By Betsy Barbieux, CAM, CFCAM / Published June 2018
Community association management and all the related legislation doesn’t make a bit of sense unless you take a look back in its history. The community association laws in Florida amount to volumes of legislation that were created throughout five decades. Without some historical perspective or bird’s-eye view, most of the laws seem strange, to say the very least. Also, without the historical perspective, it’s hard for a board of directors and management to stay on point. In other words if you don’t know why you are here, you might not know where you are going. For boards of directors and management, that means staying true to the purpose of your community association.
To get some of that bird’s-eye view, let’s go back in time; way back in time to the 1960s. In Central Florida in those years, there was no such thing as a “developer.” That creature had not been invented yet, but we did have “builders.” We had nice little neighborhoods that had names but likely no sign or main entrance, but you still knew the name of the neighborhood in which you lived. These little neighborhoods had streets, sidewalks, and streetlights. I don’t know how they got there, but they did. The words “amenities” and “lifestyle communities” were not in use in Central Florida in the 1960s. If you had a pool, it was yours even though all the neighborhood kids came over to swim in it. There were no architectural guidelines and no requirements for certain paint colors, building designs, or roofing materials. In fact, you could drive down the street and be able to tell from the construction that this home was a Sam Powell Builder home and that one was a Clell Coleman Builder home. You could also tell the homes that were built by their owners.
Eventually the streets, sidewalks, and streetlights needed to be repaired. Our parents were knocking on the doors of the city council and county commissioners saying, “Fix our streets, sidewalks, and streetlights.” The cities and county were scratching their heads and asking themselves, If we fix it, who pays for it? Does the city pay for it, or the county, or do we assess the owners? We’re not sure who is responsible.
Put this dilemma on pause and go to South Florida in the 1960s. In South Florida, there was this creature born called a “developer.” And wouldn’t you know it—he bought a city block, built an apartment building on it, filled it full of renters, and then decided he did not want to be in the landlord business. So, he decided to turn this building into a “condominium” and sell the apartments, which he renamed “units”!
Well, for the past 6,000 years people have always owned dirt. Now this developer is selling “stacked air.” Oh, my goodness, can you imagine the insurance, lending, maintenance, financial issues and disputes, and all the lawsuits! From this point on, it seems, the laws were created and are still being created as a reaction to something going wrong. To many, laws seem more reactive than proactive!
Well, the folks in South Florida had money, unlike the ones in Central Florida! So, they hired attorneys, who hired lobbyists, who began to promulgate the laws into what they are today. The legislators star-ted by saying to Mr. Developer, you cannot convert one of these apartment buildings to a condominium or build a condominium building from scratch until you first create a Florida-specific corporation that is a condominium corporation, or cooperative corporation, or a homeowner association corporation. And by the way, Central Florida neighborhoods, we, the legislators will eventually fold you into this mix of laws, too.
The legislators said to Mr. Developer, you must address at least three things in your corporate papers. First, make this corporation responsible for protecting the property and its value. Through your board of directors, this corporation will do so by maintaining the things that are used in common (and by the way, Mr. Developer, spell out the things that are used in common), and your board of directors will enforce the restrictions contained in the documents (and by the way, Mr. Developer, lay out the restrictions on owners’ use rights of their units or homes).
These organizational requirements gave every community association in Florida a threefold mission statement:
This threefold mission statement should be what the board of directors focuses its attention on at board meetings. The annual budget should reflect the sums needed to support the mission statement. Decisions made about contracts, maintenance, or violations should be made with the mission statement in mind.
The legislators realized that all corporations need people! So, the legislators made membership in the corporation mandatory when purchasing a unit or lot in the community (corporation). There is no opt-out.
Simultaneously, the legislators realized that corporations need money and gave this corporation the ability to “tax” its people—the members. The legislators called this “tax” the assessment, which is the regular amount of money a member/owner pays for his, her, or its share of the threefold mission statement. Many community associations use other terms—maintenance fees, amenities fees, condominium dues, HOA fees—but the legislators call it the assessment.
It’s not hard to imagine that some members/owners decided not to pay their regular assessments! To resolve this, the legislators gave this corporation the lien right; that is, the ability to go through a formal legal procedure to take your home from you if an assessment remains unpaid. There aren’t too many other entities that can literally take your home from you! This lien right makes our community associations very powerful Florida corporations.
If you were to step back and look at what has been described, our community association corporations seem very much like a municipality. We serve a geographic area, have a city council (board of directors) with a city manager (your CAM), provide services for which residents pay (assessment), and can “cut off” residents if assessments are not paid (lien right).
Boards of directors and managers are brought many issues that owners want resolved. Some of the issues are not for the board to resolve. Sometimes, they are simply neighbor issues.
Other boards of directors try to corral or control all the social activities within the community. Social activities may be a big part of community living but are likely not the board’s responsibility nor contained within the scope of the threefold mission statement. Social and special interest clubs within our communities may be their own organizations and may have their own leaders, their own funds, and their own bank accounts, insurances, and tax ID numbers.
There is no point in a board of directors taking on more tasks and decisions than is required. Boards of directors and managers should always keep the threefold mission statement in mind at board meetings and remember why we are here!
Betsy Barbieux, CAM, CFCAM
Florida CAM Schools