By Todd Paton, President/Founder of Paton Marketing & Lindsay Raphael, Esq., Sachs Sax Caplan, P.L.
The key to running a successful condominium association usually boils down to fostering an atmosphere of trust and efficient communications between boards and the residents they serve.
These associations can be easily compared to governing agencies similar to municipalities. Residents take pride in their towns and rely on their representatives to enhance lifestyles and maintaining value of their homes.
The same is certainly expected from condominium and homeowners associations. However, once communications fail and trust is betrayed this relationship becomes severely compromised.
In the wake of association mismanagement, the State of Florida passed sweeping legislation in 2017 that governs the operations of condominium associations with more than 150 units (which does not contain timeshares). The new law amended Section 718.111 of the Florida Statute and raises issues boards must consider as they strive for compliance.
The law can be a model for other associations nationwide as they strive to become more efficient while staying within the bounds of legal operations. That said, it is apparent that this bill is going through some growing pains which is to be expected.
While there are many provisions in the legislation, one of the most important parts sets guidelines for websites, acknowledging that this is an important step in improving transparency and accountability between boards and residents.
While most condominium associations in Florida are managed with integrity, some are not. The new law puts board members on notice that they can face felony charges if found guilty of specific breaches. The laundry list covers electoral fraud, forged signatures on ballots, conflict of interest, and misappropriation of funds, to name a few. We are focusing on the website requirements for condominiums in Florida
The deadline for compliance was Jan. 1, 2019. However, compliance and potential penalties seem to have become a moving target without clear-cut policies as to enforcement.
While Florida took the rather drastic legislative step, some states might be able to avoid the lengthy legal path by learning from this law. The law makes it clear that failure to post a required document on the condominium association’s website is a violation of the law and could result in a $10 to $30 per-unit penalty. It is too early to know exactly how the Department of Business and Professional Regulations (“DBPR”) will enforce violations and whether the DBPR will immediately issue penalties or first issue warning letters.
Initially the law seemed to guide associations on how to improve operations. First offenders were simply sent a warning letter, requiring the association to fix the violations.
Recently, there have been reports that inspectors have gone straight to penalties in the event of violations. Keep in mind that every inspector can be different in terms of enforcement. However, the one common denominator seems to be that those penalized have failed to provide inspection of an association’s official records upon request from an owner. With thousands of associations in Florida, it is unlikely the DBPR is actively viewing websites, seeking violations. Rather, the process appears to be that the DBPR gets involved when a resident files a complaint, claiming either that the association failed to give the owner access to records or that the association failed to properly post the required records. It’s the “squeaky wheel” dynamic that sets the things in motion for what can be significant penalties.
Let’s take a look at the law and how it relates to websites:
- Specific information must be updated in a timely fashion. Each owner must be provided a login and password
- The website must contain the various condominium association official records including, without limitation, all condominium governing documents, rules and regulations, all contracts, management and other agreements to which the association is a party. This is not an exhaustive or complete list.
- It must publish the annual budget and proposed annual budget, financial reports, board certifications, notice of any unit owner and board member meetings and the agenda within the statutory time periods. They must be posted in plain view on the front page of the website or a separate subpage of the website labeled “Notices” which is conspicuously visible and linked from the front page along with any document to be considered and voted on by the owners during the meeting or any document listed on the agenda, notices of board meetings and agendas within the statutory time periods.
These are all reasonable things to share with residents and should be considered common practice without the need for legislation.
There are other requirements which may not directly relate to the website, but nevertheless require the orderly sharing of information to all residents.
- Any information and documents which are restricted from being accessible to unit owners may not be posted on the website or, if posted, the protected information must be fully redacted.
- Condominium official records are expanded to include bids for materials, equipment and services.
- Annual condominium financial reports must be provided within five (5) days of request by a unit owner.
Operating a condominium association can be a thankless job and kudos should be extended to those taking on this role on a strictly volunteer basis. But despite best intentions, many boards fall victim to cronyism, conflict of interest, and mismanagement of funds. Sometimes these violations are intentional, while at other times that are simply oversights.
In Florida, the legal onus is now on the board of directors to follow these laws. The legislation is in the best interests of homeowners and the lines of open communications starts with a functioning and informative web site.
This law, however, should really be on the reading list for all directors nationwide since it provides accurate operational standards for the transparent operations of all associations.
Lindsay Raphael, Esq., is Senior Counsel with Boca Raton-based Sachs Sax Caplan, P.L., a diversified law firm with a wide range of practice groups. Her practice specializes in Community Association Law. For more information, visit www.ssclawfirm.com
Todd Paton is President/Founder of Paton Marketing, a digital marketing firm, which recently merged with BrandStar, a content marketing firm. Based in Pompano Beach, two organizations now combine efforts on a wide range of marketing initiatives for community associations, medical, retail, legal, financial services, hospitality, non-profits and many others. For more information, visit www.patonmarketing.com.