THE HIGHLIGHTS -- OR ACTUALLY LOWLIGHTS OF H 1195

H 1195 -- ENROLLED VERSION

An Opinion By Jan Bergemann 
President, Cyber Citizens For Justice, Inc.

Published May 14, 2011

This year homeowners and condo owners in Florida have to deal again with an "egregious" community association bill. H1195, sponsored by State Representative George Moraitis, will again trample on the contractual rights of the owners and increase litigation in community associations -- at the expense of the owners that are still paying dues. No relief for them in sight!

Don't believe the propaganda that this is a GLITCH BILL or REFORM BILL. It's just another bill taking away owners' rights and making association service providers rich. It's just another bill that will create more litigation at the expense of the owners that are still paying dues.

HERE ARE THE REAL LOWLIGHTS -- 

INCLUDING VIOLATIONS OF CONTRACTUAL RIGHTS OF OWNERS!

How is this for a violation of contractual rights of owners? 

Last year in S1196 legislators removed the If the governing documents so provide language from the fine provision in FS 720.305. What will it be next year? Scratch voluntary and replace it with mandatory in all governing HOA documents? Maybe as Senator Fasano's swan song -- because that's what he already tried to do in 2004?

This is a typical example that legislators feel that contractual rights of owners can be trampled upon if it serves the professionals wanting to fleece the owners -- and dictatorial board members. What about: You signed a contract -- you knew what you were getting into? The Florida Supreme Court ruled that retroactive contractual changes are invalid. Why do we need expensive court cases to find that out?

And changing "regular annual assessments that are delinquent" to "any monetary obligation due to the association" opens again the door to blackmail -- the same kind of blackmail owners testified about during the hearings of the HOA TASK FORCE in 2003/2004. Boards levied outrageous fines against owners they knew were opposing these board members -- and told these owners: Either you pay the fine -- who cares if right or wrong -- or you can't vote! Great dictatorial tool given back to board members that are drunk on power.

TENANT LANGUAGE

FS 718.116 (11); FS 719.198(10) and FS 720.3085(8)
This whole provision is nothing more than a COP OUT to throw associations/owners 
some breadcrumbs while protecting the entities that finance the legislators' campaigns: Banks and mortgage companies. Instead of approaching the financial problems head on, it's just a lame excuse for a half-hearted attempt to appease the outraged board members and owners that are facing financial hardship. In the last two years nothing really changed regarding the liability of banks and mortgage companies. Last year we saw the attempt to mislead the owners by trying to sell them a big victory over banks: Increasing the liability (in condos) for banks to 12 months. Actually, in many associations, the set limit of 1% of the original mortgage, capped it off at even less than 6 months -- nothing really gained -- just silly propaganda.

It's actually a war between association and owner waged on the back of renters, the most innocent of all the parties involved in this financial disaster. The law now requires them to pay the whole rent to the association if their landlord is behind in paying dues. But who protects the renters against fast eviction if the unit/home changes ownership? Who makes sure renters get their security deposits back once they get kicked out? It's obvious: Renters don't really have a lobby in Tallahassee. They get thrown under the bus!

This language is a RED FLAG for renters once they get the form letter included in the bill: Don't pay anybody and move out after recovering your deposit by not paying rent for two or three months. Otherwise you -- the renter -- will be the big loser in the end! Don't believe any promises being made.

TERMINATION OF CONDOMINIUM

The tricky language in FS 718.117 is in essence nothing else but a backdoor for a developer to take over an older building at low cost -- it's nothing else but expropriation of private property. We have seen it on Singer Island: Have lots of relatives buy units, or obtain the units in distress sales. Once the developer has the necessary votes to spring the trap, the remaining owners get an ultimatum: Either you sell your unit for a low price or we vote to terminate the condominium. Yes, in certain cases terminating a building in total disrepair may be advantageous, but the language in the statutes doesn't provide enough protection for owners against abuse.

THE DISTRESSED CONDOMINIUM RELIEF ACT

All in all, the so-called Distressed Condominium Relief Act is a very short-sighted solution in response to the total collapse of the condominium real estate market. And additions to this so-called Relief Act [FS 718.701 ff] are not really helping the cause. The solution may sound tempting in this market, but the owners who already bought in a condo that was supposedly owned by single owners will now suddenly face the fact that a bulk buyer runs the show -- without having the same responsibilities as a developer. In other words: The private owners will never have real voting rights or any say in the management of the association. The situation is similar to that in condo hotels, where the private owners are every time outvoted by the business interest. Is that really what these owners were told they were buying into?

BOARD MEETINGS BEHIND CLOSED DOORS

As if condo owners don't complain often enough about boards and committees holding meetings behind closed doors -- or on private computers -- the bill contains another exception for allowing meetings behind closed doors. FS 718.112(2)(c) b.  Board meetings held for the purpose of discussing personnel matters. While meetings between the board or a committee and the association's attorney require the attorney to be present, this is now an excuse that nobody can control. Board wants to hold a meeting behind closed doors? We are discussing personnel matters!

SUSPENSION OF USE RIGHTS

While the suspension of use rights was before limited to delinquency of assessments, now the legislature created another dictatorial tool to abuse unit owners and/or renters. Adding FS 718.303(3)(a) [FS 719.303(3)(a) + FS 720.305(2)(a)] allows suspension of use rights for failure to comply with any provision of the declaration, the association bylaws, or reasonable rules of the association -- with the board being judge, jury and executioner!

The bill further allows homeowners' associations [FS 730.305(3)] to restrict use rights to common areas and facilities for delinquency of any monetary obligations, not only unpaid assessments.

ADDING MORE BULK CONTRACTS

The past has shown us that bulk contracts are the source of much evil, with owners complaining about having to pay for their neighbors that stopped paying dues. We heard lots of discussions about allowing boards to cut off service -- like for TV cable service -- to the owners that are delinquent in their dues. It actually doesn't help a lot, since most bulk contracts call for a specific amount to be paid each month -- no matter how many use the service or how many are cut off.  In other words neighbors are still paying for their neighbors -- no matter what. If the existing bulk contracts didn't do enough damage to the owners that still pay, H1195 now allows addition of another sort of bulk contract to the ones already existing in homeowners' associations: Communications Services. [FS720.309(2)] Read the first two sentences and you will quickly realize that some community service lobbyist must have given lots of money to some influential legislator, because whether the governing documents allow it or not -- the cost for this bulk contract "shall be deemed an operating expense of the association."

After you read all the negative provisions that were included in this bill, your stomach might stop churning if you eat a few breadcrumbs.

HERE ARE THE FEW HIGHLIGHTS OF H 1195

Let's look at the very few positive provisions in the bill -- the BREADCRUMBS:

I actually found four provisions that can be considered favorable for owners. Admittedly, that is not much for a 75-page bill. But here are the BREADCRUMBS anyway:

• This provision deducts the number of votes suspended for non-payment of any monetary obligations from the number of TOTAL VOTING INTEREST. That provision will allow owners in associations where a large number of owners are behind in association dues to elect new boards -- or recall the existing board. We have seen associations where the owners couldn't recall the board because there were less than 50% of owners with voting rights.

• Creates ELIGIBILITY REQUIREMENTS for board members of homeowners' associations: But it doesn't mirror the provisions contained in the CONDO ACT FS 718.112 -- prominently missing are education requirements (very important) and the requirement that a board member has to be a deeded owner.

• Homeowners RIGHT TO SPEAK at board meetings on agenda items:

• Clarification: "Written EMPLOYMENT AGREEMENTS with an association employee or management company" and "COMPENSATION" are so-called public records and owners have the right to inspect and/or obtain copies.

There are some more provisions included in this bill that have in my opinion neither positive nor negative impact. Actually, a very few provisions are just clarifications and corrections. But that surely doesn't make H 1195 a GLITCH BILL.

CLICK HERE TO READ THE COMPLETE ENROLLED VERSION OF H 1195.