TC Palm Q&A Column, October 22, 2017

By October 22, 2017News, Questions & Answers

Editor’s note: Attorneys at Goede, Adamczyk, DeBoest & Cross, respond to questions about Florida community association law.  The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, civil litigation, estate planning and commercial transactions.

Q: Recently, our HOA wanted to make a significant material change to our common area. They wanted to do this without a membership vote on the issue.  Our governing documents do not address this issue. It is my understanding that the 720 statute does not address this issue. However, the issue is addressed by the Condo 718 statute.  This is a frustration for many of us who live in an HOA.  Besides this issue, there are probably many more issues where it makes perfect sense for the Florida legislature to update the 720 to reflect a similar 718 statute.  Where it is applicable, why doesn’t the Florida legislature make sure the 718 & 720 statutes address these common issues similarly?  The two statutes need to be different for obvious reasons but there needs to be consistency between the two statutes where it makes sense.  This will eliminate many of our frustrations.

M.C., Sebastian.

A: Thank you for your inquiry.  Unfortunately, the subject matter of your question and the proposed changes you appropriately suggest fall within the purview of the Florida legislature.  To that end, you may wish to contact the senator and/or member of the house of representatives who represent the interests of the citizens who reside within their respective districts.  Request that he or she consider drafting a bill which addresses placing the same limitations on materially altering the common elements of a homeowner’s association, as does Florida’s condominium act. Alternatively, you may wish to contact a lobbyist to advocate for such a change in the law as your voice before the legislature on the issue presented.   However, taking those actions will not guarantee achieving the desired result, based on the tension which exists between developers and homeowners on matters of financial control.  However, there are provisions in Chapter 720 which tangentially address how material alterations are funded.

In providing my analysis I am relying on your assertion that the declaration of covenants, restrictions and limitations which governs your community does not contain any provision that requires a vote of the homeowners when the association intends to materially modify existing buildings or other structures on the community’s common elements.  Some declarations define material alterations in terms of the dollar amount of the contemplated change, such as those the cost of which exceeds, for example “$5,000.00,” while others simply refer to “material alterations” without defining what that phrase is.  In both scenarios, a vote of the members is required.  I write this because the first step in any analysis is determining if the contemplated project qualifies as a “material alteration.” Under Florida legal precedent, a “material alteration” or “substantial addition” to the common elements has been defined in one of the leading cases on the subject to mean “. . . to palpably or perceptively vary or change the form, shape, elements or specifications of a building from its original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance.  Therefore, as to the scope of the work in your community relating to the common elements at issue, the inquiry is whether the work preserves the existing look and appearance, maintains the same functions, and/or maintains the same or substantially similar use of that of the existing buildings or other component of the common elements. If the work qualifies as a “material alteration,” then under the Condominium Act, 75% of the total voting interests in the condominium must vote to approve the change.  The exception to the voting requirement is if the material change is required to maintain other common elements. If so, then a vote is not required.

Although Chapter 720 does not specially address “material alterations,” there are provisions which place restrictions of a homeowners’ association when it comes to raising the funds needed to pay for such large repairs, or replacements. For example, if the homeowners’ association has not established reserves for the contemplated work, and did not provide for the costs in its annual budget, then a special assessment would have to be implemented.  In the homeowner association context, special assessments cannot be implemented unless the board mails each homeowner a notice of the date of the special assessment meeting, which describes the nature of the special assessment not less than 14 days before the board of directors’ meeting at which the special assessment will be discussed and voted on the board.

In addition, when the homeowners’ association prepares its annual budget, the budget must include reserve accounts if reserve accounts had been initially established by the developer, or if the membership of the association affirmatively elected to provide reserves by a majority vote of the members.  Once established the board must include and fund the reserve accounts in the budget for each year, unless in any year by a majority at a meeting at which a quorum is present, the members vote to waive reserves or partially fund them for that year.  

Thus, in the absence of any limitation in the declaration relating to making “material alterations” to the common elements, there are mechanisms in Chapter 720, which provide the members with at least some rights when dealing with such large expenditures.  However, short of the passage of a bill passed by the Florida legislature which conforms Chapter 720 to Chapter 718 on the issue of requiring a homeowner vote to materially alter common elements, the only other means available to address the issue you raise, is to amend the declaration to add a provision which limits the right of the homeowners’ association’s board of directors to make decisions relating  “materially altering,” to the community’s common elements, without  the approval of the membership.   

Good luck!

Ronald E. D’Anna, Esq., is Partner of the Law Firm Goede, Adamczyk, DeBoest & Cross. Ask questions about your issues for future columns, send your inquiry to: question@gadclaw.com.  The information provided herein is for informational purposes only and should not be construed as legal advice.  The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, or any of our attorneys.  Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein.  The hiring of an attorney is a decision that should not be based solely on advertisements or this column.