Panel reviews homeowners association conflicts
Article Courtesy of the Stuart News
Published January 26, 2004
BY Melissa E. Holsman

MARTIN COUNTY -- When residents of Lost Lake in Hobe Sound took control of their homeowners association from the developers, board members inherited reams of conflicting documents that cost thousands of dollars in legal fees to sort out. 

In Port Salerno, members of the Rocky Point Way Homeowners Association are still reeling from $20,000 in legal fees paid during a two-year court battle about a community-owned dock. 

In Palm City, new residents at the Monarch Country Club golf community sometimes have run-ins with the homeowners association about everything from plants to paint colors because of all the documents governing their deed-restricted community. 

"There are just all kinds of regulations they aren't aware of," said Dick Shelby, 69, president of the 526-member Monarch Country Club Homeowners Association. 

"Unfortunately, the Gestapos within the community -- there are residents who actually monitor these things and make complaints, and the poor new resident doesn't know." 

Such conflicts are common in Florida's deed-restricted communities -- so common a state task force is investigating whether homeowners associations should face new regulations. 

Report expected 

The Homeowners Association Task Force, created to "harmonize and improve relations between homeowners and homeowner's associations," is expected to report to state lawmakers in February, following its last public meeting Wednesday in Tallahassee. 

The 15-member panel includes consumer advocates, state officials and real estate representatives. 

William Sklar, the panel's co-chairman and director of the University of Miami's institute on property law, said the task force is studying not only what rights homeowners should be guaranteed, but how to deal effectively with disputes to avoid costly legal battles. 

"That's very important," Sklar said. "How does one enforce their rights in a realistic and pragmatic way?" 

He said decades of land-use planning and zoning changes have created more and more mandatory homeowner associations, which is putting pressure on state officials to increase regulation. 

Donald Pickard, 63, president of the 141-home Lost Lake Property Owners Association in Hobe Sound, backs the state review. He said the task force especially should look at how homeowners associations are created and the process of passing control from developers to residents. 

"In my book, that's where the problems are," said Pickard, a retired Air Force colonel. 

"The documents that are put in place for these homeowner associations by the developers are generally written around the developers' requirements," Pickard said. "And so much of the stuff is contradictory, irrelevant and just adds to the problem of getting attorneys involved." 

Pickard said state-approved documents provided nine years ago by the builders of Lost Lake contained more than a hundred examples of contradictory language. 

Initially, the situation resulted in some conflicting interpretations, in which a "homeowner could cite one thing and the board was citing something else," he said. 

The association eventually formed a committee to review the documents and spent about $4,000 in legal fees to have the papers rewritten and simplified, he said. 

New resident problems 

Another problem is new residents who don't receive or don't understand association documents explaining all the rules in deed-restricted communities, said Shelby, who also is president of the Martin Downs Property Owners Association, a master association encompassing 5,000 homes and 22 communities. 

"We find that many, many residents are coming into a deed-restricted community for the first times in their lives," Shelby said. "Unfortunately, people aren't made aware, in many cases, of the covenants and use-restrictions that apply in deed-restricted communities. 

"And there's no teeth or no legislation or enforcement policies to make these things available or mandatory to be received by all potential buyers." 

The incidents encountered at Monarch have involved "a little bit of everything," Shelby said. 

"We've had problems with pets, with exterior changes to the house; they don't know about going through an architectural review board. ... They don't know about not parking on the street," Shelby said. 

The state task force has tackled that issue head-on by recommending a new law requiring full disclosure for buyers and sellers. 

"That every seller has to give to every buyer (disclosure documents) in every transaction ... resales included," Sklar said. "Every buyer of a home has the right to know what they are getting into." 

Terms to be required 

As lawmakers beef up statutes regulating homeowners associations, Sklar said many of the new requirements, such as full disclosure, will have to be included in the association's controlling documents. 

"The requirements for open records, open meetings and competitive bidding will have to be included," he said. 

Another key issue is how to resolve disputes between owners and associations. 

Stuart lawyer Jane Cornett, who represents about 250 Treasure Coast homeowner and condo boards, said homeowners would benefit greatly by creation of an "alternative dispute resolution" process, such as the system regulated by the state to handle condo complaints. 

"Any law that would help people get disputes resolved without having to go to court would be a good law," Cornett said. 

Complaints filed by condo owners are reviewed by a trained, state-appointed arbitrator. The arbitrator can issue a final order, which can only be appealed in circuit court. Cornett said that process provides workable solutions, keeps issues out of court and saves money for both residents and associations. 

Homeowners don't have that option. 

Homeowners must sue 

If a homeowner seeks to complain about an association or its board of directors, the only legal relief is to sue. 

Because of that, the state task force has recommended an alternative dispute resolution system for homeowners, modeled after the process currently used by condo owners. Sklar said everyone agreed homeowners need to be able to "air their grievances in an expedited and more cost-effective manner." 

"That's why we have sought mandatory mediation, through the Department of Business and Professional Regulations," Sklar said. "They'll train and certify -- in HOA matters -- local people ... and there would be mediation by the parties and administered by the state." 

The panel has suggested homeowners pay a $200 filing fee to start the arbitration process, after the system has been established. And if the results don't satisfy the parties, the matter could still go to court. 

Lawsuit was only option 

Such a system might have helped at Rocky Point Way in Port Salerno. 

Rocky Point residents Michael and Barbara Miller spent about $15,000 in legal fees -- and the association about $20,000 -- during a two-year court battle about association membership and use of the community dock. 

Both sides said a formal arbitration process might have helped avoid the protracted lawsuit and hefty legal fees. 

"There are 22 of us who are getting along just fine and there is one of us who had a problem," association president William Eaton said. "We tried to negotiate, but nothing worked." 

Miller said he felt court was his only option. 

"I called the state to find out if there were any recourses to defend myself and found out there basically wasn't," he said. "That's when I got an attorney."

• Reject a proposal to establish a state agency to regulate homeowner associations, similar to the agency that oversees condominium communities. 

• Create a dispute resolution process to enable homeowners to air their grievances through state-administered mediation using trained, state-certified arbitrators. 

• Guarantee homeowners the right to inspect all records kept by a homeowners association within ten days of a request — except those considered attorney-client work product. 

• Create the right of homeowners to participate in all board of director meetings and agenda items, to be heard during a meeting, to petition for an agenda item and to have advance notice of potential special assessments. 

• Increase consumer protections such as requiring competitive bidding and the imposition of penalties if a board member engages in self-dealing during a bidding process.