‘It’s not the massive foul-up that concerns me. What concerns me is that we failed at the massive cover-up.’
——Comments by Hank Springer 8 8 16 —-
A— I provide excerpts from a legal opinion which bases much of the legal logic on cases that go back to 1986, in states other than Florida. That being the case, and I not being a lawyer, and I not being fully informed about HOA laws in Florida, including civil trials, I do wonder if any of the stipulations contained in the excerpts I provide, might be applied in a court of law regarding recent revelations in the Summer Trees West HOA, Port Orange, Fl. For a variety of reasons it is possible for HOA members to sue their HOA, including the board of directors. At one time I was told that the assessment paying residents in STWHOA community pay for a 3 million dollar insurance policy covering the board of directors if it is found to have not performed the duties required of them. I caution that from recent revelations, hearsay knowledge about any of the boards activities need to be verified, either by documents or accountability by names. However, the board of directors makes it difficult for a home owner to see documents of the board of directors, and even many times in publications by the board of directors, no name of a board member is affixed to such publication.
B— It appears to me that the STWHOA board of directors has violated the following requirement: “… The duties of a community association typically include management and control of the common areas, including… common recreational facilities…” Whether the STWHOA illegal structure was called a clubhouse, reading room, or meeting room, the revelation that since its installation many years ago the structure was not legally permitted by the City of Port Orange and did not meet stands of City Code requirements places the responsibility and accountability on all members of boards of directors since the beginning of time and tenure for those board members. In addition, the cover up or secrecy in not letting such basic information reach the association assessment paying members so that they might have input into budgets which could have rectified the illegality appears to me to unethical, morally corrupt, lacking integrity, and throws all activities of all boards of directors into a suspicion of mistrust.
It is not surprising to me, that one member of the association had started four years ago questioning and seeking documents to support certain activities of the boards of directors. Indeed, despite his alleged rudeness in seeking documented information, during his four years of research, quite a number of seemingly irregularities have been exposed, which the board of directors appear unwilling to address or provide documentation to disprove the negative suspicions and prove that the boards acted according to its responsibilities.
For many years, once a month association members convened in this illegal structure for association’s officially conducted meetings in what was an illegal structure, not meeting Port Orange city code regulation and which during those times probably had no financial liability insurance in effect. This year, there have been conflicting statements published by the board as to whether there is or is not financial liability insurance in effect for the members’ clubhouse. Such a not clearly answered liability problem forces one to consider that for how many years such liability insurance had not been covering the members’ officially sanctioned meeting place by the board. As of this date 8 8 16 the board will not let me see the insurance policy in effect for common grounds of the Association.
C — Breach of the fiduciary duty owed to homeowners by community associations appears to have occurred in the board’s failure to maintain a budget to meet the requirements of having attorneys represent the association. From what little information I have been able to access, it seems to me that lawyers in the past year have presented bills for about $8000 for services rendered, when the budget had only prepared for about $3000 set aside for attorney fees. Perhaps there is a CD owned by the association which can pay its legal fees. I am way out on a limb about this issue because I have found that this board of directors will not cooperate with me in providing me accurate information about its financial standing and affairs. Indeed, the board had apparently looked into the allegation that about 40 residents have been overbilled and the board has its own committee report affirming such a fact, and the board will not pay the money owed back to assessment paying members unless these residents, many of them elderly, prove that the board overbilled these neighbors. In addition, there is a professional company which is paid to handle the billing of monthly assessments of the community. The board did publish a document explaining why residents have to prove that they were overbilled but frankly I did not understand the reasoning involved. In addition, if we elderly residents can get our records all together to show when and how we were overbilled, we would have to provide such records at a cost of $35.00 to an accountant appointed by the board. Wherever I am wrong about these financial issues please correct me and I will publish the correction. I do admit, that I, and probably many others around the age of 79 in my community may not understand all this financial mumbo jumbo and cannot manipulate the figures to prove a case for ourselves. We had relied on the board keeping tabs on our assessment payments along with the billing company which we pay for. Does this sound to you like something out of the “Better Call Saul” episode? I did receive from the board a general statement of my assessment account for the years 2012, 2013 and 2014. My kids are working on it but only have until Aug. 10, 2016 to present it to an accountant, because after that date, the board is concluding “Case Closed” – we will not pay back what we owe you.
D— Defamation – and here is where it gets dangerous and tricky. At a time when legal costs to handle a number of questions, allegations, requests for documents from a certain resident of the community started to become expensive, the board of directors held a special meeting to present the issue and financial remedy to association members. I understand that about 104 members out of 237 attended that special meeting. I would expect that the name of the family who was allegedly costing the board money in legal advice was not mentioned, but if I know my neighborhood, I would expect that some board members would tell others the name and address of this “offending” resident, and word would spread. A previous secretary of the board told me about this residential family, and such information was presented to me in a negative context.
I would expect that there are out in cyber space quite a few e mails disseminated about this gadfly resident. I imagine this all to be fodder for attorneys and such documents might be entertained as evidence in a civil court of law, seeking monetary remedies for defamation damages. What do I know? I am not a lawyer, but what I do know, is that anything is possible in a suit for money, and witnesses and documents in this four year feud are many. Here is what I expect will be costly for all involved and members of the association if this feud goes to court. Expensive legal fees, much time and effort gathering up evidence for the attorneys involved, time spent in court, and the stress of having to testify in court. The board of directors at this time, as far as I know, has put a lien on this particular home owner in an effort to take possession of his home, unless he pays for the Association’s attorney fees, which I imagine is now up somewhere around $8000. In fairness to everyone involved in this mess, please correct me where I am wrong and I will publish that correction.
I would not like to see this feud go into court. We all lose if that happens, but attorneys will profit. I hope there will be a way to bring this feud to arbitration where both sides of this four year dispute might be settled. The board needs to put the interest of all the assessment payment residents, first and foremost, and not continue this “You Can’t Handle The Truth” kind of attitude. As Ronald Regan might say, “Mr. Emperor, take down this lien!”
I understand that the home owner who has such a special assessment lien on his home, because he will not pay the service fees of the attorney for the association which led up to placing a lien on his home, will of course fight this in court. His retirement home is at stake. Have we no shame about where our board of directors and its attorneys have taken us to?
— Comments by Hank Springer end here —–
The following are excerpts from HOMEOWNER SUITS AGAINST COMMUNITY ASSOCIATIONS
You can read the entire legal opinion at http://www.hindmansanchez.com/resources/article/homeowner-suits-against-community-associations/
….Courts have held that even unincorporated community associations may be sued by homeowners. See Murphy v. Yacht Cove Homeowners’ Association, 345 S.E.2d 709 (S.C. 1986)…..
- Breach of covenant by the community association
Homeowners have a basis for an action for breach of covenant against their community association where the association fails to fulfill any of the duties it expressly agreed to perform in the community’s legal documents. See Murphy v. Yacht Cove Homeowners’ Association, 345 S.E. 2d 709 (S.C. 1986). The duties of a community association typically include management and control of the common areas, including landscaped areas and common recreational facilities, and maintenance and repair of the exterior building surfaces and roofs. Failure to fulfill any of these duties could subject a community association to a breach of covenant claim brought by a unit owner or occupant…..
- Breach of the fiduciary duty owed to homeowners by community associations
Homeowners have the right to have the community association exercise ordinary care, in reasonable and good faith manner in the performance of its duties. For breach of these fiduciary duties, an association may be held liable by an owner. Breach of fiduciary duty actions may lie where actions or duties not expressly stated in the community’s legal documents are fairly implied by the scope of the duties set forth in the legal documents. This would include adequate funding or improper management of financial reserves to pay for repair, replacement and maintenance expenses. Other actions possible to be brought by a unit owner on these grounds may include breach of fiduciary duty due to the failure of the association to sue the developer….
- ….Generally, directors must remain informed about the community association’s business at all times, be knowledgeable about the legal documents governing the affairs of the association,
….Homeowners have the right to have the directors be loyal to just the interests of the common interest community, and not to the self-interests of the director…..
- Negligence of the community association
- Failure to perform duties in a reasonably safe and prudent manner
Homeowners have the right to expect the community association to exercise ordinary care. If it does not, homeowners can bring actions in negligence against their community association for its failure to perform any of its functions in a reasonably safe and prudent manner….
Homeowners have the right to some degree of privacy regarding their financial standing vis-a-vis their community…..
….Where the publication of delinquent owners occurs in a more public setting, such as a common bulletin board, the owner’s chances of success on a defamation action would be greater…..
VII. Breach of Statutory Duty….This statute protects owners against the mismanagement of community association funds and helps ensure adequate funds for maintenance and repair costs of the common areas. California Civil Code Section 1365.5 provides as follows:
- Unless the governing documents impose more stringent standards, the board of directors of the association shall do all of the following:
- Review a current reconciliation of the association’s operating accounts on at least a quarterly basis.
- Review a current reconciliation of the association’s reserve accounts on at least a quarterly basis.
- Review, on at least a quarterly basis, the current year’s actual reserve revenue and expenses compared to the current year’s budget.
- Review the latest account statements prepared by the financial institutions where the association has its operating and reserve accounts.
- Review an income and expense statement for the association’s operating and reserve accounts on at least a quarterly basis.
- The signatures of at least two persons, who shall be members of the association’s board of directors or, one officer who is not a member of the board of directors and one member of the board of directors, shall be required for withdrawal of monies from the association’s reserve accounts.
- As used in this section, “reserve accounts” means monies that the association’s board of directors has identified, from its annual budget, for use to defray the future repair or replacement of, or additions to, those major components which the association is obligated to maintain…..
- Under CCIOA, homeowners in Colorado common interest communities existing on June 30, 1992, have the right to require their community association to prepare an annual budget at least annually, the right to request and receive statements of account in a timely manner, and the right not to be fined, except for reasonable fines imposed after notice and a hearing. In addition, Colorado homeowners have a right to seek their attorney fees from their community association on their claim that the association has not complied with CCIOA, or on their claim that the association has not complied with the community’s legal documents. Section 123 of the CCIOA sets forth this right to attorney fees provides as follows:
- If any person subject to the provisions of this article fails to comply with any of its provisions or any provision of the declaration, bylaws, articles, or rules and regulations, any person or class of persons adversely affected by the failure to comply may require reimbursement for collection costs and reasonable attorney fees and costs incurred as a result of such failure to comply, without the necessity of commencing a legal proceeding. For each claim, including but not limited to counter-claims, cross-claims, and third-party claims, in any legal proceeding to enforce the provisions of this article or of the declaration, bylaws, articles, or rules and regulations, the court shall award to the party prevailing on such claim the prevailing party’s reasonable collection costs and attorney fees and costs incurred in asserting or defending the claim…..
….Enforcement. If any person subject to the provisions of this article fails to comply with any of its provisions or any provision of the declaration, bylaws, articles, or rules and regulations, any person or class of persons adversely affected by the failure to comply may require reimbursement for collection costs and reasonable attorney fees and costs incurred as a result of such failure to comply, without the necessity of commencing a legal proceeding. For each claim, including but not limited to counter-claims, cross-claims, and third-party claims, in any legal proceeding to enforce the provisions of this article or of the declaration, bylaws, articles, or rules and regulations, the court shall award to the party prevailing on such claim the prevailing party’s reasonable collection costs and attorney fees and costs incurred in asserting or defending the claim.
Homeowner rights in a common interest community against their community association arise out of the community’s legal documents and the conduct of the association in carrying out the duties and functions assigned to it in those documents, by state statutes and common law. While the most clearly defined rights that a homeowner possesses lie in the areas of breach of covenant, simple negligence, and liability for trespass, more complex legal questions are posed by the extent of association liability for the protection of owners from foreseeable crimes and breach of statutory duties. While the outcomes vary from jurisdiction to jurisdiction, there continues to be an expansion of owner rights and community association liability. As community associations are increasingly being recognized as quasi-governmental entities with powers greater than a mere landlord, the exact nature of the legal relationship between the homeowner and their community association is in the process of being more clearly defined. In any event, educated homeowners with expanding legal rights will help ensure the smooth operation of the community by the community association.
READ THE COMPLETE LEGAL OPINION AT http://www.hindmansanchez.com/resources/article/homeowner-suits-against-community-associations/
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