Thieves, Thugs, Pirates, and Jackals

By Betsy Barbieux, CAM, CFCAM / Published February 2019

Once upon a time there was a 206-unit well-run condominium association with a busy but competent board of directors who knew their management limitations and hired a CAM (community association manager) to perform the corporate duties and oversee maintenance and daily operations. The community had the usual amenities—clubhouse, swimming pool, covered parking, driveways/roads, stucco building with barrel tile roof, and entrance wall and access gate.

     As time went by, these busy but competent board members were replaced by others who were not so busy and not so competent. Their goal was to save money! So, of course, the first thing they did was terminate the CAM. After all, that was money they could save, and it couldn’t be that hard to manage this community! They could compensate themselves for all the work they were doing, but it wouldn’t be nearly as much as they were paying the CAM. They contracted with a board member’s brother to perform the lawn maintenance and lawn pest control and saved some money by doing so.

     They saved more money by deferring the deferred maintenance on the stairwells and railings, roof, and elevators. They didn’t know they were supposed to keep the operating funds separate from the reserve funds and failed to make the monthly transfers of those reserve dollars out of the operating account. Eventually, they were really pleased with the big bank balance.

     They seem to have held the records hostage and wouldn’t let owners have access to the accounting records without intimidating them and charging them “access” fees. This board has not proposed a budget for the past two years, and there has been no evidence of the required reserve schedule and calculations.

     They chose not to pay the insurance premiums for the property and casualty, general liability, directors’ and officers’ liability, and fidelity bond. Not knowing this insurance coverage was required by the statutes and their Declaration of Condominium, they thought these expenses had been optional. After all, the owners have their own insurance! Eventually, the association insurance was cancelled just before Hurricane Matthew struck and took off a good portion of the roof.

     Now they have placed the community in a very unfortunate position with no roof, no insurance, and insufficient reserves.

     A special assessment is imminent as are formal complaints filed by owners against the board members with the DBPR/Division of Condominiums. One owner has described this board as thieves, thugs, pirates, and jackals.

     It would seem the Florida Administrative Code new penalty guidelines in Rule 61B-21.003 were written for the thieves, thugs, pirates, and jackals among this community association board.

     The newly minted Rule provides for a penalty range between $10 to $30 per unit for each violation. If the Division imposed a penalty on this association for just one violation, the amount could be as much as $6,180.

     Below are some of the descriptions from the Rule that could describe thieves, thugs, pirates, and jackals.

Thief—a person who steals, especially secretly or without open force.

• Insufficient or incomplete accounting records
• Failure to maintain separate accounting records for each condominium
• Failure to charge interest on past-due assessments
• Failure to propose/adopt budget for a given year
• Failure to include a reserve schedule in the proposed budget
• Failure to timely provide an estoppel certificate or failure of the certificate to contain all required components
• Failure to fund reserves in a timely manner; failure to fully fund reserves
• Using association funds for other than common expenses
• Commingling association funds with non-association funds
• Commingling reserve funds with operating funds
• Levying late fees without documentary authority
• Use of an association debit card for any association expense
• Assessments not sufficient to meet expenses
• Improper calculation of reserve requirements
• Failure to follow proper method to waive or reduce reserve funding
• Using reserve funds for other purposes without proper unit owner approval
• Using special assessment funds for other purposes

Thug—a cruel or vicious ruffian, robber, or murderer.

• Failure to reasonably cooperate with an investigation
• Failure to comply with final order of the division
• Imposing fines without proper notice and opportunity for hearing; imposing excessive fines; improper suspension of voting rights without proper notices
• Improper use fee
• Improper transfer fees or security deposits
• Failure to obtain competitive bids on contracts that exceed five percent of the association’s budget
• Violating a fiduciary duty
• Requiring a unit owner to pay a fee for access to association records
• Failure to provide access to records in a timely fashion
• Failure to allow scanning or copying of records
• Failure to maintain official records
• Failure to maintain records within 45 miles of the condominium property or within the county
• Failure to hold an annual election

Pirate—any plunderer or predator; a person who uses or reproduces the work or invention of another without authorization.

• Failure to provide space for name, unit number, and signature on outer envelope
• Failure to provide or provide in a timely manner first notice of election
• Election not held at time and place of annual meeting
• Improper nomination procedures in election
• Failure to provide candidate with a receipt for written notice of candidacy
• Failure to provide or provide in a timely manner second notice of election; or omitting ballots, envelopes, or candidate information sheets
• Ballot including a candidate who is ineligible; ballot not including an eligible candidate
• Ballots not uniform; ballots identify voter; ballot containing space for write-in candidates
• Second notice of election and accompanying documents including comments by board about candidates
• Allowing ineligible person to run for board of administration
• Voters allowed to rescind or change their previously cast ballots
• Association altering or editing candidate information sheets
• Ballots not counted by impartial committee
• No blank ballots available at election meeting
• Failure to include required documents on website

Jackal—a person who performs dishonest or base deeds as the follower or accomplice of another.

• Contracting with a service provider owned by a board member
• Failure to properly disclose a conflict of interest
• Improper purchase of unit at a foreclosure sale
• Failure to maintain adequate fidelity bonding
• Failure to provide in a timely manner annual financial report or statements
• Failure to get approval for acquisition, conveyance, lease, or mortgage of association real property
• Failure of outgoing board or committee member to relinquish all official records and property of the association in his or her possession or under his control to the incoming board within five days after the election
• Improperly amending the declaration of condominium to change the proportion or percentage by which the unit owner shares the common expenses of the condominium and owns the common surplus of the condominium
• Mortgaging or conveying association property without unit owner approval
• Compensating officers or members of the board without documentary authority

     Chapters 718, 719, and 720 and the corresponding Rules found in the Florida Administrative Code take the misdeeds of thieves, thugs, pirates, and jackals seriously. Don’t be one! 

Betsy Barbieux, CAM, CFCAM

Florida CAM Schools

Betsy Barbieux, CAM, CFCAM, guides managers, board members, and service providers in handling daily operations of their communities while at the same time dealing with different communication styles, difficult personalities, and conflict. Effective communication and efficient management are her goals. Since 1999, Betsy has educated thousands of managers, directors, and service providers. She is your trainer for life! Betsy is the author of Boardmanship, a columnist in the Florida Community Association Journal, and a member of the Regulatory Council for Community Association Managers. For more information, contact Betsy@FloridaCAMSchools.com, (352) 326-8365, or www.FloridaCAMSchools.com.