material Alterations: Unless otherwise provided in the declaration of covenants and restrictions, a material alteration to a homeowners association’s common area is decided by the board. In condominium associations, material alterations require 75 percent approval of all unit owners unless the declaration provides otherwise.
Official Records Requests: In a homeowners association, official record requests must be made by certified U.S. mail to create the rebuttable presumption the association willfully failed to respond. There is no similar requirement for a condominium association. Every community association should adopt specific rules governing official records requests, how often they can be made, and where they must be delivered. If your association has not done so, you are urged to discuss this with the association‘s lawyer.
Quorums: A quorum of the membership for a homeowners association membership meeting consists of 30 percent of the entire membership unless a lower number is provided for in the bylaws. A quorum for a condominium association membership meeting occurs when there is a majority of the voting interests present unless a lower number is provided for in the bylaws.
Reserve Accounts: A homeowners association only has restricted reserve accounts if initially created by the developer or voted on and approved by a majority of the entire membership. In a condominium association, the budget must include reserve accounts for capital expenditures and deferred maintenance. These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. Condominium boards and homeowners association boards with restricted reserves may propose lower or no reserves to the membership which is subject to approval by a majority of a quorum of the members. However, neither board is obligated to propose lower reserves. A condominium association board and a homeowners association board with restricted reserves must fully fund those reserves in the budget each year as must homeowners association boards whose association has adopted restricted reserves.
Transfer Fees: As per §689.28, Fla. Stat., transfer fees when buying and leasing a home in the state of Florida are prohibited. But, there are exceptions for both homeowners and condominium associations with this caveat. There is no cap, per se, that a homeowners association can charge a prospective member as a part of acquiring their property, but such fee must be authorized in the declaration (or other recorded document). However, as per §718.112 Fla. Stat., a condominium association can only charge up to $150 per applicant. A husband/wife or parent/dependent child are considered one applicant. A condominium association can only charge a transfer fee if it has the authority to approve transfers, and the authority for the transfer fee, specifically, must be set out in the declaration or bylaws (and as set forth above, as of July 1, 2021 it is presently limited to a maximum $150.00).
Warranties: A developer and general contractor of a condominium provides statutory warranties to buyers of units as further detailed in Chapter 718, Fla. Stat. There are no similar statutory warranties set out in Chapter 720, Fla. Stat., for buyers of a home within a homeowners association. A developer of a condominium, pursuant to relevant law, also provides an implied warranty of habitability. As to a homeowners association, §553.835, Fla. Stat., provides in relevant part that there is no such warranty for off-site improvements (i.e., the common areas) with a small exception for the shared components of a townhome type community.
Websites: A condominium association that has a condominium with 150 or more units must host an association website and post certain official records to it. Homeowners associations have no similar requirement.
If you have any questions in regard to these matters be sure to discuss them with an attorney of your choosing.
(Reprinted with permission from the April 2021 edition of the Florida Community Association Journal and updated to reflect recent legislation effective July 1, 2021)
Comments: Comments Off on Can They Do That? Video Series by Becker
Can They Do That? Video Series
Becker’s video series, tackles some of the unique problems that homeowners and renters face today. We answer questions, no matter how far-fetched they may seem. From service animals to nudists in your community, we get to the bottom of it and let you know – “Can They Do That?”
Our condominium has never funded reserves, and yet, the board has proposed and adopted a budget that provides for full funding of reserves. – “Can They Do That?”
I put up a political sign for my favorite candidate. My HOA and the Board sent me a letter telling me to take it down. I have a right to free speech don’t I? – “Can they do that?”
A hurricane is a few days away from landfall near my condominium. The association sent a notice that elevators and the building air conditioning will be shutdown for 36 hours before landfall. “Can they do that?”
I came across an unofficial community website that was using our official logo and name. The website included some damaging information about the association. “Can they do that?”
I received a notice that my property is in violation of local code and ordinances. The city wants to start imposing fines on my property. “Can they do that?”
I’m going to go on a trip right now. Prices are really low to travel, and I want to visit my family. My employer’s telling me that if I go on the trip I’m not able to come back to work. My employer is going to mandate that I quarantine myself for 14 days when I come back. “Can They Do That?”
As they say…hindsight is 20/20. The tragedy in Surfside rips your guts out. I had to go there and see it for myself. I did. I then walked over to the memorial and saw pictures of the victims, including little kids, entire families and you wonder how anything like this could have possibly happened. Immediately you want to blame someone. You want justice. You want someone to pay for what happened here. It’s only natural to feel that way. But we need to try to calm down and think this out rationally.
It all starts with the fact that there has NEVER been a building collapse like this that anyone is aware of, not only in Florida, but anywhere in the entire country. Think about that. This has never happened before. There is no precedence for this disaster. Did the Board members have engineering reports warning them that the concrete would deteriorate exponentially if not replaced? Yes they did. Were they told the building would collapse if they don’t immediately fix it? No, they weren’t. In fact, it appears that the Chief Building Official in Surfside actually attended a board meeting and told the community that the building was fine and not in any danger.
The Board no doubt figured that this massive project needs an intense amount of planning. The association needs to apply for a loan. The board needs to prepare for a special assessment. Engineers need to prepare a bid package. The right contractor has to be chosen. This does not happen overnight and it appears that the Board accomplished almost all of these things. Those of you who live in condominiums also know that those board members must have also been fighting intense pressure from many unit owners not to pass a $15,000,000.00 special assessment in the middle of the COVID pandemic no less! While I’m sure the Board members knew that the more time it takes, the more damage would occur and additional repairs would be needed, none of them thought for a moment that delay would result in the collapse of the building. If they did, some of them wouldn’t have been there when the building collapsed. Had the Board members been told by professionals that this building could collapse, then I would change my tune. But there is no evidence that they were told.
Going forward, rest assured that from now on when an engineer inspects a condominium building and observes concrete spalling, the report will indicate that the building may collapse if not repaired promptly. There is nothing to lose by placing that in a report from now on, but perhaps a lot to lose if you fail to place that in a report.
We tend to forget that the average Joe or Sally on a Board of Directors is not an engineer, general contractor or condominium or construction attorney. Many of them have no experience whatsoever in how buildings are constructed and maintained. All they can do is rely on what their experts are telling them. I don’t see any experts telling this board at the Champlain Towers South that this building may collapse. How then can they be expected to know that it would?
Again, this tragedy provokes an automatic impulse in all of us that somebody must be held accountable here. Somebody must pay. Some have even called for criminal prosecution of the Board. As many of you know, being a board member is a thankless job. On your best day, you are harassed, yelled and cursed at, and always second guessed. It’s hard enough to get volunteers to serve on the Board. If you are going to hold directors individually or criminally liable when accidents happen, even tragic accidents, that have never before happened anywhere in any building you are headed down a very dangerous path where it would not make sense for anyone to take the thankless board member position out of fear of losing their money or even their liberty. You would have to be nuts to volunteer.
So while we all want some justice here and some answers, I urge everyone to take the focus off of the Board for a moment. They are too easy a target and should not be made the scapegoat here. Maybe we need to ask why buildings on the ocean don’t have to pass an annual inspection every year by the county or municipality. Maybe we need to ask if there should be stricter scrutiny of buildings built before massive changes to the South Florida Building Code were made after Hurricane Andrew, like the Champlain Towers South. Maybe we need to ask why municipalities are now asking their Building Departments to inspect tall buildings, but never required it previously. Maybe we need to find out why the elevators have to pass an annual inspection but not the structure of the building itself. Maybe we need to find out why the first time a building gets inspected is at the 40 year recertification requirement and why that is only a requirement in Miami-Dade and Broward Counties. If you want to find someone or something to blame for this catastrophe, this is where I would start.
Comments: Comments Off on Vaccination ID’s To Require Or Not To Require, That Is The Question by KBR Legal
Vaccination ID’s
To Require Or Not To Require, That Is The Question
Florida’s community association board members are wrestling with many amenity re-opening decisions these days. One such decision is whether or not to open the community clubhouse including the card rooms, bingo, and even off-Broadway like shows. As a part of that decision making process, board members may be considering requiring proof of vaccination as a pre-requisite to such use.
While ultimately a decision within the business judgment of the board, requiring proof of vaccination prior to allowing use of an association amenity is not recommended. Do you remember the ol’ adage, “no good deed goes unpunished?” Well, requiring proof of vaccination from the members prior to allowing use of the clubhouse, no matter how well intended, could likely lead to significant and costly problems for the association who fails to heed the warnings set out in this article.
When acquiring medical information of members, the board’s duty, pursuant to relevant law, is to keep such acquired medical information confidential. Requiring proof of vaccination to use amenities will no doubt lead to a significant breach of that duty.
Another reason not to require proof of vaccination is that doing so will lead to creating two classes of members. The vaccinated members who are allowed to use the amenities and the unvaccinated members who are not allowed to use the amenities. Yet, all members pay for access to use the amenities in proportion to their assessment obligation. Therefore, this practice could expose the association to adverse litigation from the upset unvaccinated members.
If the aforementioned two reasons are not sufficient to dissuade you, then consider this: A member may choose not to be vaccinated for religious reasons. In this situation, by requiring proof of vaccination the association will be exposing itself to a claim of religious discrimination.
If the association opens an amenity, then the amenity should be available to all members for use without consideration of vaccination. If that is a concern, then perhaps waiting a short while longer to open the clubhouse or other amenity makes the most sense. Remember, too, that when you do re-open to adhere to CDC protocols as may be appropriate for your community such as mask wearing, social distancing, and sanitizing. As a part of the re-opening procedure, please consult with your association’s attorney regarding the do’s and don’ts.
SFPMA works throughout the State of Florida, we are a multi-member organization for the Condo, HOA and Property Management industry. Through knowledge based Articles, Events and our Members Directory, Clients find the right information to make an informed decisions for their Florida properties.
Privacy & Cookies: This site uses cookies. By continuing to use this website, you agree to their use.
To find out more, including how to control cookies, see here:
Cookie Policy
The “state of emergency” that had been imposed by Governor DeSantis in light of the COVID-19 pandemic expired on June 26, 2021. As a result, the “emergency powers” given to condominium, cooperatives, and homeowners’ associations in Sections 718.1265, 719.128, and 720.316, Florida Statutes, respectively, are no longer in effect. The emergency powers that were in effect during the COVID-19 state of emergency included conducting board meetings and membership meetings with notice given as is practicable, but did not specifically give associations the authority to conduct meetings remotely. Nevertheless, many associations did hold meetings remotely in an effort to slow the spread of the virus and to protect its residents and employees. (NOTE: The emergency powers statutes were amended effective July 1, 2021, and now specifically provide that during a declared state of emergency, the association may conduct board meetings, committee meetings, elections, and membership meetings, in whole or in part, by telephone, real-time videoconferencing, or similar real-time electronic or video communication.)
Lilliana Farinas-Sabogal
