Condo & HOA Law, Naples Daily News

Naples Daily News Q&A | March 28, 2021 | Hurricane Irma Special Assessments

Fort Myers Attorney Richard D. DeBoest, II | Florida Attorneys Goede, Adamczyk, DeBoest & Cross

By Attorney Richard D. DeBoest

 

Q: Our condominium association adopted and collected a special assessment for hurricane Irma damage. Now we have finally settled with the insurance company and have a surplus of funds. The board is considering refunding the surplus funds to the owners who paid the special assessment but some of those owners have sold their unit and moved. How can this be done?
B.H., Naples

A: The surplus must by law be returned to the current owner of record not a prior owner even if the prior owner paid the special assessment. The Condominium Act provides in Section 718.106(2)(a) that the surplus is an appurtenance to the unit, so the current unit owner owns the share of the surplus. The board is not obligated to return the surplus and may place it in the association’s operating account or reserves. If the board decides to return the surplus, I recommend the surplus be returned in the form of a credit to the owner’s account. That way anyone that is delinquent will have the delinquency paid via the credit. Then anyone that does not want to let the credit ride can request a disbursement check.

Q: If you buy into a community association-controlled development and have your governing documents and all the rules and regulations, but along the way a board changes some of the rules and regulations that would affect you, do you have any grandfathered rights since you have been an owner under earlier rules? For example, if the original rule says maximum of three pets, then it changes to two, are you grandfathered in? Another example is if the original rule says you can have a boat or RV on property for 24 hours, but then it changes to no boats or RVs at all at any time, do you have grandfathered rights since you bought under different rules?
H.W., Naples

A: In the examples you cite, the person that had three pets or an RV or boat would be grandfathered as long as they had the same three existing pets or the same RV or boat after the rules were changed. Once one of the pets died or the person got rid of the prior allowed RV or boat, they would not be allowed to replace them and would be required to follow the current rules. A famous case on grandfathering involved a white Chevy Astro van. At the time the owner moved into the community there was no prohibition on having a van. Thereafter, the rules were changed to prohibit vans. The owner was grandfathered and allowed to keep his white Chevy Astro van that he had at time of the rule change. Thereafter, he sold his van and bought a newer white Chevy Astro van and the association sued him for violating the no van rule. His defense was that he was grandfathered. The court disagreed because the grandfathering applied to the van that he had at the time the rule was changed, not the replacement van, even though the van was the same make, model and color.

 

Q: Is there a limit in the law as to how much a special assessment can be? Do the owners have to approve the special assessment?
A.S., Marco Island

A: No. Chapters 718 (Condominiums), 719 (Cooperatives) and 720 (Homeowner Associations, HOA) Florida Statutes do not set a limit on the amount or frequency of special assessments nor do they require unit owners to approve special assessments except in an HOA that is still under developer control. However, sometimes a community’s governing documents do impose such limits or require membership approval, so you need to check your documents. If your documents are silent, then the amount of the special assessment is determined by the board of directors.

Q: Is it legal for the board of directors, to make sidewalk deals by phone or a Zoom meeting of the board of directors only, and reach agreements or “line up the ducks” before the meeting? They would say, for example, “if you vote for my motion, then I will vote for yours.” So, at the meeting, they often just say, “All in favor, say Aye.”
L.B., Estero

A: Your question raises several issues. First, if a quorum of the board is meeting on the telephone or via Zoom or some other type of real time communicative platform and they discuss association business, then that gathering is a board meeting and must be noticed and open to the owners to attend. If there is less than a quorum of the board at the gathering, it is not a board meeting and no notice is required and the owners have no right to attend. However, the statutes provide that a quorum or more of the board may communicate with each other via email about association business but cannot vote via email. So, it is legal for the board to communicate via email or text and discuss what may occur at the board meeting and elicit support for a particular position from other directors. However, in my opinion if this type of planning results in the board meeting lasting figuratively five minutes with no discussion about the issue or motion, then I think the directors are not fulfilling their role properly. In other words, if every motion is a rubber stamp vote with no substance, I think the directors should not do this. The owners are entitled to hear how and why certain decisions are being made since it is their money being spent.

Q: Can the board of directors borrow $50,000 to repair roofs without owner’s approval?
P.R., Fort Myers

A: Yes, unless the governing documents expressly require owner approval to borrow money. Chapter 617 Florida Statutes is the not-for-profit corporation act. Almost all community associations are governed by Chapter 617. Chapter 617 provides that a not-for-profit corporation may borrow money and does not require member approval to do so. So, you need to review your governing documents to determine if there is a requirement for the board to have owner approval to borrow money on behalf of the association. However, even if there is a requirement for owner approval to borrow money in the governing documents when the geographic area of the community is under a declared state of emergency, the emergency powers statutes allow the board to borrow money without owner approval

 

Q: The incoming HOA board members who will assume office in April, 2021 are concerned that the 2021 budget that was approved in October, 2020 by the outgoing board members is not adequate to cover needed areas (i.e. legal fees for review and revision of rules) plus underfunding a number of line items in the operating budget. There was also no increase in pooled reserves funding to accommodate large projects like painting and roofs scheduled for the next few years. Is it possible for the new board to amend the budget or do we just have to live with it as it stands?
D.C., Naples

A: Yes, generally the board can adopt an amended budget at any time using the same process that was used to adopt the original budget. You should review your governing documents to see if there are any special sections limiting this, but I would doubt it.