A discussion of routine & complex issues which confront all types of shared ownership communities.

Condo and HOA Law Blog By Donna DiMaggio Berger, Esq.

Condo and HOA Law Blog By Donna DiMaggio Berger, Esq.
This blog covers every topic under the sun related to condominiums, cooperatives, HOAs, timeshares and mobile home communities from the unique perspective of attorney Donna DiMaggio Berger.

Sunday, April 13, 2014

Is anyone performing background checks on directors?

Florida law has been changed over the years to clarify that convicted felons whose civil rights have not been restored are not eligible to serve on a community association board. Other states similarly restrict felons from serving on volunteer boards. In addition, members who are 90 or more days delinquent in the payment of assessments are similarly not eligible to serve on the board.

However, knowing the law and enforcing it are often two entirely different matters.

From a practical standpoint, how do community associations actually determine the eligibility of their board candidates? While the Florida statutes do not specifically address these issues, do you think it is important for your community to also know in advance if a candidate for the board has a personal problem with budgeting, previous litigation, prior rules violations in another community, etc.? How likely is it that any personal judgment issues will bleed over into the judgment a director needs to exercise while serving on a community association board?

When I volunteered to serve as a chaperone on my kids' school field trips, I was rightfully asked to undergo a background check before being approved. I understood the significance of my role as a chaperone and readily submitted to the lengthy questionnaire, fingerprint and background check required by the Broward County school system. When I ran for my HOA Board, I was asked no questions nor did I submit any paperwork to run.

While I am not in favor of unnecessary hurdles that make it less likely that people will volunteer to serve on their association boards, I do think most reasonable board candidates would not object to some level of due diligence to ensure that they are eligible to serve on the board.

So how does your community handle this issue? Do you:

1.      Ask the candidates to fill out a questionnaire confirming if they have been convicted of a felony and if so, whether or not their civil rights have been restored? In Florida, many board candidates submit candidate information sheets touting their credentials to the membership but few delve into any darker issues in those sheets. Does your board ask for additional information needed to determine eligibility?
2.      Do you ask candidates who fall into the category above to provide proof that their civil rights have been fully restored, including the right to bear arms?
3.      Do you check to determine that all candidates are current in the payment of monetary obligations to the association?
4.      Have you amended your governing documents to require more extensive background checks of director candidates including a check for a history of previous bankruptcies, credit issues, litigation, etc.?
5.      Have you done nothing with regard to director background checks?

Far too often, communities learn that there is a director on the board who is not statutorily eligible to be there. Finding someone has a "troubled past" is not always an indication of future trouble. However, wouldn't it be easier if standard election procedures were updated to provide for some level of director background checks to ensure that potential problems are averted?

Friday, April 04, 2014

An owner's right to privacy vs. Association's need to perform preventative services

A recent case out of Florida's Fourth DCA involved a condominium owner's longstanding refusal to allow her association to enter her unit to perform routine pest control services.

The owner claimed that she had a breathing disorder which would be worsened if the association treated her unit for insects and other pests. The owner claimed that she would use a non-chemical form of pesticide but refused to allow the association access to her property to confirm that the unit remained pest-free.

The association argued that Section 718.111(5) of the Condominium Act as well as the provisions of its governing documents granted it the right to enter units for necessary maintenance. The statutory language provides as follows:

Right of access to units--The association has the irrevocable right of access to each unit during reasonable hours, when necessary for the maintenance, repair, or replacement of any common elements or of any portion of a unit to be maintained by the association pursuant to the declaration or as necessary to prevent damage to the common elements or to a unit or units.

The association did offer to allow the owner to provide her own vendor who would use a chemical-free pesticide so long as the owner provided proof that such services were actually being performed.

The trial court ultimately entered an order in favor of the association which laid out a King Solomon-like solution as follows:

-On the third Monday of every month, the owner would permit the association access to her unit for the purpose of performing pest extermination services'
-The pest extermination services would be performed with pesticides purchased and provided by the owner and given to the association to use or if no such chemical-free pesticides were provided, then the association would have to use non-toxic chemical-free pesticides' and
-The owner also had the choice to employ her own exterminator to keep her unit pest-free and provide the association with a copy of her invoice for such services to demonstrate that they were being performed on a monthly basis.

Did this solve the problem? Of course not. Both sides argued that they were the prevailing party and therefore, worthy of having their attorney's fees awarded. The association argued that it had prevailed since it was granted access to the owner's unit. The owner argued that she had prevailed because the association was required to use a chemical-free pesticide. In the interim, the owner continued to refuse the association access to her unit and continued to refuse to provide proof that any services were being performed to keep the property pest-free.

The 4th DCA reversed the summary judgment order and the attorney's fees entered pursuant to that order and affirmed the contempt and enforcement orders.

The overarching question in my opinion is whether or not the owner's chemical sensitivity is a red herring designed to mask the fact that this owner was not happy with giving the association entree to her unit under any circumstances.

Sunday, March 30, 2014

My emotional support animal is bigger than yours!

We've all heard the playground chant about whose dad or house or anything of importance is bigger than someone else's. Lately, I wonder if there isn't a race in some pet-restricted communities to see how many people can actually get a pet by hook or by crook. Last Friday seemed to be my day to bump into a variety of service and support animals as I visited several different venues in Broward County.

My first encounter was with a very cute little dog wearing a standard Service Animal vest walking along the sidewalk near the entrance to my office building. The dog strained his leash as he eagerly attempted to jump up and greet passersby. Friendly for sure but not typical service animal behavior. When I got up to my office I decided to see how easy it is to order a service animal vest for your dog. It turns out it is pretty darn easy. Dozens of companies came up including Amazon and Ebay. One website did have the following warning on it:  

It is fraudulent to represent your dog as a service animal if it is not. Please don’t do it! Although service dog vests are not required by ADA Law, persons with service animals find it easier  to outfit their dog in a service dog vest.  It instantly shows the place you are entering that your dog is a service dog and has the right to accompany you.  Simply put it helps to avoid confrontation.  We will not sell any service animal supplies for a pet dog.

Still, there was nothing to stop someone from completely ignoring the foregoing information and proceeding to the order page.

I suppose the statement that a service animal vest helps to "avoid confrontation" is true because most business owners are now so fearful of litigation that they have instructed their employees not to inquire about a dog wearing one even if the animal seems to otherwise not fit the service animal mode.

Later at a business lunch on Las Olas, my colleague and I were seated outside next to a table with three Yorkies accompanied by their human "masters". One of the dogs sat in his owner's lap, one on the floor near the table and the third comfortably sat on top of the table throughout the meal. These dogs wore no vests so their presence at the upscale bistro remained a mystery. Perhaps they were there to provide emotional support rather than being trained service animals? Frankly, the weather was beautiful and the dogs were no trouble at all other than the odd sensation the one actually sitting on the table created while looking over at our meal wistfully.

My last encounter came later that evening when my family and I went to the Broward Center to see Green Day's American Idiot. Midway through the performance we heard a dog barking in the theater. Since there were no canine performers in the show, we realized it was yet another support animal who had found his or her way into the theater. We looked left and right to see where the dog was seated and, to my surprise, I found a man two seats down from us with his bare feet propped up on the brass balcony railing. American Idiot indeed!

For 12 1/2 years, I was the proud and happy owner of a Boxer named Baci; the name means "kisses" in Italian and it was an apt moniker as he was friendly as most Boxers are. While my family and I loved spending time with Baci, we never felt compelled to buy him a Service Animal vest so he could accompany us to places he really shouldn't be. I chuckle even thinking about how he would have certainly worked to get any such vest off himself. We usually took him to the dog park as opposed to French restaurants and while he was a fit television companion, I cannot imagine enjoying a Broadway show with Baci rolling around next to us.

The choice to pursue or forego a fraudulent service animal or support animal request boils down to an honor system of sorts. At this point, it really should not be surprising that some people are going to act dishonorably in this regard.

Sunday, March 23, 2014

Five Things Your Board of Directors and Neighbors Won't Tell You.

5 Things Your Board of Directors Won't Tell You.

1.      "We don't all like each other." This should come as no surprise but many boards fight amongst themselves. Unless the directors run in a block (which creates a problem in and of itself) chances are your board is made up of different personalities not all of whom will play nicely with each other. Bottom line is that many people don't like other people so why should volunteer boards be any different?

2.      "We haven't really read the governing documents." Ask most board members and they will cite chapter and verse of the association's governing documents; problem is that some of them haven't actually read those chapters and verses but have just heard from other members that's what the documents say. There is a wide disparity in the knowledge base amongst the directors on this topic. Some diligent directors actually do read every word of the entire set of governing documents; others just think they did.

3.      "Some of us don't pay our assessments on time."  A delinquent director is the classic case of "do as I say, not as I do."  Fortunately, delinquent directors are now automatically removed from office if they go beyond the 90-day mark but far too often some directors still pay late and/or violate rules to which other members are bound.

4.      "We prefer you not show up for meetings."  We've all seen how nettlesome and long-winded some members can be at meetings but still, the whole point of such meetings is to keep the members involved and informed about their community's operations. Boards would be well advised to take the approach of "if you love something set it free" by making every effort to encourage members to attend-chances are they still won't show up (see #2 below).

5.      "We think we know more than our lawyer, accountant, engineer, fill in the blank."  We have all seen how well decisions made by overly confident board members usually turn out. There is a reason that attorneys, engineers, accountants and other professionals make a livelihood out of representing private residential communities. A specialized set of skills is often needed to solve complex association problems. Boards who decide to go it alone either as a cost-saving technique or as a result of hubris often learn costly lessons the hard way.

5 Things Your Association Neighbors Won't Tell You.

1.      "We never read the governing documents."  How many times must we go over this one? Please do not buy a property inside a mandatory association unless and until you have read (or retained someone to read) the governing documents to determine that you can live without that St. Bernard or monster truck. You will save yourself and your neighbors a lot of headaches and legal bills if you do.

2.      "We don't really want to miss CSI to attend a board or membership meeting."  Board and membership meetings are not the most scintillating way to spend your Tuesday night especially after a long day at the office or running your household. Still, you really do waive your right to complain if you never show up.

3.      "If you specially assess us for any reason including necessary maintenance we will grumble and/or try to recall you."  Granted, the words "special assessment" are two of the dirtiest in a community association but how does one expect the roof to remain watertight or the pool to pass the Health Code if things are not maintained? Rather than threatening to revolt, a commitment to fully funding reserves might be a more attractive alternative to the special assessments which become inevitable when those reserves are waived year after year.

4.      "We will likely need an emotional support animal at some point."  Certainly, there are individuals who benefit emotionally and physically from a furry companion. However, if you are otherwise of sound mind and body, you must ask yourself if you are willing to "game the system" to get what you want. Perhaps it would be better to purchase in a community where pets are not only permitted but welcomed?

5.      "We think we can do a better job than you even though we don't feel like actually running for the board or showing up for meetings."  See # 2 above. You may very well be a better candidate for the board but how will you ever know if you never show up or contribute your time and energy to making your community a better place to live?

Sunday, March 16, 2014

Are golf course communities becoming a thing of the past?

As I type this blog, I am sitting in my backyard looking at the fourth hole of the private golf course community my family and I have called home for the last two decades.

One of the many things that attracted us to this particular community was the overall ambience that living on a golf course provides. The wide expanse of nature in our backyard provided an appealing and peaceful view.  Our children loved seeing the wide variety of wildlife that also make the course their home. It is not unusual to see all sorts of birds including large herons and cranes, turtles sunning themselves on the rough as well as iguanas, foxes, alligators and even an otter that has played in the canal that rings the course for years.

I recently learned that yet another Florida golf course will be developed into a planned community. California-based developer, Standard Pacific Corp., will be turning the 33-acre Raintree Golf & Country Club in Pembroke Pines golf course into a community of 105 single-family homes. The course had been closed since 2006. The city of Pembroke Pines purchased it in 2009 for $9.1 million and sold it last week for $7.7 million.

Isn't this the scenario played out in the minds of every owner whose home currently sits on or adjacent to a private golf course? If the course cannot remain profitable, it will close, the property may sit abandoned and become an eyesore or it will be sold and developed at some point, which will completely change the nature and overall feel of the community?

After all, there is only so much green space left in most parts of Florida. Now that builders are starting to build again, looking to redevelop existing green space such as golf courses makes sense.

Some developers who built these kinds of communities understood this future risk and encumbered the real property on which the course was situated with a restrictive covenant requiring that the property always remain open green space used for a golf course purpose only. Of course, that kind of restrictive covenant can be extinguished by application of the Marketable Record Title Act (MRTA) and many of these golf course covenants have since been extinguished, thirty years or more after the first root of title creating same.

Now I realize that some folks might welcome the obliteration of the golf course next door. I venture to guess, however, that more folks would be wary of what kind of development might go up as well as the potential impact to their structure (not to mention their quiet enjoyment of their property) as a result of the ongoing construction. Lest we remain too human-focused in our concerns, it is important to also mention that developing a golf course results in the death and displacement of countless wildlife.

As for me, I would rather look at the beauty of nature any day of the week.

Sunday, March 09, 2014

A Legal Homecoming

Last week I rejoined Becker & Poliakoff, where I began practicing community association law two decades ago. For perspective, my son Ryan was four months old when I was first interviewed by Becker & Poliakoff.  He is now about to graduate from UF and deciding where to attend law school in the Fall.

I started writing this Condo and HOA Law blog during my initial tenure at B&P and it is only fitting that I dedicate my first blog back in my legal home to how the firm and I have grown.

I had worked with a boutique real estate and banking law firm in Miami directly out of law school. When I was asked whether or not I would consider switching to the representation of community associations, I thought "sure, how hard could it be to read the statutes". I quickly learned that the proper representation of private residential communities requires an extensive knowledge of many different areas of law including corporate, real estate, banking, land use and zoning, litigation, probate, labor law and more. 

This new area of practice required not only acquiring new legal skills but new people skills as well. Dealing with volunteer boards and the other professionals who service them, is a much more hands-on relationship than representing corporations for profit. I quickly realized that the human side of this professional equation was perhaps the most fulfilling part of my day.

In 2007, I left the firm. During my time away, I wrote extensively on association issues, built meaningful relationships with legislators, association leaders, industry professionals, umbrella groups, and individual association members, drafted community association legislation, created an extensive Social Media platform, mentored attorneys and created a truly sophisticated transactional law practice. I was fortunate enough to do all this and more. I acquired new skills and experiences that now help me better serve the communities who seek my help.

While I was growing up, Becker & Poliakoff was growing out. The number of attorneys grew to 170 and new offices were opened in New York, New Jersey, Washington DC and Virginia in addition to the firm's thirteen offices throughout Florida and its international office in Prague. 

Last week was an emotional homecoming after having been away for seven years but seeing many of the same faces that have been at Becker & Poliakoff for decades only reinforced the strength of a law firm that was founded in 1973 as a pioneer in assisting the burgeoning number of shared ownership communities that were being developed throughout Florida in the '60's, 70's, 80's and 90's. 

"Welcome home" are two of the nicest words in the English language. It feels good to be home where it all started and it feels exciting to be part of an association practice group that is so very capable of assisting every residential community regardless of size or location.

Thursday, February 27, 2014

"A Man Cannot Serve Two Masters"-Directors and Breach of Fiduciary Duty

This past weekend, I visited my daughter who is a freshman at Washington University in St. Louis. I had asked if I could possibly attend a law school class at some point during my visit since my daughter had her own undergraduate classes to attend throughout the day.

I knew ahead of time that I would be sitting in on a Corporations Law class but other than that, the topic for that evening's class was a mystery. When the professor reached the lectern, the first words he uttered were "A man cannot serve two masters". He then launched into a two- hour class on fiduciary duty.

Having represented directors in all types of shared ownership communities for many years, I was particularly interested in the topic. After all, volunteer directors don't always have the easiest time when it comes to operating and administering their communities. Professor T discussed the seminal 1944 U.S. Supreme Court case of Bayer v. Beran. He questioned his students as to whether a person can be honest and still breach his or her duty of loyalty to the corporation. In the Bayer case, Mr. Dreyfus, the Chairman of the Board of Celanese Corporation of America, decided that a radio advertising campaign would be great for the company and his wife just happened to be one of the singers on the program in which Celanese would be advertising. While Celanese hired an advertising agency to produce the ad and the advertising commitments were subject to cancellation at any time, some of the company shareholders were still concerned that it was not a fair transaction as they felt that the decision was made simply to advance the spouse's career. A shareholder's derivative action ensued wherein Mr. Dreyfus's loyalty to the company was challenged.

Professor T explained to his class that if a director's actions are challenged, then the burden is on the director to not only prove the good faith of the transaction but also to show the inherent fairness from the viewpoint of both the corporation and those interested therein.

How many times has a director who also owns a business which serves community associations believed that his or her company would do the best job cutting the lawn, cleaning the pool, managing the community, etc.? When questioned about the potential conflict, the director usually says something along the lines of "Well I know my company will do the best job because I live here and will observe the work and will give the best price." Now, this may very well be true and the director's company may be the very best fit for his or her community but it is still up to the other disinterested directors and not the conflicted director to make that decision.

This logic was articulated in the Bayer case which remains good law to this day. The Supreme Court found that the Chairman's wife was actually a very competent singer who had a reasonable rate of pay which made the entire board's decision to advertise on the program reasonable.

Overall, the decision to hire a particular person or company must be fair and in the best interests of the association and not just in the best interest of the director with the connection. Of course, just like Mr. Dreyfus, an association director with this kind of conflict should be prepared to live with the possibility of scrutiny at best and a public relations nightmare at worst.