TRANSPARENCY? NOT IN FLORIDA'S COMMUNITY ASSOCIATIONS

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

Published July 10, 2010

Florida's media is only too happy to report about all the problems in Florida's community associations. Embezzlement, scams, fraud, kickbacks and self-serving contracts are daily occurrences -- and the problems are increasing with the economy and the real estate market dying more and more.

Considering the fact that nobody living in Florida can claim not to know about these ever-growing problems, common sense would dictate that a community association bill enacted by Florida 's legislature would take these problems into account. The legislature would enact provisions that would add more TRANSPARENCY to the community association laws, trying to reduce the number of scams!

But, you may have guessed it; common sense doesn't seem to be on the agenda of our elected officials in Tallahassee. Instead of enacting provisions that would improve the situation, they enacted provisions that will allow even less transparency and more backroom deals.

Boards and their managers and attorneys will now be allowed to hide more important documents from the view of owners, the cost for requesting records will seriously increase and enforcement of the laws will get even more expensive.

What a great result for a 2010 legislative session that succeeded in protecting the financial gains of special interest and making living in community associations even more expensive.

Here are the two important changes caused by S1196 for homeowners' associations.

FS 720.303(5)(c) 3. Personnel records of the association’s employees, including, but not limited to, disciplinary, payroll, health, and insurance records.

Isn't it nice as an owner to know that you pay the employees but are not allowed to know how much the employees get paid? What are we getting in the future in response to record requests? Financial records with white-out lines, claiming that the "invisible" lines are all payments to employees? Great way for boards to hide payments they don't want owners to see!

FS 720.303(6) --- or association management company personnel and may charge the actual cost of copying, including any reasonable costs involving personnel fees and charges at an hourly rate for vendor or employee time to cover administrative costs to the vendor or association.

Great provision for management companies to make lots of extra bucks. I always love the word "reasonable," because the folks writing these provisions are definitely not reasonable. But it may stop the latest hype that seems to be fashionable in response to very specific record requests: "Here are some banana boxes full of records and the drawer over there are full of records. Take your pick! What you are looking for must be in there somewhere!"

In my opinion that is absolutely against the legislative intent of the record request provisions. My suggestion to owners facing this kind of response from manager/board: "Make a holy mess out of the records and then explain that you couldn't find the requested records." Boards and managers seem to think that they are the only ones who know how to play games.

How reasonable can one be? How about 2 hours of manager's time ($35/hour) for preparation of inspection of minutes of 4 board meetings from last year? A manager who needs two hours to find the minutes of 4 board meetings from 2009 should get fired immediately anyway.

Not to forget this very important "reform":

FS 720.303(5)(a) The failure of an association to provide access to the records within 10 business days after receipt of a written request submitted by certified mail, return receipt requested, creates a rebuttable presumption that the association willfully failed to comply with this subsection.

While boards and attorneys can threaten owners with liens and foreclosure by simple mail (FS 718) -- who knows if it was ever mailed as required? -- owners have to make simple record requests by certified mail, return receipt requested in HOAs. Shows where the legislators’ priorities are located: Definitely not with the owners.

For condo owners it's not much better.

FS 718.111(12)(c) 3. Personnel records of association employees, including, but not limited to, disciplinary, payroll, health, and insurance records.

That will make board members happy, especially those who have a double function as manager. They will be only too happy to know that they can pay themselves outrageous wages without having to reveal to neighbors how much they are paying themselves -- or their wives or other family members. We have seen this happening for years with the DBPR sitting idly by. Now our legislators saved the owners lots of money, because there will be no more lawsuits filed by owners trying to find out how much the president is paying himself/herself.

The association may further remove e-mail addresses and telephone numbers from the public membership roster. That means that sitting board members can campaign by e-mail and telephone number (they have access to these tools), while the new candidates have to use the old-fashioned way: USPS or door-to-door! Let's make sure that sitting board members have a clear advantage over these unwanted opponents.

And while FS 718.111 doesn't require record requests to be sent by certified mail, return receipt requested, owners better use that method, because otherwise the DBPR will not enforce complaints about access to official records being denied:

FS 718.501(1)(d)7. If a unit owner presents the division with proof that the unit owner has requested access to official records in writing by certified mail, and that after 10 days the unit owner again made the same request for access to official records in writing by certified mail, and that more than 10 days has elapsed since the second request and the association has still failed or refused to provide access to official records as required by this chapter, the division shall issue a subpoena requiring production of the requested records where the records are kept pursuant to s. 718.112.

It is of utmost importance that owners have easy access to the records of the association. Their homes are at stake and lots of financial damages can be prevented by making all documents available -- really fast.

Here are two recent examples where quick access to financial records would have prevented serious damage.

In a town home community in Palm Beach County two owners suspected that the board president was embezzling money. They demanded to inspect the financial records, according to FS 720. Instead of the financial records they were served with slander lawsuits. Board president and association attorney succeeded in preventing these owners from inspecting the records for more than 18 months. When they finally inspected the records, the embezzlement was obvious. But if the owners had access to the financial records immediately, about $350,000 less would have been embezzled!
In Broward County a board president -- who got paid as manager without having a CAM license -- made $70,000 annually. This is about $30,000 more than he would have earned in his original job. When people complained to the DBPR, the professional regulation department, in its infinite wisdom, rather brought this president/manager into "compliance." Meaning that the DBPR gave him a CAM license, instead of punishing a person who knowingly broke the law. But now, with the new laws in place, the president/manager doesn't have to reveal any longer how much he is paying himself from other people’s money.

It's very obvious that the legislators who pushed this bill were more interested in campaign funds from special interest than in the welfare of their constituents! Florida's homeowners and condo owners living in community associations will suffer even more, courtesy of legislators who couldn't care less what happens to these owners.