Condo & HOA Law, Naples Daily News

Naples Daily News | March 8, 2020 | Legality of 50/50 Raffles

Q: Our association frequently holds social events where there is a 50/50 raffle. The winner gets 50 percent of the money collected and the social committee retains the rest. Is this legal?

L.M., Naples

A: Probably not. 50/50 raffles are very common at many types of social and networking events. However, more than likely the raffle is actually illegal. Florida law allows 50/50 raffles if they comply with Section 849.0935, Florida Statutes.

50/50 raffles are considered a form of gambling and are illegal unless you comply with the following:

• The organization conducting the raffle and receiving the funds is an IRS 501(c)(3) charitable organization with a current determination letter from the IRS.

• All brochures, advertisements, notices, tickets or entry blanks used in connection with the raffle conspicuously disclose:

     a. the rules for the drawing.
b. the full name of the charitable organization and its principal place of business.
c. the source of the funds used to award the cash prize.
d. the date, hour, and place where the winner will be chosen, and the prize awarded.
e. that no purchase or contribution is necessary. A donation can be suggested but not required.

Community associations, while Chapter 617 not-for-profit corporations, are not IRS 501(c)(3) charitable organizations, nor is the typical social committee.

Again 50/50 raffles are very common and rarely investigated by the authorities, but the association should not formally sponsor such a raffle or keep any of the proceeds from it.

Note item 2.e. above. Even in a legal 50/50 raffle you cannot mandate that to enter the raffle you must pay an entry fee, but you may suggest a minimum donation. Legally, if someone wanted to enter for free or for less than the suggested minimum donation, you must allow it.

Q:  What are your thoughts on alcohol being served at association events?

K.G., Naples

A:  First, for liability reasons the association should never purchase or provide alcohol at any event. Second, the community association statutes authorize the collection of assessments from members for the purpose of paying common expenses of the association. Common expenses are identified in the statutes and the governing documents. The statutes address items primarily concerned with the maintenance, repair, replacement, protection and insurance of the property and improvements. The governing documents will often identify additional common expenses such as sewer and water service. Thus, purchasing alcohol with association funds is improper as it is not an identified common expense. This does not mean however, alcohol cannot be consumed at such events, but it should be on a BYOB basis only. In any event, if any form of consideration is paid in order to receive the alcohol then a temporary liquor license is legally required. The payment of consideration does not have to be a direct exchange. If, for example, the social committee (whether formal or ad hoc) is holding a St. Patrick’s Day event and the door charge is $5.00 for all the corned beef and cabbage and green beer you can consume, a temporary liquor license is legally required. Of course, this type of thing happens all the time and rarely does anyone get in trouble. But the Florida Department of Tobacco and Alcohol will investigate such activity if it is reported to them.

Q: Our condominium association bylaws provide that in order to qualify to run for the board of directors the candidate must be a resident of Florida and reside in the community at least seven months out of the year. Is this legal?

C.G., Bonita Springs

A:  No, the Condominium Act and the Homeowners Association (HOA) Act provide that every owner has the right to be a candidate for the board if they otherwise meet the qualifications listed in the statutes. The acts require that the candidates be at least 18 years old, not be a convicted felon (unless their civil rights have been completely restored for at least five years), not be delinquent in the payment of any monetary amounts owed to the association and not be under suspension by the Department of Business and Professional Regulation. The Division of Condominiums has issued several declaratory statements and rulings that hold that residency requirements are not enforceable. While such rulings are not strictly applicable to HOAs in my opinion residency requirements are not enforceable in HOA’s either.

Q: My condominium association board has adopted the budget for 2020. It includes a large increase in the quarterly assessments because the clubhouse is going to be renovated this year. I was told the board cannot adopt a budget that increases the assessment more than 15 percent from the prior year. In this case, due to the project the increase is well over 15 percent. Can the board adopt this budget without the approval of the owners?

K.S., Naples

A:  Yes, unless your association’s governing documents limit the board’s authority to increase the budget. What I think you are referring to is Section 718.112(2)(e)2.a., Florida Statutes which provides, “If a board adopts in any fiscal year an annual budget which requires assessments against unit owners which exceed 115 percent of assessments for the preceding fiscal year, the board shall conduct a special meeting of the unit owners to consider a substitute budget if the board receives, within 21 days after adoption of the annual budget, a written request for a special meeting from at least 10 percent of all voting interests. The special meeting shall be conducted within 60 days after adoption of the annual budget.”
The statute also provides, “Any determination of whether assessments exceed 115 percent of assessments for the prior fiscal year shall exclude any authorized provision for reasonable reserves for repair or replacement of the condominium property, anticipated expenses of the association which the board does not expect to be incurred on a regular or annual basis, or assessments for betterments to the condominium property.”

So, in your case the cost of the clubhouse renovation project would be excluded from the calculation because it is not an expense the board would expect to be incurred on a regular or annual basis and the assessment is for a betterment to the condominium property.

Q: I think our association election was flawed and improperly conducted. How can I challenge the election results?

J.Z., Estero

A:  In order to challenge the election results you must file a petition for arbitration with the Division of Condominiums within 60 days of the election. However, before filing the petition you must send a notice to the association demanding that the election be done over and provide the association an opportunity to do so. Further, you must indicate in the letter that if the association does not comply, you intend to file for arbitration. Note that the Division of Condominiums also has jurisdiction over HOAs for election disputes so in an HOA you must follow the same protocol.

Visit our Condo/HOA Blog for more of our Q&A articles.

 


Richard D. DeBoest II, Esq., is co-founder and shareholder of the Law firm Goede, Adamczyk, DeBoest & Cross, PLLC.  Visit www.gadclaw.com, or to ask questions about your issues for future columns, kindly send your inquiry to: info@gadclaw.com.  The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, PLLC, or any of our attorneys.  Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.