Avoiding Legal Woes by Mastering the Mundane

Avoiding Legal Woes by Mastering the Mundane

By J. Kevin Miller / Published April 2023

Photo by iStockphoto.com/BitsAndSplits

It seems now more than ever that Florida’s community association managers are asked to do more and more. Focusing on a few of the basics can go a long way in keeping the community association out of legal trouble and alleviating the stress of community association management. Here are a few traps for the unwary to avoid. 

Records Inspection Requests

     For both condominium and homeowners’ associations, Florida Statutes contain a litany of official records which must be maintained by the association and made available to unit and parcel owners upon written request. Voluminous or frequent official records inspection requests can be the bane of a manager’s existence, in large part because they require short turnaround times. Both the Condominium Act and the Homeowners’ Association Act require the production of records for inspection, or electronic delivery of records, to the unit or parcel owner, within ten working days of receipt of a written request. Sometimes deciphering what a unit owner or parcel owner is requesting can also be challenging. There is also the seemingly unlimited nature of what can be requested and the frequency in which owners may request to inspect documents. But there are ways managers can better manage the task. 

     First, act fast. With busy schedules and limited time and resources, it’s best to act fast. Sitting on a written request until the last minute is a good recipe for stress. Failure to make records available for inspection or to produce them by electronic means to the owner can result in a statutory penalty of 50 dollars per day and up to 500 dollars if records are not made available to the owner in a timely manner. Additionally, if arbitration or litigation results from the failure to produce records on time, attorney’s fees can be awarded to the prevailing party. So, the consequences can be costly. 

     Secondly, keep association official records organized. An organized recordkeeping system will make locating and producing records relatively painless. Records should be kept in a central location. It is not the best practice to permit board or committee members to keep official records at their respective homes while the manager maintains other records at their office. For litigation purposes, it’s best to have a single records custodian. That is someone who can testify in court how the records are made, when they are made, and how they are maintained in the ordinary course of the association’s business. The community association manager is the professional best equipped to have a complete and thorough knowledge of what records exist, when they are created, and how and where they are maintained. Electronic storage of official records is ideal and makes their production more efficient. Additionally, electronically storing records that are also backed up on cloud-based storage systems helps to protect them in the event of casualty.

     Lastly, Florida Statutes permit the association to adopt reasonable rules regarding the frequency, time, location, notice, and manner of records inspections and the copying of records. Depending on the nature and scope of the request, the intake of a request, the time for production, and the manner of production, the task of production can be surprisingly complicated. A well-established written policy concerning records inspection requests can help clarify the method of making requests, the intake of requests, and the manner in which documents are to be inspected. In the condominium context, there is an abundance of condominium arbitration decisions concerning official records inspection requests, including what arbitrators have deemed reasonable or unreasonable when it comes to drafting rules regarding inspections. It can be a surprisingly troublesome area to navigate for the association. It’s a good idea for the association to consult with legal counsel when drafting policies concerning records inspection requests. 

Certified Written Inquiries

     For condominium association managers, a written inquiry delivered to the association by certified mail can pose a risk to the association if not addressed quickly. Pursuant to Section 718.112(2)(a)2, Florida Statutes, when a unit owner of a residential condominium files a written inquiry by certified mail with the board, the board must respond in writing to the unit owner within 30 days after receipt of the inquiry. The board’s response must either give a substantive response to the inquirer, notify the inquirer that a legal opinion has been requested, or notify the inquirer that advice has been requested from Florida’s Division of Condominiums, Timeshares and Mobile Homes. If the board requests advice from the Division, the board shall, within ten days after its receipt of the advice, provide in writing a substantive response to the inquirer. If a legal opinion is requested, the board shall, within 60 days after the receipt of the inquiry, provide in writing a substantive response to the inquiry. 

     Adhering to these timeframes is crucial because the association’s failure to provide a substantive response to the inquiry in a timely manner precludes the board from recovering attorney’s fees and costs in any subsequent litigation, administrative proceeding, or arbitration arising out of the inquiry. Like official records inspection requests, the association may adopt reasonable rules and regulations regarding the frequency and manner of responding to unit owner inquiries, one of which may be that the association is only obligated to respond to one written inquiry per unit in any given 30-day period. It’s important for any condominium association manager to have a careful intake system concerning any correspondence delivered by a unit owner via certified mail. Such intake procedures should include keeping the envelope in which the mail was delivered containing the certified mail number, calendaring the dates of receipt and the 30-day initial response deadline, and communicating to the board the association’s obligation to substantively respond, along with the board’s options to either seek advice from the Division or a legal opinion from counsel. Basically, the manager should be on high alert when receiving any certified mail from a condominium unit owner.   

     Condominium association managers should promptly inquire of legal counsel regarding whether any certified letter from a unit owner contains an inquiry as contemplated by the statute because the failure to respond can prove costly should any litigation, administrative proceeding, or arbitration arise from the subject matter of the inquiry.  

Service of Court Documents, Threats of Litigation, and Making Insurance Claims

     Many community association managers serve as the registered agents for their associations. In this capacity, managers are routinely served with court filings. Commonly served papers are subpoenas requiring the production of documents in litigation not involving the association. These are titled subpoena duces tecum and can require the production of documents either by mailing, when a deposition will not be taken, or in person, where a deposition of the association’s records custodian will be taken. A subpoena is a legal document which orders someone to do something, typically producing documents, appearing in court or before an administrative agency, or appearing before a lawyer for a deposition. The failure to respond to a subpoena is punishable as contempt. It could subject the nonresponding party to monetary sanctions. 

     Managers serving as registered agents are also commonly served with a summons and complaint when their association has been served with a lawsuit. A summons notifies the person or entity of the lawsuit and informs them of their requirement to respond. If a manager is served with a summons and complaint, he or she should immediately notify the board and its legal counsel to determine an appropriate response. The failure to respond within the proper timeframe to a complaint can prejudice the association’s ability to defend the case. The association should also seek advice from its legal counsel and insurance professionals to determine if a claim should be made on its insurance policies. The failure to report the filing of a lawsuit on time, a claim as defined by the applicable insurance policy, or even a threat of claim can lead to the association’s insurer denying a claim. In many instances, even non-court related communications, written or otherwise, threatening legal action against the association may constitute a claim under an insurance policy, requiring the association to promptly notify the insurer or risk having the claim denied. Accordingly, it’s wise for community association managers to promptly notify their board, the association’s legal counsel, and the association’s insurance professional of threats of litigation or possible claims to avoid the risk of having a claim denied for failure to provide timely notice. 

     These are just some of the issues managers face on a routine basis. Knowledge, best practices, and diligence will help managers keep their associations out of legal trouble.

J. Kevin Miller

Lawyer, Becker

     Mr. Miller practices in the areas of business, real estate, and community association litigation. Since joining Becker in 2001, he has concentrated much of his practice in the law governing common interest ownership associations. During that time he has represented condominium, cooperative, and homeowners’ associations as well as developers in a wide variety of litigation and other matters.
     From 2005 through 2012, Mr. Miller served as the statewide leader of the Firm’s collection and foreclosure practice. During that time, he was a frequent speaker on topics related to Florida’s residential foreclosure crisis, the foreclosure process, and creditors’ rights.
     For more information, call 239-433-7707, email KMiller@beckerylawyers.com, or visit www.beckerlawyers.com.