Q: We have an odd question concerning a special assessment. We live in a gated subdivision with 630 homes and 18 “lakes” that are called “storm retention areas” and an 18-hole golf course. Two hundred-twenty of the homes are located on these lakes, and those owners are concerned that the banks are eroding. The board of directors claims that, by law, this needs correction.
We are told that some subdivisions have an extra annual maintenance fee for the people on the lakes because of the aesthetics and increase in property values. We have none. We are also told by a city engineer that the lakes are oversized for a subdivision of this size, that the storm water retention areas do not need to contain water, and also that the lakes were created to sculpt the golf course and to enhance the sale of the houses on the water.
The people on the water are delighted that the association will correct the bank erosion and that their property values will go up. The golf course owner is charged very little, even though it could just about close its doors without the water features. The main assessment is charged to all 630 homes. As the city engineer pointed out, the people that benefit the least are paying the most. Would not a more equitable assessment be 40 percent to the golf course, 40 percent to the homes on the water, and 20 percent to us “commoners?”
– Name withheld by request, via email
A: Sometimes people buy in haste, and then repent in leisure. Or when we talk about Florida real estate, you may not even get to enjoy the leisure.
Just because something seems “unfair” does not make it necessarily illegal. If the “lakes” are under the control of the association and if the governing documents allocate the costs of the maintenance among all the owners, and not specifically to those on the water or to the golf-course property, a challenge is going to be an uphill battle.
It is similar to a situation in a condo, when an owner of a one-bedroom unit pays the same share of common expenses as an expansive penthouse unit. Maybe unfair, but nonetheless legal if the recorded documents spelled out exactly what the assessment obligations would be, and if such apportionment conforms to legal requirements.
In many communities, property values vary by location, size and amenities. You may not feel that the costs are not being apportioned in a fair manner, or that the costs being incurred are not necessary. I cannot determine what legal recourse, if any, that you may have. It may not make your pocketbook feel any better, but usually “all boats rise in a high tide,” and properly maintaining the common property protects community-wide real estate values, even if your home is not the property directly adjacent to the improvement.
You can choose not to pay the special assessment. That comes with risk to you. I would suggest you seek legal advice as to where you stand before pursuing that course of action.
Billing fees
Q: In one of your articles, I read that HOA’s are required to bill for fees on a quarterly basis. My HOA board of directors and management company claim ignorance on this. Could you verify my belief by quoting “chapter and verse” for this or just verify that I am delusional?
– S.P., via email
A: Delusional may be going too far, although in the community association context, who knows?
In a condominium, assessments cannot be levied LESS frequently than quarterly. In an HOA, or homeowners’ association, the governing documents control. So, if your HOA documents state that assessments are to be collected annually or bi-annually, or in any other manner, including monthly or quarterly, this would probably be OK.
Suing the board
Q: Lately in our HOA, there has been a lot of discord and people have thrown out statements about “suing the board.” That got me questioning whether most HOAs carry insurance protecting the directors for actions taken as board members, and, if not, how to institute a requirement to carry that kind of insurance. Our documents require a two-thirds vote of all owners to adopt amendments, and it would be very difficult to pass such an amendment where additional costs are involved. People are very sensitive to any increases in cost.
– C.J.B., via email
A: Should an association carry insurance on its directors and officers for their actions on behalf of the association? Of course.
I would go so far as to say that it should do so even if the governing documents are silent on the subject.
It is not easy to successfully sue a director or officer of a Florida non-profit corporation for breach of fiduciary duty. It usually takes proof of self-dealing, fraud or other actions outside of what is considered the discretion given to association representatives under the “business judgment rule.” Florida law provides protections, as do most corporate articles of incorporation, which give directors and officers a certain level of indemnification. That said, I would never recommend that an individual serve on a community association board unless insurance is in place. That insurance, usually called directors and officers insurance (“D&O”), is akin to errors and omissions insurance carried by businesses.
Such insurance is usually available to associations as part of the overall package offered by insurance carriers to community associations. Even if the addition of this coverage slightly increases the association’s total insurance costs, the board can probably add such coverage without seeking owner approval to change the documents.
More doggie DNA news
A few months ago, I reported about the efforts by some Florida community associations to identify owners who are allowing their pets to make “deposits” on the common property without “scooping the poop.”
The solution for some is to require pet owners to submit DNA from their pets to be registered in a database. In the event of “illegal dumps,” the association can have the proof tested and punish the owner accordingly.
According to an article published in The New York Times, this trend has found its way to Naples. Not Florida, but rather, Italy. Even though the article suggests that Naples’ unpaid debts top $2 billion, the city has made dog-waste eradication a priority. A captain of the municipal patrol has been assigned to work undercover, cautioning pet owners to be more responsible while the DNA database is being developed. This officer refers to his evidence as “presences.”
I have often struggled coming up with a “lawyerly” way of describing dog poop, and now I have it. I just hope that for my birthday, no one gets me a “presence.”
Tamela Eady is a Florida Bar board-certified real estate attorney with more than 25 years’ experience. She is an attorney with Tannenbaum Hanewich, with offices in Sarasota and Clearwater, concentrating her practice on community association and real estate legal matters. The subjects discussed are not intended as specific legal advice to anyone and are subject to principles that may change over time. Email questions to TEady@TH-Legal.com.
