Tag Archives: hoa

Quest for Quorum

For community associations in Florida, when it comes to having a valid meeting of the membership the statutes applicable to condominiums and homeowners associations both require that there be a “quorum.”  A quorum, as defined by the internet equivalent of Webster’s dictionary, Dictionary.com, defines a quorum as “the number of members of a group or organization required to be present to transact business legally.”  So although this word may sound like just another typical piece of lawyer jargon derived from a dead language (Latin, not Sanskrit, for those scoring at home), it has the potential to be the undoing of a lot of hard work if the proper number is not achieved.  One of the confounding circumstances is that many assume that the condo and HOA statutes are completely in sync and while this may often be the case, the statutory requirement for a quorum at a meeting of the membership of a condo differs quite significantly from that for HOAs.

Chapter 718 governs condominiums in Florida and with regard to achieving a quorum, subsection 718.112(2)(b)(1) states that “unless a lower number is provided in the bylaws, the percentage of voting interests required to constitute a quorum at a meeting of the members is a majority of the voting interests.”

Chapter 720 governs HOAs in Florida and with regard to achieving a quorum, subsection 720.306(1)(a) states that “unless a lower number is provided in the bylaws, the percentage of voting interests required to constitute a quorum at a meeting of the members shall be 30 percent of the total voting interests.”

So unless a number lower than these figures is provided for in an association’s bylaws, for condominiums to have a quorum at a meeting of the membership there must be at least 50% of the membership plus 1 present, in person or by proxy.  This is significantly higher than for HOAs where only a minimum of 30% of the membership must be present, in person or by proxy.  It follows that if your association wants to take action on something requiring a vote of the membership, such as amending of the governing documents, knowing the appropriate quorum requirement is crucial to ensuring the validity of the proceedings.

It is also important to note another related difference between the statutes.  While Chapter 720 is silent on the issue, Chapter 718.112(2)(b)(2) provides that “a voting interest or consent right allocated to a unit owned by the association may not be exercised or considered for any purpose, whether for a quorum, an election, or otherwise.”  In the current economy, where units are often foreclosed upon and taken title to by associations, it is important that condo associations understand that per this statute, they cannot use ownership of units to satisfy a quorum requirement, nor can the association vote the interest of these units in any way whatsoever.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999

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The Art of the Covenant: Preserving HOA Restrictions

The covenants and restrictions found in the governing documents for homeowners associations are subject to the seldom discussed, but very important Florida Marketable Record Titles Act (“MRTA”).  Under the MRTA, encumbrances on real property, including a homeowners association’s covenants and restrictions (such as those that allow it to control aesthetics, issue violations and levy assessments), may be rendered unenforceable and extinguished 30 years after their date of recordation if not properly preserved or reaffirmed by the association beforehand (See Florida Statute 712).

The good news is that there is a streamlined and relatively simple 4 step process by which the association can ensure that its covenants and restrictions are not extinguished by the MRTA, and in doing so, avoid the possibility of homeowners later contending that the provisions of the community’s governing documents are inapplicable as to their property.

The first step, as if you did not see this one coming, is that the association must properly notice a meeting of the board of directors (hooray for more meetings!).  The association must mail or hand deliver the notice to all the members of the community at least 7 days prior to the meeting, and the notice must include the time and place of the meeting, as well as all the “Statement of Marketable Title Action” as is explicitly set out in Florida Statute 712.06.  A copy of the meeting notice should also be posted throughout the community.

The second step is the holding of the meeting.  At the meeting, the approval of at least 2/3 of the members of the board of directors will be necessary to properly authorize the preservation of the association’s covenants and restrictions (See 712.05).

Once authorized, the third step is for the association to have its attorney prepare and record a Notice of Preservation of Covenants and Restrictions in the public records of the county where the association is located.  The Notice must contain the name and address of the association, a full and complete description of all land affected by the notice, a copy of the applicable covenants and restrictions sought to be preserved, an attached affidavit of a board member attesting that the “Statement of Marketable Title Action” was previously provided to the members of the community and the Notice must be properly signed and notarized.

The fourth and final step is for the association to either arrange and pay for the clerk of court to mail a copy of the notice to all owners (by registered or certified mail) or alternatively (and what probably makes more sense), have the notice, including the recording book and page number, published once a week, for 2 weeks in a local newspaper.

Of course, the lesson here is simple but crucial.  A homeowners association’s ability to assess its members and to exercise certain levels of control are crucial elements of community living and every necessary step (or 4 of them) to preserve those powers must be taken.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999

Got Rent? Going After Delinquent Owners’ Rental Income

Its 2012 and for most associations, their biggest challenge this year, as with past years, will be delinquencies in their community and the all-important “accounts receivable” column on their balance sheet.  For many associations, even more irksome than a unit owner continuing to reside in the community without paying assessments is that same delinquent owner renting out their property and deriving income from it.

Fortunately, the Florida legislature recently acknowledged this circumstance and codified amendments to Florida Statutes 718 and 720 (Condo and HOA, respectively, see “Useful Links” tab above) empowering associations to send demand letters to tenants of delinquent owners, requiring that they immediately begin tendering their monthly rent payments directly to the association instead of the owner of the property.  Of course, a key element to the success of this program has been the threat of eviction.  In addition to providing an association with the right to demand rent payments from tenants of delinquent owners, the applicable statutes (specifically, 718.116 and 720.3085) also allow the association to evict those tenants who refuse to comply.  Since the word “eviction” generally strikes fear in the heart of most tenants, especially those who are able to pay their rent and generally like where they reside, it is this attorney’s experience that tenants who receive a demand letter often contact the association very quickly to arrange for the paying of their rent.

The tenant rent demand letter serves as a low cost way to generate an influx of payments which will reduce an association’s assessment arrearages and  accounts receivable.  Because of the low cost and high success rate, it is this attorney’s recommendation that any Florida condominium or homeowners association ensure that their attorney is using this valuable tool on their behalf.

Daniel Wasserstein

E-mail: danw@wassersteinpa.com

561-288-3999