Editor’s note: Attorneys at Goede, DeBoest & Cross, PLLC, respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, litigation, estate planning and business law.
Q: An owner in our condominium enclosed her lanai with glass and added HVAC vents to the lanai. This owner did not ask for permission and it ruins the uniform appearance of the buildings. What can be done?
-SB, Stuart
A: Generally speaking, a condominium lanai is considered a limited common element, meaning that the lanai is part of the common elements but can only be used by the unit owner with the appurtenant unit. The act of enclosing the lanai is effectively modifying the common elements and most all governing documents require the condominium to approve such alterations. Because the enclosure would also constitute a material alteration of the condominium property, it is also possible that this alteration would require the membership’s approval in addition to the Board’s approval.
Assuming the governing documents have an approval mechanism, and assuming the owner received no such approval, the Association should enforce the covenants. If the enclosure is not permitted, the Association may levy fines of $100 per day up to a maximum of $1,000. The Association can also suspend the owner’s amenity privileges. In addition, the Association can file a petition for arbitration with the Florida Department of Business and Professional Regulation seeking an arbitration order to require removal of the enclosure.
Because this type of enclosure has significant implications with respect to insurance, structural integrity, wind mitigation, uniform appearance and maintenance responsibilities, the Board should carefully review its governing documents and the proposed enclosure and determine whether it is a) permissible; and b) in the best interest of the condominium.
Q: Our homeowners’ association has approximately 500 homes and our budget is over a million dollars. The Board has not commissioned a financial audit in years and keeps recommending that the members provide only an account of income and expenses, which seems inadequate considering the amount of dollars coming in and out of the community. Is this a breach of fiduciary duty?
-TN, Vero Beach
A: Because of the annual revenues, Florida Statutes section 720.303 requires the Association to obtain an audited financial statement. That being said, the statutes also provide a mechanism for the owners to annually vote to waive the audit requirement in lieu of a lower level of financial reporting. The report of cash receipts and expenditures referenced in your question is the lowest level of financial review and analysis. There is no limit on the authority of the membership to waive the audit indefinitely.
To be clear, the decision to waive the financial audit is not, in itself, a breach of fiduciary duty. The decision to waive the financial audit is also the membership’s decision, not the Board’s decision. The Board could be breaching its duty if it has knowledge of a financial issue or practice that places the Association’s finances in jeopardy and ignores the problem. If an audit would reveal and help mitigate any financial dilemma, the audit is advisable, even if waived by the membership. That being said, many of our clients with sound financial management and procedures routinely waive the financial audit to save on the expense and it is perfectly valid. Thus, the decision to waive rests with the membership, so if you feel that the Board should commission a financial audit, the membership needs to vote “no” when approached to waive the 2018 financial reporting requirements.
Q: A tenant in our condominium was just elected to the Board. How is this possible? I thought Directors had to be unit owners.
-PR, Port St. Lucie
A: Most condominium unit owners do not realize that the statute does not require Directors to have any relationship with the condominium itself. Most condominium governing documents, however, will self-impose a restriction and require Directors to be unit owners. Thus, if your condominium documents only mirror the statutory eligibility requirements, it is very possible a non-owner could be elected to your Board of Directors.
Steven J. Adamczyk Esq., is a shareholder of the law firm Goede, DeBoest & Cross, PLLC. Ask questions about your issues for future columns, send your inquiry to: question@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, DeBoest & Cross, 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.