We, the Jury, Find…

By Jane F. Bolin, Esq. / Published April 2017

On May 9, 2016, 21 citizens were selected to the Miami-Dade Grand Jury to investigate the problems and issues facing condominium owners and the response of the Department of Business and Professional Regulation (DBPR) in handling or otherwise regulating those problems. In short, this report was a scathing review of the DBPR and their ability to deal with fraud and wrongdoing by condominium associations.

I do not necessarily agree with all of the findings or recommendations provided by the Grand Jury; however, I welcome this conversation about whether the current practices and policies make an impact for Florida condominium owners. This article highlights a portion of the report, so please do take the time to read the report in full (www.miamisao.com/wp-content/uploads/2017/02/Grand-Jury-Report-Final.pdf). You will find that the process of the Grand Jury’s investigation and clear frustration with DBPR witnesses who were subpoenaed to testify shaped the report conclusions and recommendations.

The Grand Jury findings cover three main areas: access to records, management of the association (including elections), and the DBPR’s ability to manage and enforce the law. Notably, a 2008 final report by the Florida House of Representatives Select Committee served as the basis for the inquiry and provided a road map for the Grand Jury to investigate. Did anything improve or change since 2008? According to the report, the answer is no, and the situation for condominium owners has only gotten worse.

A major problem cited is access to records. The Florida Condominium Act provides access to the official records of the association by owners. This provision provides transparency and very specific guidelines for the production and timing of the association response. Thankfully, the report does acknowledge the nuisance of some owners who abuse this right and approves of the right of associations to create reasonable rules and regulations to combat these situations. It is the enforcement provisions the Grand Jury does not agree with. Currently, an owner may receive $50 a day up to 10 days ($500) if the association “willfully” failed to comply with the request. The Grand Jury suggests that the board members or the association (including CAMS) should be personally liable for “repeated” failures to comply. This repeated failure is defined as twice in a 12-month rolling period. No doubt, access to records is important to owners, and rightfully so; but to start placing this blame personally on board members will cause a chilling effect.

Often, I teach board member certification courses and discuss the requirements of the board to act in good faith. The requirements of the not- for-profit statute (617) both define the manner in which board members should conduct themselves and provide immunity from liability as long as that conduct is not committed with “bad faith or malicious purpose.” The Grand Jury starts with personal liability for the monetary damages and moves swiftly to creating criminal sanctions for not producing records. Did I say this would have a chilling effect? Indeed, the argument can be made that only those who knowingly do this (the bad guys) would care about such a change.

Considering the thousands of board members I have taught, I would have you consider there are plenty of volunteer board members who simply don’t know how it works, even after taking the state required board certification course. Finding talented (or any) owners to volunteer their time is always the number one complaint. “We don’t have any participation. No one will run for the board.” Does it make sense to add to the objections of potential candidates? Imagine telling your neighbor, “Well, you could be liable for monetary damages personally, and there is the threat that the board might be convicted of a misdemeanor.” Folks have professional licences, security clearances, and basic HR requirements of employers to consider. The pool of potential candidates doesn’t shrink, it evaporates.

The report goes on to address the issues of fraud in elections and election monitors’ ability to manage those elections. The Grand Jury cites a terrible case where election rigging and financial fraud were committed hand in hand. Without a doubt, this is a dire situation! I agree election monitors need training and regulation. I applaud critical thinking and independence to report a potential crime. Empowering election monitors to invalidate or reorder an election for fraud is extraordinary, but it requires a level of training that does not exist at this time.

I believe funding the DBPR to train monitors and investigators to pursue these claims through the arbitration makes more sense. Any election that is invalidated should go through an arbitration process (perhaps expedited) to have a second opinion. Currently, every association pays $4 per unit to the Division of Condominiums, Timeshares, and Mobile Homes. Those funds do not make it to the DBPR and are usually reallocated for general use, to put it nicely. I suggest we focus on how to support the DBPR rather than blame it for the systemic issues that face condominium owners, and I suggest new legislation that will provide meaningful sanctions and the ability for DBPR to report to the State Attorney when the actions of the board or managers rise to the level of a crime. Many associations cannot get the police or State Attorney to take on their cases; perhaps a collaboration between the DBPR and the State Attorney would provide more meaningful results.

Jane F. Bolin

Founding Member, Chief Marketing Officer, PeytonBolin

For more help on running your association board or if you’re in need of an attorney who focuses on community association law, contact PeytonBolin at (877) 739-8662 or through our online contact form at peytonbolin.com/contact.