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Unlicensed Contractors

Using Unlicensed Contractors Can Cost More

Associations lose hundreds of thousands of dollars to unlicensed and uncertified contractors every year. Associations should protect their property by avoiding unlicensed contractors. Unlicensed individuals cannot pull permits and often carry no insurance. Licensing is not necessarily a measure of competence but it presupposes a certain degree of professionalism and commitment to the industry. When dealing with an unlicensed contractor and the work is not done in accordance with the applicable building codes or workmanship standards, there is no recourse against the unlicensed individual other than through the courts. Although licensing is not a guarantee of the contractor’s work, it can protect the Association from a number of potential problems such as:

  • Unlicensed contractors are often unfamiliar with building codes, inspection sequences and inspection requirements.
  • Limited recourse for breach of contract and/or defective work. When dealing with a licensed contractor, the Association always has the option of contacting the appropriate licensing agency. Some agencies are able to resolve issues and assist in recovering consumer losses. At a minimum, licensing agencies have the authority to suspend or revoke licensing privileges. This does not eliminate all contractor problems, but does provide contractors with an incentive to conduct fair business practices and comply with the law.
  • Unlicensed contractors are often uninsured. If an Association uses an unlicensed contractor and property damage occurs, the individual may have no way of reimbursing the Association for damages caused. Furthermore, if a third party suffers an injury at the Association’s property, there may be no insurance coverage. Many homeowners insurance policies exclude claims arising from unlicensed construction practices.
  • Unlicensed contractors cannot pull permits. If the Association pulls the permits for an unlicensed contractor, then the Association, not the person doing the work, is held responsible.
  • If the Association hires an unlicensed contractor, the Department of Business and Professional Regulation or the Building Department may issue a cease and desist order to stop the work, and may decide to take legal action against the Association to impose civil penalties for aiding and abetting unlicensed activities.
  • If the Association hires an unlicensed contractor and the work is not completed in accordance with state and local building codes, the Association may have to pay additional monies to have the work brought into compliance.
  • If an unlicensed contractor does not pay his subcontractors or suppliers, the Association may be liable for these costs. Subcontractors and/or suppliers who work for unlicensed contractors still have the right to file liens on the Association’s property.

There are steps that Associations can take to help protect themselves from unlicensed contractors. When hiring a contractor, Associations should:

  1. Always ask to see the State of Florida license.
  2. Note the license number and verify that the license is current and in good standing. To check on the license, call 850-487-1395 or visit www.myfloridalicense.com.
  3. Ask for references and check each one.
  4. Always get several estimates for comparison.
  5. Never pay in cash, and never provide large up-front deposits. Beware of scams when individuals ask for money up-front or will only accept cash.
  6. Beware of writing checks made payable to individuals especially, when the Association is dealing with a company or a corporation.
  7. Everything should be in writing. At a bare minimum, a contract should include the contractor’s names, address and professional license number; a detailed description of the work to be completed and materials to be supplies; a completion date and total cost.
  8. Have an attorney review all contracts before signing anything.

In these economic times, there are many individuals who try to hold themselves out as licensed contractors. They usually make promises of quick and inexpensive repairs and require large up-front deposits. When work needs to be done, Associations should choose a contractor carefully and make sure the contractor is properly licensed and insured.

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

hurricane season

Be Prepared

We are now into hurricane season. Now is a good time for associations to start to work on developing disaster preparedness and response plans for the future, or refining current plans based on what has been learned from recent events.

The steps that community associations can take to prepare for major casualties such as hurricanes, tornados, and fires, include review of what coverage is actually provided by your insurance policies, consideration of having flood insurance, and preparation of disaster preparedness and response plans. Now is the time. I have found that when years go by with no major hurricanes, people tend to lose focus on the importance of good planning. Human nature, I guess.

Section 718.111(11)(d) of the Florida Statutes requires a condominium association to use its best efforts to obtain and maintain “adequate insurance” to protect the association, the association property, the common elements, and the condominium property. The condominium statute does not specifically require flood insurance.  In fact, the law states that a condominium association “may also obtain … flood insurance,” implying that flood insurance is permissive, rather than legally required.

For condominiums located within designated flood hazard areas, flood insurance could be considered mandatory by the “adequate” insurance requirement of the statute. If flood damage occurs, not only the structure of the building may be damaged, but the electrical system, plumbing, and other utilities may have to be replaced in their entirety. In a high rise condominium building, unit owners on higher floors often forget that they also own a share of the lower floors. Further, windstorm insurance does not cover damage due to flooding, and vice versa. This could result in associations being underinsured in the event of damage due to both wind and flood. Further, a high percentage of flood claims occur outside of flood zones, so every association should take a hard look at this issue.

The Florida Homeowners’ Association Act, Chapter 720 of the Florida Statutes, imposes almost no insurance requirements on homeowners’ associations. The scope of required coverage and types of insurance required will be dictated solely by the governing documents. For attached structures, such as townhouses or villas, the difference between good and bad documents can mean the difference between financial success and disaster. Talk to your insurance agent and attorney to make sure the documents actually say what you want them to say, and are consistent with how you are insuring.

Associations should develop guidelines as to what actions will be done both before and after a disaster occurs. Before a disaster, associations should ensure that important documents such as insurance policies and association records are secured in a safe place, including having such documents on-line, designating an out of state contact for the association, and taking photographs and videos to document property conditions for insurance purposes.

After a disaster occurs, associations should rely on established relationships with contractors to perform emergency repairs. Associations should assemble a list of post-disaster contacts such as board members, management, attorneys, engineers, insurance agents, insurance adjusters, and so forth. There are, unfortunately, some opportunists and charlatans who chase these storms.

Associations should develop a program to keep owners informed regarding the status of association matters, for instance by email updates or posting on a website. Many association-owner disputes arise from these events. Some could be avoided with a little communication.

Review your governing documents with your attorney, particularly as to “emergency powers”. Have a clear understanding of what you can do (legally) in the event of an emergency. Adopt an emergency plan before the emergency. Consider needs of residents with disabilities, the impact of loss of electricity, staffing needs, locate the nearest shelters, meet with first responders who serve your community to address their plans and your needs, and have multiple alternatives for communication with Board members, management and contractors. Consider a safe or duplicate location for the official records, keep a separate copy of your insurance policies and service contracts. Consider pre-qualifying for a line of credit to assure available funds. Do not settle any claim without your attorney’s involvement.

Hopefully, it will be a long time before we have to deal with these issues. However, we certainly cannot count on it and should let past experiences serve as a wake-up call that an ounce of prevention is often worth a pound of cure.

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

Association party

It’s Time to Party – Responsibly

Everyone, generally speaking, loves a good party – who doesn’t?  What defines a “good” party may differ, however, depending on whether you are the Association or the party-goer.

Some associations choose to sponsor or allow social gatherings in the common areas of the association, which may involve food, entertainment, and perhaps the consumption of alcoholic beverages. In deciding whether or not to serve or allow the consumption of alcoholic beverages on association property an association should consider, at a minimum, state and local liquor license requirements, association liability, and insurance.  Before allowing alcohol to be sold, served, or consumed on association property, at a minimum, an association should take steps to insure it is compliant with alcoholic beverage laws, is protected from liability to the greatest extent possible by using waivers and by consulting with your insurance agent for proper coverage. 

A common question posed to our firm was whether or not an association is required to obtain a liquor license to serve wine and beer at social events sponsored by the association.  Sometimes the question includes charging a ticket price for admission to such events, at which alcoholic beverages would be available to attendees at no additional cost, i.e., the cost of the alcohol would be covered by the payment for the ticket. 

The main factor which determines if a liquor license is required is whether or not the alcohol is being “sold,” or provided for free, courtesy of a “social host.” Paying or trading something of value for alcohol, whether directly or indirectly, can trigger state and local liquor laws, and such transaction may be considered a “sale.” If alcohol is being “sold,” the applicable laws are different than if the alcohol is being provided free (without “consideration,” i.e., payment or something of value exchanged) to social guests by a social host.

Florida Statutes, Title XXXIV, Alcoholic Beverages and Tobacco, Chapter 561, Beverage Law: Administration, Section 561.01(9), Florida Statutes, states:

(9) “Sale” and “sell” mean any transfer of an alcoholic beverage for a consideration, any gift of an alcoholic beverage in connection with, or as a part of, a transfer of property other than an alcoholic beverage for a consideration, or the serving of an alcoholic beverage by a club licensed under the Beverage Law.

Chapter 562, Beverage Law: Enforcement, Section 562.12(1), Florida Statutes, states that selling alcohol without a license is prohibited, and any person who sells alcoholic beverages without proper licensure is violating the law, which is a misdemeanor of the second degree:

(1)It is unlawful for any person to sell alcoholic beverages without a license, and it is unlawful for any licensee to sell alcoholic beverages except as permitted by her or his license, or to sell such beverages in any manner except that permitted by her or his license; and any licensee or other person who keeps or possesses alcoholic beverages not permitted to be sold by her or his license, or not permitted to be sold without a license, with intent to sell or dispose of same unlawfully, or who keeps and maintains a place where alcoholic beverages are sold unlawfully, is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.

Applying the above law we conclude that selling tickets to or requiring donations from attendees of association functions at which alcohol will be served would likely be considered the sale of alcohol, subjecting the association to the risk of violating Section 562.12, if it did so without the appropriate license.  If the provider of the alcoholic beverage is receiving any type of consideration or payment for the provision of alcohol, such provider must be properly licensed.  

However, if the association is committed to the concept of selling tickets and offering alcoholic beverages to attendees, the association may be able to obtain a permit for a time period not to exceed three days; however, there are requirements the association must meet, and there is no guarantee that it would qualify, pursuant to Section 561.422, Florida Statutes, which states: 

561.422Nonprofit civic organizations, charitable organizations, municipalities, and counties; temporary permits.—Upon the filing of an application, presentation of a local building and zoning permit, and payment of a fee of $25 per permit, the director of the division may issue a permit authorizing a bona fide nonprofit civic organization, charitable organization, municipality, or county to sell alcoholic beverages for consumption on the premises only, for a period not to exceed 3 days, subject to any state law or municipal or county ordinance regulating the time for selling such beverages. All net profits from sales of alcoholic beverages collected during the permit period by a nonprofit or civic organization must be retained by such organizations. All net profits from sales of alcoholic beverages collected during the permit period by a municipality or county must be donated to a nonprofit civic or charitable organization within 90 days after the permitted event. A municipality or county may only be issued such a temporary permit if it has attempted to solicit a qualified nonprofit civic or charitable organization to conduct such sales but has been unable to find such a qualifying organization in a reasonably practicable manner and timeframe. A nonprofit civic organization, charitable organization, municipality, or county may be issued no more than 12 permits per calendar year. Notwithstanding other provisions of the Beverage Law, a nonprofit civic organization, charitable organization, municipality, or county licensed under this section may purchase alcoholic beverages from a distributor or vendor licensed under the Beverage Law. The division may adopt rules and conduct audits to ensure compliance with this section.

One way to possibly avoid the requirement of obtaining a license is to hold the event in such a manner that the ability to consume alcohol is in no way dependent upon payment of consideration to attend the event.  For example, any table set up to receive “donations” must involve bona fide, voluntary donations (no “drink tickets” can be given for donations), and should not be located by the entrance to the event, or near the area where alcoholic beverages are being served, so as to avoid attendees making the assumption that a donation or payment is required or recommended in exchange for being served alcohol. 

The Florida Division of Alcoholic Beverages and Tobacco has, in the past, suggested that if an association holds functions on a limited periodic basis where alcohol is served (but not “sold”), does not hold itself out as a “bottle club,” is open to participation by all members of the association, and does not charge any consideration whatsoever, then it probably would not require a license. 

Pursuant to Section 561.01, Florida Statutes, a “bottle club” is defined as follows:

(15)“Bottle club” means a commercial establishment, operated for a profit, whether or not a profit is actually made, wherein patrons consume alcoholic beverages which are brought onto the premises and not sold or supplied to the patrons by the establishment, whether the patrons bring in and maintain custody of their own alcoholic beverages or surrender custody to the establishment for dispensing on the premises, and which is located in a building or other enclosed permanent structure. This definition does not apply to sporting facilities where events sanctioned by nationally recognized regulatory athletic or sports associations are held, bona fide restaurants licensed by the Division of Hotels and Restaurants of the Department of Business and Professional Regulation whose primary business is the service of full course meals, or hotels and motels licensed by the Division of Hotels and Restaurants of the Department of Business and Professional Regulation.

Importantly, if the association chooses to obtain a license to sell alcohol, chooses to allow its event attendees to bring alcoholic beverages to its events, or sponsor “BYOB” events, the Board should be aware of the potential liability resulting from the dangers of alcohol consumption by attendees, such as potential physical harm or death to attendees, third parties, or damage to property.  Florida Statutes Title XLV, Torts, Chapter 768, Negligence, Sub-Section 768.125, Liability for injury or damage resulting from intoxication, states:

A person who sells or furnishes alcoholic beverages to a person of lawful drinking age shall not thereby become liable for injury or damage caused by or resulting from the intoxication of such person, except that a person who willfully and unlawfully sells or furnishes alcoholic beverages to a person who is not of lawful drinking age or who knowingly serves a person habitually addicted to the use of any or all alcoholic beverages may become liable for injury or damage caused by or resulting from the intoxication of such minor or person. (Emphasis added.)

Therefore, the association should be mindful, even under the circumstances where the sale of alcohol is not necessarily at issue, to ensure that individuals who are drinking are of lawful drinking age, and the association should take care not to serve alcohol to any attendee whom they know is an alcoholic or is otherwise habitually addicted to drugs or is highly intoxicated.

If the association is functioning as a “social host,” (i.e., not selling the alcohol), courts have held that there is some protection from liability extended to such a host. [See Dowell v. Gracewood Fruit Company, 559 So.2d 217, Supreme Court of Florida, (holding that an employer was a “social host,” who served alcohol, and could not be held liable for injuries caused in drunk driving accident); and Bankston v. Brennan, 507 So.2d 1385, Supreme Court of Florida, (holding that statute limiting liability for seller of alcohol did not create cause of action against social host under same circumstances)]. 

However, given the lack of cases specifically on-point regarding community associations, we cannot say with certainty that an association would definitely avoid liability based on F.S. 768.125, in the event injury, death, or property damage resulted from intoxication by alcohol served on the premises of or by the association.

Importantly, if the association chooses to allow alcohol to be consumed on its premises, the Board should consult with the association’s insurance agent to make certain it is adequately covered in the event of a liability claim made against the association due to alcohol being served. 

Similarly, if the association allows a member to host an event on the premises, the association should consider requiring the member host to obtain his or her own insurance, naming the association as an additional insured, and require proof of coverage.  The association’s insurance carrier should be consulted regarding this option. Other possibilities to reduce liability include requiring a member host to sign a release/waiver, which may help insulate the association from liability, although full protection is not guaranteed.  Finally, the association may consider adopting rules and regulations governing the consumption of alcohol on its premises, such as ceasing serving intoxicated attendees, and requiring intoxicated persons to leave the premises, but not to drive a motor vehicle. 

The question posed herein risks the association being found to be engaging in the unlicensed sale of alcoholic beverages. Selling tickets or charging an admission fee to an association event at which alcoholic beverages are served, even if there is no additional charge for the alcoholic beverages, is likely considered the sale of alcohol, and would require a license.  In addition, an association should work in coordination with its insurance agent, and its attorney to insure it is adequately covered for such events. 

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

 

Carolyn C. Meadows

Condominium and Planned Development Law Attorney, Becker
Tampa
 | bio

 

What Should Be Contained In Board Meeting Minutes?

As an owner, have you ever requested to review your association’s board of director (“Board”) meeting minutes, only to find a mini version of War and Peace to go through? As a board member, have you ever received Board meeting minutes to review and approve and thought to yourself “Is that what the owner in the audience said? I don’t remember the other audience member saying that…..”?

What should be included in Board meeting minutes? The law only requires that Board meeting minutes must indication the vote or abstention of every Board member in attendance on each voted on item. Minutes should not be a word by word transcription of everything said by everyone at a Board meeting.

Board meeting minutes should be succinct but with enough information to determine exactly what transpired at the meeting. The minutes should reflect the date, time and location of the meeting; when it was called to order; who made a motion; who seconded the motion; and how each Board member voted on the motion. If the vote was unanimous, stating that in the minutes will suffice. You can also add introductory or explanatory phrases such as “The Board heard presentations from company A, B and C in regard to painting and waterproofing of the building. A discussion ensued”. Following would be “Bill Smith made a motion, seconded by July Jones, to approve company B for the painting and waterproofing of the building, subject to the association attorney reviewing the contract.”

Including a word for word description of the Board’s discussions, owner comments, questions, etc., in my experience, is much more frequently used against the Board and the association in litigation that in assisting the Board in any way.

Finally, please be aware that the law regarding retention of minutes was changed last year. Associations are now required to keep association minutes permanently, as opposed to the previous requirement of seven (7) years.

 

Howard J. Perl, Esq.

Shareholder, Becker
Fort Lauderdale | bio

 

Should Your Association Eliminate Some of Your Outdated Rules?

Many of my conversations with my association clients involve an evaluation of their rules and regulations and their available enforcement tools.  We regularly discuss how previously overlooked rules can be revived through a process known as republication so the Board can once again enforce them prospectively.  We also discuss how rules must complement rather than contradict the provisions in the recorded Declaration or Bylaws.  There are times, however, when I raise a question that some of my clients have never considered:  are there current rules that need to be updated or eliminated altogether?

Some of the following restrictions may need to be updated to be more relevant to your residents’ lifestyles these days and, an added bonus to doings so, is that it is much easier to secure voluntary membership compliance with relevant, reasonable rules.

  • Almost every set of governing documents I’ve read over the least two decades restricts the use of the unit or the home to “single family use”.  Many of these restrictions were drafted decades ago when a single family resembled the family in “Leave it to Beaver”. These days a single family unit can be comprised quite differently and your documents should be revised to reflect that reality by defining a family in more contemporary terms.  Since federal and state law is subject to further change in this area, I prefer to amend this section to ensure that the unit or home is used for residential purposes. Defining the term family is also important if you wish to impose and enforce meaningful restrictions on guest occupancy.
  • The opposite of a residential purpose is a commercial purpose which most association documents seek to prohibit. However, in the strictest sense of the words, many of your owners are already violating this provision if your documents have a broad prohibition against “commercial use”.  Many people these days telecommute which means they are earning a paycheck out of their unit by conducting their company’s business from home; this would constitute a commercial use of the property.  Others may be tutoring, counseling or advising paying customers online which would also fall within a commercial use description. The restriction against commercial usage was drafted, in many cases, by developers’ counsel many years or decades ago before the advent of the personal computer, tablet or the ubiquitous cell phone, all of which are frequently used for business purposes.  The typical prohibition on commercial use was designed to prohibit business activities which would detract from the residential character of the community or create a nuisance for neighboring owners; a typical example would be an owners operating a hair salon out of his or her unit or home which would bring both customer traffic as well as noxious odors and noise to the property.  Clearly, the use of typical digital devices rarely impacts the residential character of the community nor does it create  an actionable nuisance; attempting to enforce an archaic commercial use prohibition under those circumstances is likely impossible. Associations should revise older commercial use restrictions to define the types of commercial activity which are prohibited and which are not.
  • Once upon a time, trucks were a bugaboo in community associations; seen as something that vendors and contractors drove but certainly not residents. These vehicles were seen as eyesores which detracted from the overall aesthetic of the community. These days, many trucks are coveted, expensive vehicles which are driven by a wide cross section of the population. If your community’s documents have a blanket restriction against “trucks” or “commercial vehicles” without proper specificity, it may be time to rethink why these vehicles are being prohibited. If your parking spaces cannot accommodate these larger vehicles that is a legitimate reason for the restriction to remain in place or to impose size limitations or designate appropriate parking areas for larger vehicles but if the restriction is borne out of aesthetic concerns alone this may be a restriction that is unnecessarily narrowing your pool of eligible purchasers as well as creating dissension in your community.
  • Nothing stirs the blood as much these days in community associations as the topic of pets.  Some communities believe that they are “no pet” communities. They rely on older restrictions which impose a blanket prohibition on any and all pets but, when asked, many of these boards cannot confirm with any degree of confidence that there is not a goldfish in a bowl or a hamster running on a wheel inside one of their units.  Overly broad pet restrictions may be one of the factors fueling the proliferation of fraudulent assistance animal requests in community associations. Revising those blanket restrictions to impose moderate, reasonable boundaries, prohibiting only those pets or animals your board would be prepared to pursue legal action to remove might stave off certain unintended consequences, particularly assertions of selective enforcement without negatively impacting the quality of lifestyle in the community.
  • Rules that pertain strictly to children expose an association to potential liability. Families with children are a protected class under both Federal and Florida law and rules which single out families with children by making their experience in the community more restrictive than families without children are often seen by the courts as driving a discriminatory agenda.  Your board has to strike the right balance between protecting your residents and your common areas and not creating and enforcing rules which have a disproportionately negative impact on one set of residents. For example, rules which permit the pool to be used only during the typical hours when children are in school might be viewed by a trier of fact to be a transparent attempt to keep children out of the pool altogether. Rules which use words like “toys”, “running” and “playing” similarly expose a preconceived notion of which segment of the association’s population engages in those activities.  It is important to remember that some adults cannot accurately assess the risks associated with the use of the pool or weight equipment, are incontinent, and like to engage in horseplay in the pool so age alone is not the best barometer for drafting rules related to conduct.

The foregoing list is by no means all-inclusive.  Your community might have old rules which are no longer legally enforceable regarding satellite dishes and religious objects affixed to the door frames of condominium units or rules which impose fees triggered by the transfer of a unit which are not permitted by the applicable statute or your governing documents.

I recommend to my clients that they engage in a regular rules audit with me to confirm which rules are effective, which can be improved or updated and which are well past their expiration date.

 

Donna DiMaggio Berger

Board Certified Condominium and Planned Development Law Attorney and Shareholder, Becker
Ft. Lauderdale
 | bio

 

Why is a Plat so Important?

As an owner of residential property in Florida, you are aware that your community is probably subject to a unique set of “governing documents.” Typically these will include a Declaration of Covenants and Restrictions, Association Articles of Incorporation and Bylaws, and various Rules and Regulations.

Less well known is the statutory process of “platting,” which is required whenever a developer wishes to subdivide a large piece of property into smaller parcels and tracts. These smaller areas become the residential lots, streets and parks of a new residential sub-division.

Creation of statutory subdivision plats is governing by Florida Statute 177 Part 1. The statute contains specific requirements for both drafting and filing a plat. Basically a plat is a map of the subdivision of lands, which is supposed to be an exact representation of both the subdivision and other information required by the statute and any local ordinances. The next time you have an issue with boundaries in your community, the extent or purpose of an easement, or whether a portion of property is within your property, check your plat in addition to other governing documents, it has a wealth of information.

Every plat of a subdivision must be accompanied by a survey of all the boundaries of the platted lands. The survey must be performed under the supervision of a professional surveyor. Each plat must be accompanied by a title opinion of a Florida attorney, abstractor or title company which shows that all the owners of the property are executing the plat, and that all mortgages on the property have been satisfied.

The statute lists 29 specific requirements for each plat, including the size of the plat and the color ink that must be used. In working with your community plat (which is recorded in the Public Records of the County in which your community is located) the following requirements can be particularly useful:

  • A prominent “north arrow” must be drawn on every page to allow you to orient the map.
  • Sufficient data must be shown on the plat to describe the boundaries of every residential lot, block, street, easement, park and all other areas shown on the subdivision plat.
  • Properties which adjoin the subdivision must be identified by subdivision title, plat book and page. If adjoining land is unplatted, that must also be designated.
  • Both the location and width of all easements must be shown either on the plat or in the notes or legend on the plat. The specific intended use of each easement must also be clearly stated.
  • If there is an interior parcel within the community that is not part of the plat, it must be clearly labeled; “Not A Part Of This Plat”. Without such a label, all property within the boundaries of the platted subdivision are included.
  • If your community decides to have another survey of any portion of the property, it is important to remember that the original surveyor who prepares a subdivision plat is presumed to have been correct. For this reason, the new survey will only locate the original monuments, points and lines of the original survey. If for any reason there is a discrepancy between what the subdivision plat shows and what the original survey indicates, the monuments placed on the ground as part of the original survey have precedence.

 

Harry W. Carls, Esq.

Office Co-Managing Shareholder, Becker
Orlando | bio

 

Attorney-Client Privilege When Board Members Sue the Association

Attorney-Client Privilege When Board Members Sue the Association

Many Associations have just completed their election season and find that a person or persons newly elected to the Board are involved in a case being defended or prosecuted by the Association. Now what? Clearly, a conflict of interest exists but participation in a lawsuit against the Association is not one of the factors that makes you ineligible to sit on the Board. Therefore, the person(s) can take their seat on the Board so long as every other aspect of the election process was valid. The Board however still needs to take measures to ensure that the strategy and legal opinions obtained from counsel on behalf of the Association continue to be privileged. This can be accomplished in a few ways. One option is for the person(s) with the conflict to recuse themselves from participating in any meeting/vote regarding the lawsuit. Their fiduciary duty to the Association would be fulfilled but what if that means there is no quorum of the Board to make a decision? Also, they would have to know of the meeting in order to recuse themselves and this would tip them off that something was up? The better alternative is to have an open Board meeting for the sole purpose of creating a committee of members of the Board who do not have the conflict of interest. This meeting would be open to all members of the Board and the Association. The persons with the conflict should be allowed to vote on the issue and their fiduciary duty should dictate that they vote in favor of such a committee. During this meeting the Board should also vest all powers necessary to allow settlement or resolution through appeal in the committee. Otherwise, if the committee continually had to return to the Board for more authority, the person(s) with the conflict would be able to deduce what was going on and the creation of the committee would be for naught.

If the Association is one in which the majority of the Board makes up the person(s) with the conflict, there will not be enough disinterested Board members to create a committee which could handle the litigation. The option then is to have non-board members partake in the committee. In this instance, the Board should decide how many additional persons are needed. My recommendation would be if you have a 5 person Board with 3 persons having a conflict, that you add 3 additional non-board members to the committee. The most diplomatic way to do this would be to have an open Board meeting for the purpose of the creating the committee but advising on the notice that the Board will seek 3 volunteers to sit on the committee from the non-Board members. During the meeting, the Board would explain the purpose of the committee, the fiduciary duty to the Association and the requirement that the privileges afforded a litigation be preserved despite any friendship with the person(s) having the conflict. For obvious reasons, relatives of the persons with the conflict should not be allowed to sit on the committee. Should only 3 volunteers seek to be part of the committee, nothing else is necessary. Should however more than 3 volunteers seek to be part of the committee, the Board should vote on each one until the 3 spots have been filled. Another option would be to have the members vote on the volunteers.

Please note, if your governing documents provide another procedure for setting up a committee (such as landscaping, architectural, etc.) you may want to follow that procedure all together. Similarly, if the governing documents require that you have a litigation committee, then you need follow that procedure, always ensuring that the person(s) with the conflict do not sit on the committee. Regardless of how this committee is seated, the first thing to do is set a closed meeting with counsel. This will permit the attorney to meet the persons she will be dealing with during the litigation. Additionally, the attorney will be able to explain the duties of the committee as they pertain to the Association in terms of the suit and bring the committee up to speed on what is going on in the case. The attorney will also be able to get an understanding of what the committee wants in terms of resolution (i.e., settlement or trial). One last thing, when creating the committee, it should be clear that the committee is created solely for the purpose of the case at hand and all that goes with it (counterclaims, third party claims, etc.) and that it dissolves immediately once the case is resolved. Again, if your governing documents create a method for dissolving a committee, the Association should follow those procedures.

 

Marilyn Perez-Martinez

Attorney at Law, Becker
Miami | bio

 

nuisance

Defining a Nuisance in your Community

If you live in a shared ownership community, you have likely heard the term “nuisance” bandied about now and then. It is an unfortunate byproduct of living in close quarters with others that at some point, another person’s conduct may impact your enjoyment of your home.

A nuisance can be summed up as a condition, activity or situation (such as loud noises or foul odors) which interfere with another person’s use or enjoyment of property. Every set of association documents I have reviewed over the last two decades contains at least a bare bones nuisance provision.

Legally speaking there are many different types of nuisances which include:

  1. Abatable nuisance-easily removable by reasonable means.
  2. Nuisance per se (aka absolute nuisance)-an interference so severe that it would create a nuisance under any circumstances.
  3. Anticipatory nuisance-a condition which has not yet risen to the level of a nuisance but is very likely to become one.
  4. Attractive nuisance-a dangerous condition that could attract children-a typical example is an unsafe lake or other body of water.
  5. Permanent nuisance-cannot be readily abated at reasonable expense.
  6. Private nuisance-this one is the most applicable in the community association setting as it impacts a person’s enjoyment of his or her property.
  7. Public nuisance (aka common nuisance)-is an unreasonable interference with a right common to the general public.

Practically speaking, the following conditions can be considered nuisances depending on how often they occur and the level to which they rise:

  • Loud noises-radio, pets barking, screaming, etc.
  • Odors
  • Parking-blocking in neighbors’ cars, parking on others’ property, etc.
  • Failing to clean up after dogs and/or allowing dogs to run around off leash
  • Domestic violence
  • Smoking
  • Overflowing waste receptacles used by owners undertaking home renovation projects
  • Leaving holiday decorations up year-round

The foregoing list is certainly not all-inclusive. Nuisances in communities often result in long-ranging consequences which can include board members being recalled for failing to act, people moving out of the community and, in the most dire circumstances, violence erupting between neighbors.

Which activities have you seen in your community or a neighboring community which could constitute a nuisance? What has your board done to correct the problem?

If you have not looked at, let alone amended, the nuisance provision found in your original developer-written documents, it is time to do so. Why leave it up to a trier of fact to determine what is considered a nuisance in your community? Spell it out for swifter and easier enforcement.

 

Donna DiMaggio Berger

Board Certified Condominium and Planned Development Law Attorney and Shareholder, Becker
Ft. Lauderdale
 | bio

 

difficult people

The Dynamics of Difficult People

We all encounter difficult people in our lives. This is particularly true for property managers. In dealing with difficult people, and in order to maintain your sanity, finding an effective way of dealing with difficult people is critical.

Effectiveness in dealing with difficult people begins with understanding the dynamics of the person and situation. It is helpful to understand the difficult person by examining what type of difficult behavior are they exhibiting and what are their motives. In understanding the dynamics of the situation, you are deciding what tools and techniques you can use to assist in resolving the situation.

The first consideration is identifying the type of behavior being exhibited. This consideration focuses on two aspects of behavior: whether the person is at their core a difficult person or is being difficult due to the situation itself and how they are exhibiting their difficult behavior.  The next step that is important is to identify as best you can, the person’s motives which can be trickier than it seems.

Once you have an understanding of the dynamics of the person, you then turn to the dynamics of the situation. This is where you employ your tools and techniques that can help resolve the issue you are experiencing with the difficult person. 

The typical behaviors of difficult people generally fall into one of several categories based on common characteristics. Some of the more common categories are:

  • Bullies – people that tend toward angry outbursts, that must be right at all time, that backstab and spread rumors.
  • Malcontents – people who complain about everything, are never satisfied and are negative about everything.
  • Know it Alls – people who are pompous, condescending and generally believe (whether true or not) that they know more than you.

After identifying the behaviors associated with certain categories of difficult behavior, it is important to try and understand the motive of the person which involves asking the person questions and communicating with them. It is important for you to control the communication by making sure the communication is on your terms. Setting an appointment with the person is one of the best ways to make sure you are fully prepared to address the issue.

Motives can be obvious and easy to understand but they can also be complex. The key is to identify, through discussion, the motive of the person. Asking the following questions can help expose motive and help unpeel any complex motivational issues:

  • What is going on that led to X?
  • What would getting X do for you and why is that important?
  • If you are not able to get X, what else might satisfy you?

Identifying behavior categories and motives allows you to more effectively disarm the difficult person and to negotiate with them.  The following are a few strategies that can be helpful in disarming a difficult person based on the type of behavior the person is exhibiting:

  • Bullies – stand up to the bully and confront the person on your terms in a professional but direct manner.
  • Malcontents – refuse to feed into their complaints or allow yourself to be a sounding board. Instead, steer the conversation toward the person’s desired outcome and encourage the person to find solutions.
  • Know it Alls – counter the person’s understanding with information but try to present the information in a way that allows the person to save face.

Once you have a plan for disarming the difficult person, the task becomes resolving the issue. Active listening is essential to understanding the issues, identifying areas of agreement and disagreement and preparing yourself for your response. Asking questions and making statements that make the person defensive should be avoided as should statements that minimize the person’s feelings.

After allowing the difficult person an opportunity to express themselves and their objective, you can begin the process of negotiating with the person in order to resolve the conflict.   The following techniques can help in the negotiation process:

  • Focus on the future. Remind the difficult person that the past cannot be changed but they can be part of coming up with a solution for how things should be in the future
  • Use silence. Use silence during points of unreasonableness and after making offers in order to encourage the other person to reflect on what was said.
  • Use doubt. Use a question like “is it possible?”
  • Use the facts if the difficult person was not aware of all relevant facts.
  • Role reversal. Help the difficult person see the situation from your point of view.
  • Point out possible inconsistencies by gentling saying something like “I am confused, I thought I understood you to say X.”
  • Point out constraints.

Once you feel that a resolution has been reached, it is important to make sure that you restate the resolution so that you both are clear on what will happen next.

 

Marielle E. Westerman

Marielle E. Westerman

Construction Law Attorney, Becker
Tampa | bio

 

Are E-Mails Official Records?

Whether you live in a condominium, cooperative or homeowner association, the Statue governing your community defines the term “official records”. In defining official records, each Statue has a catch-all provision.

All other written records of the association not specifically included in the foregoing which are related to the operation of the Association.

Sections 718.111(12), 719.104(2), and 720.303(4), Florida Statues.

Questions abound as to whether e-mails are official records. The Department of Business and Professional Regulation (“Division”) has ruled that e-mails to an association can be considered official records and are therefore subject to inspection and copying by owners or their representatives. The question is, what are e-mails “to an association?” Are personal e-mails between board members official records? What about an owner’s e-mail to a board member’s email address and the board member’s response to that owner – is that considered an official record subject to another owner’s inspection and copying?

Division rulings have held that e-mails to an individual director or to all directors as a group, addressed only to their personal computers are not written communication to the association and therefore not considered an official record. This is because there is no obligation for a director to turn a personal computer with any regularity, or to open and read e-mails before deleted them. Irzarry v. Laguna Point Condominium Association, Inc., Arbitration case No. 08-05-2791 (April 10, 2009/Final Order). This point was further clarified in the arbitration case of Humphrey v. Carriage Park Condominium Association, Inc., Case NO. 08-04-0230 (March 30, 2009/Final Order/Campbell), where the arbitrator stated that “any e-mails received by, stored upon, or otherwise contained upon or within the personal computer devises (e.g., computers, laptops, cell phones, tablets, etc.) of Directors shall be considered the personal property of the Director upon whose devise said e-mail exists.” I other words, the e-mail does not belong to the association.

However, arbitrator in Humphrey went on to state “[t]he conclusion may be different if the association owns a computer on which management conducts business including e-mails (analogous to government public records); or if e-mails are printed up and passed around for discussion at a board meeting.” In other words, e-mails to an association’s e-mail address, the (“@codename.com”) are considered official records.

It is important to have a clear understanding of and a policy in place related to e-mail to assure that those e-mails that are official records are properly kept and those e-mails that are not official records are properly deleted. There are also exceptions for things such as communications that relate to litigation, which must be considered when creating and implementing an e-mail policy. It is therefore strongly recommended that all associations involve their attorney when formulating their e-mail retention policy.

 

Marilyn Perez-Martinez

Attorney at Law, Becker
Miami | bio