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What can be done when home sales are not approved by the association?

Q. Our community is facing a new problem. Recently, a couple of sales have closed without association approval. We did not receive an estoppels request or any communication from a title agent. Our documents specifically require association approval for any sale or lease. Now, we have two new residents who are not approved and we are not sure how to address this. Any guidance is appreciated. – R.M.

A. The association certainly has the upper hand here. Occasionally, a title agent or Realtor will inadvertently fail to obtain association approval or will attempt to get approval after the fact on a rush closing. The documents will protect the association if the approval requirements are reasonable and clearly expressed in the declaration. If the purchasers had made application, the association would have had the opportunity to advise the new owners of the financial obligations and use restrictions they would face as owners. Failure to obtain this approval will create a serious title defect for the new owners. Most declarations provide that unapproved sales or transfers are void and in such event, the association need not recognize the new resident as a member of the association. All parties associated with the unapproved sale have liability. The association could impose fines against the former owner and the new owner for failing to obtain approval. The title agent, who insured the transaction, could also be responsible for the financial consequences of the error. The recommended first step is to immediately send a demand letter to the new owners advising of the violation and the intent to impose fines and remove them from the community. This will likely get their attention and result in compliance. If the new owners refuse to cooperate with the approval process and/or violate the use restrictions, the association can be aggressive and file suit to remove them from the community. However, most of these cases involve sloppy work during the closing and can be corrected by requiring the parties to pay fines and make proper application.

Q. Most residents in our community are in favor of changing our documents to authorize the construction of detached structures, such as guest homes, utility sheds, garages and structures for storage of RVs or boats. The lots in our subdivision are large and these structures will easily fit on most lots without creating an eyesore. Proposed structures will need to go through an architectural review committee, which will be addressed in our amendment. Our manager has advised the board that it should first check county code and the planned unit development to ensure that these structures will comply with local zoning restrictions. I am under the impression that our governing documents are the only concern. Is our manager’s advice correct? – L.P.

A. Yes, your manager is correct with respect to local building codes and zoning restrictions. In addition to your governing documents, several important documents and laws, including subdivision plat and planned unit development ordinances in most cases, also govern your community. The plat shows the dimensions of the homes, common areas and rights of way. It also shows the location of certain easements that might interfere with the construction of these structures. The PUD is a zoning ordinance that is special to your community. It contains the commitments the developer agreed to as a condition of obtaining building approvals. Most planned subdivisions in Southwest Florida are subject to a PUD ordinance. This ordinance may or may not prohibit the construction of these structures or limit the manner in which detached structures can be used. Your association counsel should be able to provide your association with an opinion on whether your new structures are permitted under local law. Even if allowed by an amendment to your documents, these structures will not be legal if they are not allowed under local zoning restrictions.

Q. Our condominium documents go back to the 1990s and have never been updated with the exception of a couple of minor amendments. My friends on other boards talk about the need to update our documents, but we are fairly happy with our documents and we are not sure if rewriting the documents would be a huge undertaking. What is your position on this? – L.H.

A. Generally, it is a good idea to have your association’s legal counsel review your community documents periodically to ensure compliance with existing law. Particularly in recent years, there have been multiple important changes to Chapter 718, the Florida Condominium Act. For our readers, who are members of a homeowners association, there have also been significant, recent changes to Chapter 720. A critical issue is whether your documents even benefit from changes in the statute as it is amended annually. If your documents do not have specific language regarding changes in law, the Florida Supreme Court has said that your association will be stuck operating under older versions of the law. There are other reasons to review your documents for possible updates. Perhaps your association has adopted a set of rules and regulations. If the Declaration of Condominium is not consistent with those rules, the rules will be practically worthless. Perhaps there are certain provisions in the bylaws regarding voting, elections and financial issues that could be improved. Remember, what was best for the developer years ago when drafting the documents might not be best for your association at this point in time. Experienced legal counsel can advise on the appropriate amendments to your documents. Many firms, including ours, should be willing to provide a courtesy review with some recommendations for your board to consider.

Q. There is much confusion in our community regarding the master association and which laws govern the master with respect to voting and elections. The master board has attempted to operate under Chapter 718, although some have argued at membership meetings that we should be following Chapter 720 because the master is not a condominium association. Can you point us to the rule or statute that will end the confusion? – C.G.

A. Your question is timely because a Florida court recently addressed this issue. In that case, a dispute arose over the election of officers in a master condominium association comprised solely of five sub-condominium associations. Two directors were nominated as president and they disagreed on the voting method for the election of officers. One candidate wanted a weighted voting procedure, while the other candidate insisted that a one vote per director majority voting scheme be used. The court confirmed an important clarification regarding voting and elections in master condominium associations. First, master condominium associations are controlled by Chapter 718 only if the master association meets the definition of association found in section 718.103(2), Florida statutes. Otherwise, the master association is subject to Chapter 617, Florida statutes, the Non-Profit Corporation Act. The court reiterated that a master condominium association meets the definition of a condo association in 718.103(2) if: 1) It is responsible for common areas distinct from any sub-condominium association; 2) condominium unit owners have user rights in the master association’s property; 3) voting membership is exclusively condominium unit owners; 4) membership in the master association is a required condition of ownership; and 5) the master association is authorized to assess its members for payment of shared expenses with lien authority to compel payment. The legal distinction in this court decision is critical because Chapter 718 permits weighted voting procedures if supported by the governing documents and Chapter 617 does not. At the end of the day, it is questionable whether this court decision will have a major impact on the election of officers, but this decision may be cited as a basis to invalidate prior elections depending on the specific language of the governing documents. This decision highlights the importance of 1) clarifying whether Chapter 718 or Chapter 617 governs a master association with respect to voting and elections; and 2) ensuring that your declaration, bylaws, and articles of incorporation are uniform and clear regarding voting procedures.