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Florida Condominium Associations: Creating Quality Board Meeting Agendas and Minutes

Posted on March 24, 2014 | 39 Comments

NOTE: This post reflects our opinions and ideas and should not be taken as legal advice or professional guidance. References to language in the Florida Statutes or Florida Administrative Code are based on our reading and laymen’s interpretation of these documents. As always, we strongly encourage you to consult with legal counsel regarding the interpretation of law.

Board meeting agendas and meeting minutes are a key part of condominium associations’ official records. For unit owners not actively involved with the association, they are the primary way to follow along with the board’s activities. Given this, it is important that the board produce quality agendas and meeting minutes. Generally, these two documents should provide sufficient detail so that a unit owner with no previous knowledge of the property will understand what the board is considering and the reasoning behind board actions. Agendas and meeting minutes are also reviewed by the association’s CPA during audits, and are some of the primary documents the Department of Business and Professional Regulation (DBPR) examines to resolve complaints against associations. Lastly, new managers or board members use meeting minutes to obtain insight into past association issues. In sum, having detailed agendas and meeting minutes can prove invaluable.

There is significant confusion around how agendas and meeting minutes should be formatted, and what information they must contain. The Florida Statutes provide little guidance on these topics, leaving it to the boards and their managers to determine what is appropriate. Many standard formats (i.e., Robert’s Rules of Order) are used and often the community’s bylaws will provide guidelines. The board is obligated to follow any agenda, meeting minutes or board meeting format requirements outlined in their governing documents. That being said, if your documents indicate that Robert’s Rules should be followed, the board should review these Rules and make reasonable decisions about how to apply them to a casual condominium board meeting. For example, there is no need to stand to make a motion and no need for the president to recognize a board member before they speak despite what Robert’s Rules tells us.

This post will outline key considerations when constructing a format for your agendas and meeting minutes. It should be read in conjunction with my post on unit owner rights and association responsibilities at board meetings. We will discuss an appropriate and abbreviated version of Robert’s Rules for association meetings in a separate post.

Agendas

Florida Statute 718.112(2)(c) provides the following agenda requirements:

  • All regular board meeting agendas must be posted visibly on the condominium property at least 48 hours in advance of a meeting. NOTE: Members’ meetings (e.g., annual meeting), budget meetings and certain other meetings require additional advanced notice.
  • If there is no condominium property available where notices may be posted, the board must mail or email (if electronic consent form has been received) the agenda to all unit owners 14 days in advance of the meeting.
  • The board must adopt an official location for posting agendas on property.
  • Any item that will be discussed by the board at a meeting must be listed on the agenda.
  • If 20% or more of a community’s members petition to have an item on the agenda, the board must add this item to an agenda within 60 days of receipt of the petition.
  • Board meetings held in the event of an emergency may be held without a previously posted agenda.
  • Items not listed on an agenda may be taken up at a meeting on an emergency basis by a vote of a majority plus one of the board members.

NOTE: The DBPR has reprimanded associations for holding “emergency” meetings and discussing “emergency” items that are not true emergencies. If the board can wait 48 hours for proper notice to be posted before discussing the item, then the board should do so.

The above Florida Statute requirements do not provide any guidance on how a meeting agenda should be structured. This is up to the board to decide.  I recommend that an agenda format be approved by the board and used consistently. To better inform the unit owners, I also recommend that the agenda include a brief sentence on the purpose of each agenda item. For example, an agenda may list “Landscaping” as one of the items but to a unit owner that may mean very little. An agenda item like this is much more informative: “Landscaping: the board is considering proposals to replace all plants surrounding the front fountain”. Most management companies have their own agenda formats but the board can certainly request changes to that format.

Below, I have listed the primary sections of a board meeting agenda with some guidance on each item. They are listed below in the order which I would recommend they be listed on the agenda and addressed at the meeting.

NOTE: We will gladly provide a template agenda upon request.

1.     Meeting Date, Time and Location:  This information must be included on every posted agenda.

2.     Call to Order, Proof of Quorum, Proof of Notice & Roll Call: This item should be the first item at every meeting and is primarily a formality. The president will call the meeting to order, specify the time, and confirm that the agenda was properly posted at least 48 hours in advance of the meeting. The board members present should state their names and positions to confirm a quorum has been obtained.

3.     Special Speakers or Guests: Sometimes boards will request special guests attend a meeting. For example, the association may request that its insurance broker come to a meeting to discuss insurance policy renewal. I generally recommend listing any agenda items relating to guests at the top of the agenda so that the guest may conduct their business and then leave without having to sit through a long meeting.

4.     Prior Meeting’s Minutes: Minutes from the previous board meeting should be reviewed and approved by the board. If your community follows Robert’s Rules, they are required to be read aloud. To avoid this, the board should receive and make changes to draft minutes in advance of the meeting. If done this way, they do not need to be read aloud. Getting draft minutes to the board for review within a few days of a meeting really helps with accuracy as the information is fresh in the members’ minds.

5.     Manager/ Board Member/ Committee Reports: If the manager, a board member (typically the president) or committee head wishes to provide an update on specific items, they should be listed on the agenda. Further, I would recommend a brief listing of the topics they will discuss. Just listing “President’s Report” could be used as a catch all agenda item during which the president/ board may talk about any association topic. In my opinion, this does not comply with the spirit of the Florida Statutes.

6.     Treasurer’s Report/ Financial Statements Review: The association’s most recent monthly (or quarterly) financial statements should be reviewed and approved at each meeting. Any items the board may need to vote on relating to collection efforts (e.g., a vote to lien a unit) should also be listed as an agenda item (specific unit numbers may be listed).

7.     Amenities Use & Voting Rights Suspensions: As discussed in this post, boards must vote to suspend the amenities use rights or voting rights of unit owners in arrears. As such, this should be listed as an agenda item (specific unit numbers may be listed).

8.     Unit Owner Comments/ Questions/ Concerns: As discussed in our post on unit owner rights at board meeting, unit owners have the right to speak on any agenda item. I recommend listing an agenda item specifically for this purpose near the beginning of the meeting.

9.     Old and New Business: This section should include any business the board wishes to discuss. Keep in mind that the agenda should include all discussion items not just those that the board plans to take a final vote on at the meeting.

10.  Email Vote Ratification: While boards should try to avoid voting by email entirely (see this post for more information), if the board does vote via email I recommend that the item be included in the next meeting’s agenda and ratified at the meeting.

11.  Adjournment: Similar to #2 above, this is a formality. The time of adjournment should be specified.

 

Meeting Minutes

According to Florida Statute 718.111, meeting minutes must be taken for each board meeting. In my opinion this includes those meetings not open to unit owners (though minutes should be brief). Further, minutes must be retained for at least 7 years and must include how each board member voted on each item including if the board member abstained from voting. These are the only requirements for meeting minutes per Chapter 718. Robert’s Rules provide guidelines on preparation of meeting minutes but otherwise the style and content of the meeting minutes is up to the board.

I recommend the following as it relates to constructing meeting minutes:

1. Use the meeting’s agenda as a base for the meeting minutes.

2. Include meeting start and end times.

3. List the board members, unit owner and other guests in attendance (including those present by phone)

4. Record the meeting and listen to the tape while drafting the minutes to ensure accuracy. Tapes may be destroyed once meeting minutes are approved.

5. Ensure the minutes are sufficiently thorough for a unit owner not present at the meeting to understand what actions were taken by the board and why.

6. Transcribe the specific wording of each motion including who voted in favor of or against the motion.

7. Include any identified board member or manager conflicts of interest.

8. Briefly summarize any discussions the board had that did not end in a vote.

9. Do not include board member quotes or the specific opinions of one board member (unless requested by the board member).

10. If email votes were ratified at the meeting, Include copies of the email chain showing the vote with the meeting minutes.

The board of my association has begun attaching a “status update” document to our meeting minutes which I think is very helpful. This document specifies what actions have occurred on each agenda item from the time of the last meeting to the time of the current meeting. For example, if in last month’s meeting the board voted to re-landscape an area of the property, the “status update” document (which is provided to the board for review and approval at the current meeting along with the draft minutes of the prior meeting) would state something like: “Landscapers removed all old plants and have replaced all irrigation piping. New plants are scheduled to be installed next week”. This provides and straightforward way for unit owners to obtain updates on the status of past agenda items.

Hopefully this overview of agendas and minutes has been helpful. If you have any questions, don’t hesitate to reach out.

Emily

Emily Shaw is a condominium homeowner in Tampa, Florida and a Director of VERA Property Management, a firm providing full-service community association management in the Tampa Bay Area as well as consulting, financial and legal services to all Florida community associations. 

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Florida Statute 718.111(12): Unit Owner Access to Florida Condominium Association Official Records

Posted on March 8, 2014 | 57 Comments

A reader recently asked how frequently a unit owner has a right to view the official records. In this person’s case there was a unit owner requesting official record documents on a weekly basis. This question prompted the following post on unit owner official records access.

Every Florida condominium association is required by law to maintain official records. An overview of what constitutes official records is provided here with a more detailed overview of financial records here. Florida Statutes 718.111(12)(b) and 718.111(12)(c) provide unit owners the right to view and make copies of official records; however, aside from very basic guidelines, the association remains responsible for creating reasonable rules surrounding the frequency, time, location, notice and manner of unit owner record inspections. Because associations are left to construct official record inspection rules, I recommend (as I always do) that the board create and distribute a policy around official records access. In general, it is my opinion that the more official records transparency the better; is a great way to earn unit owner trust.

This post will review the access provisions laid out in the Florida Statutes and provide general guidelines on constructing a reasonable official records access policy.

Florida Statute Guidelines

  • Official records must be maintained within the state for 7 years
  • Official records must be made available within 5 days of a unit owner’s written request
  • Official records must be available to unit owners within the condo’s county (or within 45 miles if the county boarder is more than 45 miles from the condominium)
  • Official records must be open to inspection at reasonable times
  • Associations may charge a reasonable expense for copies of official records
  • Associations may approve reasonable rules surrounding frequency, time, location, notice & manner of inspections
  • Unit owners who are denied access to the official records 10+ days after a written request are eligible for damages no lesser than $50 per day and reimbursement of any attorney’s fees.
  • Unit owners may take photos of official records with a camera, phone or other electronic device.
  • The association must maintain copies of the declaration, articles of incorporation, bylaws, rules & regulations, frequently asked question & answer sheet and most recent year-end financial report on the condominium property for unit owners and prospective purchasers. The association may charge its actual costs of preparing these documents.
  • The following documents are protected and NOT available to unit owners: (1) documents protected by lawyer-client privilege; (2) information associated with the sale of a unit; (3) homeowner medical records and other confidential information such as Social Security Numbers; (4) association security information (e.g., passwords); and (5) personnel records (if the association has employees).

NOTE: Personnel records include items such as the health records, W-4s and performance reviews. This records exemption does not include salary details of the employee as this information should be readily available in the association’s budget.

 

Official Records Storage

Before an association can establish reasonable rules around unit owner access to official records, the board must have a good handle on how/ where official records are stored. Associations that are self-managed or in-house managed have much more control over the storage of their official records than do professionally managed associations. As I discussed in length in my post on management transitions, I strongly recommend that boards of professionally managed associations complete official records “audits” from time to time to ensure proper records maintenance. I also recommend that boards provide guidelines to their management companies on how they would like their records organized and stored. Here are a few recommendations:

  1. If the association has an on-site office or lobby, consider keeping a computer with all official records on it for unit owners to review at any time.
  2. If the association has a website, keep the association’s key records (e.g., financial statements, meeting minutes, agendas, budgets, reserve studies, insurance information) on the website for unit owners to access at their convenience. This also provides a web-based backup of the official records so there is no concern about them being destroyed due to theft or natural disaster.
  3. Keep binders with hard copies of all frequently requested records on property or at the manager’s office. A simple way to do this is to have a binder for each key item.
  4. Store any hard copy records that will be accessed infrequently (e.g., copies of checks, invoices from prior years) in a professional storage facility designed to withstand hurricane force winds.

 

Official Records Access Policy

Given that the Florida Statutes provide associations with the flexibility to create reasonable rules surrounding official records access, I believe establishing a policy is prudent in that it specifically informs management how to proceed and ensures consistent unit owner treatment. Of course, if your association has its official records readily available on property or electronically for unit owner viewing at their convenience, the majority of this policy becomes irrelevant. If unit owners in your community are frequently asking for official records documents and your records are primarily in hard copy, it may be worth contracting to have all of your records scanned and made available via the web. From personal experience, the time saved by directing every official records request to one website is well worth the upfront cost.

I would recommend that every official records access policy include the following:

Governing Documents, FAQ Sheet & Year-end Financial Report: While the Florida Statutes specifically say “copies” of these documents must be available on property, the association should focus instead on compliance with the spirit of the law. If the association would like to keep paper copies of these documents on property, that’s great. If that doesn’t make sense for your association, I believe the following options also comply with the law: (1) making the documents available on a website, (2) making them available on a CD/ thumb drive, (3) emailing them to the requestor.

 The policy should specify how these documents will be provided to unit owners/ potential buyers and any costs associated with these documents. The law specifically states the association may charge actual costs of these documents. If they are available via website or email, there should be no charge. If available via hard copy, CD, or thumb drive, the association should charge whatever amount the manager or document preparation services (e.g., Kinkos) charges the association. For self-managed associations completing printing work in-house, a cost of $.10 – $.15 per page for black and white or $.50 for color is reasonable. This range should cover your paper, ink and printer wear and tear. If creating CDs or thumb drives in-house, the cost should reflect the actual cost of the CD or thumb drive.

 Copying Fees: For official records excluded from #1, the association may charge a reasonable fee for copies, CDs or thumb drives of these records. I don’t see this as much different than actual cost given that it seems unreasonable for the association to make a profit (even if a small one) on official record distribution. As mentioned above, unit owners should charge the exact cost charged to them by the manager or other professional preparing the records. For self-managed associations, the cost guidelines mentioned in #1 remain reasonable though the association may charge an additional amount for time spent making copies so long as the amount is defendable.

 Viewing Location:  The policy should specify where unit owners may view the records. There may be multiple locations. For example, meeting minutes, budgets and monthly financials may be available on the association’s website while copies of contracts and invoices are available at the management company’s office.

 Frequency of Requests:  The policy should specify how frequently a unit owner may request records and clarify that any requests in excess of the frequency limitations will not be accepted. There is no right choice: daily may be too burdensome on the association but quarterly may be too limiting for the unit owner. It may be worthwhile here to distinguish between how frequently a unit owner may request electronic records (i.e., those that can be easily emailed) and how frequently they may request viewing of hard copy records.  These specifics will entirely depend on how your property is managed and how records are stored.

Viewing Times: The policy should specify when documents are available for review. For those available on the web, there is no limitation on viewing time. For all other documents, viewing times may be by appointment during the management company’s business hours.

Making a Request: This section should indicate how the unit owner makes a request. It should specify who the unit owner contacts and what information to provide. I would recommend associations require unit owners to select specific records or groups of records (e.g., 2009-2011 budgets, March 13, 2013 invoice from Joe Plumber). This avoids the “I’d like to see all your records” requests which are nearly impossible to accommodate. Generally these requests arise if a unit owner feels the association is hiding something. All requests should be in writing (mail or email). The policy may also require the unit owner to provide his/ her availability over coming days (if applicable).

Request Response: This section should indicate how and when the association will respond. The law states that documents must be made available within 5 days of a written request. Do not read this to mean that in all circumstances the documents must be in the hands of the requestor within 5 days. If the association has the requested documents available electronically, they should certainly be emailed within 5 days. However, for hard copy documents, the association should respond as promptly as possible (I’d recommend within 1 business day) and offer reasonable viewing time(s) that fall within the 5 days window.

 

As I recommend with all policies, the association’s attorney should review the policy before it is finalized. Further, the board should re-review and re-approve the policy annually to ensure continued compliance with applicable law.

Feel free to reach out with any questions.

Emily

Emily Shaw is a condominium homeowner in Tampa, Florida and a Director of VERA Property Management, a firm providing full-service community association management in the Tampa Bay Area as well as consulting, financial and legal services to all Florida community associations. 

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Reserving Funding Requirements and the Procedures for Waiving Reserves in Florida Condominium Associations

Posted on March 4, 2014 | 108 Comments

Florida law is very clear: every association must fully fund reserves unless a vote to waive reserves is obtained. This post will review the reserve funding requirements detailed in the Florida Statutes/ Florida Administrative Code and the process for waiving reserves.

Reserve Funding Basics

NOTE: There are specific requirements for developer-controlled condominiums and multicondominiums that are not discussed here.

Section 718.112(2)(f) of the Florida Statutes and Rule 61B-22.005 of the Florida Administrative Code require ALL Florida condominium associations to fund reserve accounts for deferred property maintenance and replacement projects. Specifically, a reserve account must be established for roofing replacement, property painting, asphalt paving, and any other project that has an anticipated cost of greater than $10,000.

For each identified project, the association must identify the anticipated date and cost of the project. For example, a community’s roof may have an estimated remaining useful life of 10 years and replacement cost of $50,000. Therefore, in 10 years, the association will need to have $50,000 in the roof reserve account to pay for the replacement.

The association must calculate annually the amount it needs to contribute to its reserve accounts and include this amount in the budget. Generally, associations will collect one maintenance fee payment from each unit owner monthly or quarterly and deposit it into an operating account. From there, the percentage of maintenance fees allocated to reserves per the budget is transferred into a separate reserve account. Reserve and operating funds may not be commingled for more than 30 days from the date of receipt of a maintenance fee payment. As such, if an association receives maintenance fees monthly (quarterly), they must contribute the appropriate amount to their reserve funds monthly (quarterly).

NOTE: There are two ways to look at monthly or quarterly reserve funding. Let’s look at an example. An association has a $100,000 annual budget with $20,000 (20%) allocated to reserve funding. The association requires maintenance fee payments monthly. In a given month, the association should received $8,333 in maintenance fees ($100,000/12) of which $1,667 is allocated to reserves ($8,333*20%). Let’s say in January the association actually received $7,000 in maintenance fees (several units failed to pay). The association could choose to fully fund the reserve account that month by transferring $1,667 dollars of the maintenance fees received to a reserve account. Or, the association could choose to only transfer $1,400 ($7,000*20%) to a reserve account, as they have not yet received the maintenance fees that would have contributed the remaining $267 ($1,667-$1,400) in reserve funds. The majority of associations (and management companies) choose the first option, ensuring that reserves stay fully funded. Both are acceptable per the law in my opinion. While the first option is preferable, if there is a situation where a large percentage of unit owners fail to pay maintenance fees and contributing the full budgeted monthly amount to the reserve account would hinder the association’s operations, then the second option may be best.

Florida law specifies two acceptable methods for calculating the necessary annual reserve contribution: pooling or straight line (component). We have discussed these two methods as well as the pros and cons of each here.

Recap: So, we know that condominiums must budget for sufficient reserve funds to pay for all long-term maintenance and replacement projects greater than $10,000. Further, we know that the annual reserve contribution necessary is based on the expected timing and cost of each project using one of two calculation methods (pooling or straight line). Great. But how does a board know exactly what projects greater than $10,000 will need to be done, when they will need to be done, or how much they will cost?

This is where a reserve study comes in. A reserve study is a professional engineering survey of your property. The reserve study firm will examine the property and determine what major capital maintenance and replacement projects will need to be done in the next 30 years. The study will provide expected costs of each project and expected timeframe for completion. While there is no specific requirement in Florida law that associations obtain a professional reserve study, I don’t see any way for a board to properly determine annual reserve contributions without one. I recommend a reserve study be completed every 2-3 years. Prices generally range from $3,000 – $6,000 for an initial study with a reduction in price for study updates completed by the same firm. To ensure the association always has the funds to complete routine reserve studies, I recommend including a reserve account for the study itself.

NOTE: If you need a good reserve study firm, I have had great success with Reserve Advisors.

Waiving Reserve Contributions

For those communities where, for whatever reason, fully funding reserves is infeasible, Florida law provides the option to reduce or eliminate reserve funding. Here’s how it works.

Every year, the board must present a proposed budget to the community assuming full reserve funding. The association cannot hold a vote to waive or reduce reserve funding until after a proposed budget with full reserve funding has been provided to the membership. If the board would like to put a vote on the table to reduce or waive reserves funding, then they should provide (along with the proposed budget which must be distributed 14 days prior to the budget meeting): (1) a second budget with waived or reduced reserves and (2) a limited proxy to be filled out by unit owners specifically requesting the membership to vote on the second budget. The proxy must include the following wording per Florida Statutes:

WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.

To successfully reduce or waive reserve funding, a majority of the membership (i.e., 51% of unit owners) must vote in favor of the reduction/ waiver.

If by the time of the budget meeting arrives the association has received insufficient votes, the board may delay approving the budget to attempt to collect more votes. Of course, realistically, the board may only postpone so much as the budget should be approved in time for coupon book deliveries prior to year-end. Further, the limited proxies are only valid 90 days from the date of the first scheduled budget meeting. So, if your association would like to vote to waive reserves but getting sufficient unit owner participation will be a struggle, it may be worthwhile to set the budget meeting earlier in the year than you would otherwise.

If a majority vote is not obtained, the board must approve the budget with full reserve funding. If a majority vote is obtained, the board must proceed with the waived or reduced reserve funding. It is important to note that any vote to waive or reduce reserves is only effective for one annual budget. Therefore, the vote must be obtained for every year the board would prefer not to fully fund reserves.

Why Fund Reserves?

Arguably one of the biggest problems facing condominium associations today is the failure to fully fund reserves. Many associations put little to no money aside, creating project delays and large special assessments. With the primary focus being low maintenance fees, boards can easily loose sight of the big picture reasons to fund reserves.

Let’s look at our roof example. The community’s roof has an estimated remaining useful life of 10 years and an anticipated replacement cost of $50,000. If an association does not put aside money routinely in a roof reserve account, then the unit owners would likely have to pay a $50,000 special assessment in 10 years. This is a negative outcome in several ways:

  1. Hesitancy to issue a special assessment or difficultly collecting the special assessment may lead to delays in project completion and further deterioration of the roof (i.e., more roof leaks which cost money to repair.
  2. The special assessment will be a burden on the unit owners.
  3. A special assessment is unfair in that prior unit owners did not have to contribute any money to the roof (though they benefited from it) while current unit owners have to pay for the entire thing. This creates an inequitable distribution of expenses.
  4. Limited reserve funds and a history of special assessments will drive away buyers, keeping home prices lower than they otherwise would have been.

I strongly recommend that every board fully fund reserves. If a board does not feel that full funding is feasible right away, they should still contract for a professional reserve study and establish a long-term plan for achieving full funding by gradually increasing reserve funds each year.

I hope this overview of condominium reserve funding was helpful.

Please let me know if you have any questions,

Emily

 Emily Shaw is a condominium homeowner in Tampa, Florida and a Director of VERA Property Management, a firm providing full-service community association management in the Tampa Bay Area as well as consulting, financial and legal services to all Florida community associations. 

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Hiring a New Management Company: The Florida Condominium Association Manager Transition Process

Posted on February 18, 2014 | 11 Comments

Do you feel like there are better property managers out there? Have your Board members been hesitant about considering new management because they are concerned the transition process is going to be difficult?

If you relate to the above questions then you are not alone. One reason why ineffective mangers remain in business is that Board members are generally weary of the time, effort and instability they perceive as part of the manager transition process. While management transitions can be stressful and, if handled incorrectly, frustrating for all the community’s residents, a proactive Board of Directors can help to create a seamless transition.

This post will provide general guidance on navigating the management transition process. We will also provide an overview of the key aspects of the transition plan you should see from a new management company.

Don’t rush the management decision-making process. Be sure to start interviewing new management companies at least 60 days before you need to give notice to your current management company. Be sure to review your current management contract to know exactly how and when notice of cancelation or non-renewal must be given. Some management agreements may require notice as much as 90 days in advance.

Negotiate your new management contract. There is always risk associated with hiring a new management company. The manager could fail to live up to the Board’s expectations. Because of this, the Board should ensure that they have negotiated a contract with favorable terms. See our post on contract negotiation here for more details.

Give the new company ample time for transition. Make sure that new management contract is signed at least 60 days before the start date. 60 days is a reasonable amount of time for the new management company to properly transition the administrative aspects of the association (e.g., inform residents, open new bank accounts, transfer financial data), be brought up to speed on outstanding association projects, and generally be ready to go when management officially begins.

Audit your association’s official records. Once the Board has decided to make a management change, one of the first things they should consider doing is auditing the association’s official records.

NOTE: Board members often think of official records maintenance as being the manager’s responsibility and, therefore, don’t spend too much time thinking about it. While it is true that maintaining records is part of the standard management contract, it is ultimately the Board’s responsibility to make sure that records are properly kept in accordance with Florida Statutes (read more about official records requirements here). Remember, when a Board hires a management company, responsibility for compliance with Florida Statutes & association governing documents does NOT shift to the management company. Ultimate responsibility remains with the Board. As we discussed in our post on the Florida Administrative Code, relying on a management company is not an acceptable defense for failing to comply with Florida law.

Transitioning the association’s records is one of the most important aspects of the management transition. Not only is it a requirement of the Florida Statutes that certain records be kept, it is also crucial for the smooth operations of the association (particularly when new management is involved). An advanced audit of the official records may bring to light unexpected issues.

If your management company keeps all your records off property, a Board member(s) should request a meeting with the current manager to review all of the records. Bring our blog post on official records with you as a cheat sheet for everything that should be included. If records are missing, make a list of those records and request that the current management company locate them. Determine which records are kept in hard copy and which in soft. Ask the manager how email communications relating to association business are stored and how you would access them. If the manager tells you emails are not part of the official records, push back. Emails are a very important part of the association’s records. A tremendous amount of detail surrounding historical association events is lost every time an association switches management companies without retaining email records. In my opinion, this point is so important that it may be worth consulting the association’s attorney if the management company refuses to provide them.

If all the records are accounted for but they aren’t organized, don’t sweat it. At this point, you just need to make sure the records are available. Once your association has hired a new management company, organizing the official records can be something you require.

Review the association’s polices. The period prior to a management transition is a great time for the association to review its operational policies and procedures (e.g., collections, sales/ lease, parking, property access, amenities use). If the association has been relying on certain internal policies and forms of their current management company (most frequently for maintenance fee collections and violation identification/ fining), it is worthwhile to request copies of these policies. All policies should be provided to the new manager for his/ her review to ensure policies are applied consistently from one management company to the next. Consistent application helps to create a smooth transition and limits resident complaints. Any policy changes the new manager recommends should be reviewed and approved by the Board.

Establish a transition plan. Be sure to establish a detailed transition plan with the new management company and follow up on the status of the transition weekly. The following outlines the essential aspects of a transition plan. Prior to hiring a new management company, the Board should understand exactly how the new manager plans to handle the transition.

 

Manager Transition Plan Key Components

Board Meetings/ Transition Updates: The new manager should meet with the Board of Directors shortly after contract signing to discuss the specifics of the transition plan. The manager should also agree to provide routine updates (perhaps weekly) on the status of the transition. If possible, the new manager should attend any regular Board meetings that occur in advance of the start of the contract.

Obtain/ Organize Official Records: Management’s first big hurdle is going to be obtaining all of the association’s records from the departing management company. The manager should request the records at the beginning of the transition period, review the records, and provide the Board with a list of missing records (if any). If the new manager is having difficulty obtaining specific records from the departing manager, the Board may need to step in and request those records.

Opening Bank Accounts/ Signers: Management companies typically serve as custodians of their associations’ bank accounts. For simplicity, they will usually only work with one bank. As such, a change in management company often means changing the bank where the association holds its operating (and possibly reserve) funds. As part of the transition, the new manager will need to assist the Board in establishing new bank accounts for the association. This should definitely be done in advance of the contract start date (ideally 30 days before) to ensure there is a location for maintenance fees to be deposited. As part of this process, the Board will need to specify which Board members will be allowed to sign the association’s checks (generally the President and Treasurer). At this point, the Board should request that online access be established so that the manager, Treasurer or other Board members can check the status of the association’s accounts at any time.

Purchasing Coupon Books: With new bank accounts come new coupon books. The manager will need to order these coupon books and have them delivered to residents in advance of day one of the contract to ensure unit owners can pay their maintenance fees on time. Generally, these coupon books are accompanied by an introduction letter from the new management firm.

Resident Communication: Communicating with residents is a crucial aspect of the transition. All management companies send an introduction letter to all unit owners that generally includes a brief paragraph about the company and the manager’s contact information. In my opinion, this letter alone is insufficient. I strongly recommend that the President of the Board personally communicate with all residents explaining reasons for the management change and asking residents for their patience during the transition. Knowing that the Board made a thoughtful and well-informed decision will help to limit resident complaints. I also think the Board should confirm that the manager will not only contact the community’s unit owners but other residents as well (e.g., tenants) to the extent possible. These other residents are often left in the dark by property managers, causing them to complain to their landlords (i.e., unit owners).

Confirm Resident/ Homeowner Contact Info: The new management company should obtain unit owner and resident contact information (e.g., addresses, phone numbers, emails) from the departing management company and should work to confirm this information with each resident. The Board should communicate to the new management company any additional information they would like the management company to maintain for each resident (e.g., parking spot number, number of pets, license plate number, emergency contact).

Meeting with Vendors: The new manager should meet with all of the association’s key vendors to introduce him/herself and get brought up to speed on current projects. The manager should ensure that the association has a W-9 form and current certificate of insurance for each vendor.

Financial Updates: During the month prior to the contract start date, the new manager should obtain financial records through the previous month’s end from the departing management company. If the two management companies have compatible accounting systems, the transfer should be straightforward, with the new management company simply importing all historical data into their system. If there is system incompatibility, the new manager will simply begin maintaining accounting records on day one of the contract. In this case, I recommend making sure the association have the following reports for all prior months: (1) Balance Sheet, (2) Income Statement, (3) Budget-to-Actual, (4) Check Registers, (5) General Ledger & (6) Full Historical Ledgers for each unit owner. Read more about financial records here.

Policies & Procedures: During the month prior to the contract start date, the new manger should obtain all of the association’s current policies and procedures. The manager should review them and provide any recommended changes to the Board. To the extent possible, all key policies and procedures should be in place in advance in advance of contract start.

Annual Report/ Registered Agent: Immediately after the start date of the contract, the new manager should amend the addresses listed on the association’s Florida annual report to the manager’s address (unless Board members prefer their personal addresses). The manager should also ensure that either the manager or the association’s attorney is listed as the association’s registered agent.

Website: If the association provides a website for its communities, the website should be fully operational, with all relevant association records uploaded, in advance of the contract start date. Many managers allow for some customization of the association’s website. The Board should discuss this with the manager to ensure they are fully taking advantage of the website’s features. Read more about the benefits of a condominium website here.

This post provided only a brief overview of the transition process. If you would like to discuss the specifics of your community’s management transition, feel free to reach out.

Thanks,

Emily

Emily Shaw is a Florida condo owner and a director of VERA Property Management, a community associaiton management and consulting firm.

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Your Florida Condominium Association Hurricane Preparedness Plan

Posted on February 9, 2014 | 7 Comments

Today’s post is going to be a long but important one.

Every condominium association in Florida, particularly those along the coastline and in flood or evacuation zones, should create and distribute to its residents a hurricane preparedness plan. Though realistically there is only so much planning an association can do for a natural disaster, your community will certainly be better prepared after drafting the steps community residents, Board members and association personnel should take in the event of a storm.

This post will review certain key elements of a hurricane preparedness plan. As I am not a disaster preparedness expert, I am sure there are points to consider that I have not included below. This post is meant to be a starting point for discussions among Board members about drafting a plan. For associations attempting to create a highly detailed plan, the Board may hire a consulting firm specializing in natural disaster preparedness.

The hurricane preparedness plan should be reviewed and approved by the Board of Directors annually in advance of hurricane season (official start on June 1st).

NOTE: Section 718.1265 of the Florida Statutes provides associations with specific powers in the event of an emergency (such as after a hurricane). We will discuss these powers in a separate post but it is wise to review them while creating your hurricane preparedness plan.

Insurance Issues

While discussing hurricane preparedness, the Board should review the community’s property insurance policy. In particular, the Board should be sure to understand the policy’s hurricane deductible. Hurricane deductibles are usually 2%, 5% or 10% of the insured value of the property. What does this mean? Let’s assume the community’s total property value is $3,000,000, the hurricane deductible is 5%, and a hurricane has created a total loss of the property (complete rebuild required). In this scenario, the association would need to pay a $150,000 deductible. If your community does not have the total amount of the deductible available in excess operating cash or reserve funds, it will be important for the Board to discuss how they would pay the deductible in the event of a major casualty due to a hurricane.

 Useful Hurricane-Related Links

http://www.floridadisaster.org/

http://www.fema.gov/

http://www.nhc.noaa.gov/

http://www.stateofflorida.com/articles/hurricane-preparedness-guide.aspx/

Florida Condo Association Hurricane Preparedness Plan

I recommend breaking a condo association hurricane preparedness plan into four main sections which, for ease of use, should be constructed like “to do” lists: (1) Routine Preparation, (2) After a Tropical Storm or Hurricane Warning, (3) After an Evacuation Order, (4) After a Tropical Storm or Hurricane. These four categories should address both what the association should do and what residents should do. We will look at these four categories in detail below.

Routine Preparation

Resident Routine Preparation

  • Obtain a Local Hurricane Guide: Most municipalities in Florida produce hurricane preparedness guides that include evacuation plans, shelter locations, important contact numbers, survival kit recommendations, and more. The association should consider obtaining copies of these guides and making them available to residents.
  • Update Your Contact Information: Unit owners and residents should make sure that the association has their accurate phone number, address and email address.
  • Hurricane Shutters, Windows, Doors & Garage Doors: Unit owners should consider installing hurricane shutters (if the association has not already done so, discussed below). Further, if unit owners are responsible for repair and replacement of windows, doors and/ or garage doors per the association’s governing documents, unit owner should consider installing Miami-Dade County approved versions of these fixtures.
  • Disabled Resident Assistance: Any residents that would need assistance in the event of an evacuation should inform the association and also reach out to their city and/ or county to sign up for emergency aid.
  • Consider Homeowner’s Insurance: All unit owners should consider homeowners insurance (generally called a HO-6 policy) for their condominium. As we have discussed in past posts, per Florida Statutes Chapter 718.111(11)(f), in the event of a casualty to the condominium property, unit owners are responsible for repairing or replacing the following items:
    • All personal property
    • Floor, wall and ceiling coverings
    • Electrical Fixtures
    • Appliances
    • Water heaters
    • Water filters
    • Built-in cabinets and countertops
    • Window treatments including curtains, drapes, blinds, hardware

Think about what this means. If a hurricane came through and there was a total loss, the association’s insurance would rebuild the building and your unit. However, the unit would have only sub-flooring (no carpet, tile or wood floors); would have no electrical fixtures; no cabinets, countertops or sinks; and no water heater or other appliances. Also, the insurance statute only requires that the association’s insurance rebuild the property with products similar to those that were originally installed. So, let’s say you recently replaced all your cheep original windows with very high-end, impact resistant windows. Unless your insurance covered those new windows, you would be out of luck. Without insurance coverage, replacing these items can create a major out-of-pocket expense for unit owners.

  • Photograph Your Home and Valuables: It is worthwhile for every unit owner or resident to photograph their condominium to capture on film all of the personal property within a unit. After a storm, this can be a helpful way to identify items that are missing. For unit owners with homeowners insurance, photographing the property (and valuable items in particular such as TVs) may make processing claims with their insurance companies much easier. It is prudent to contact your insurance company and ask them what they would ideally like to see in the event of a major claim post hurricane. They can typically provide guidance on how to properly prepare.
  • Create a Survival Kit: Keep a survival kit in your home that you can grab in the event of an evacuation. A survival kit should include, at a minimum, fresh water supply, batteries, canned goods, proper identification, important documentation (e.g., birth certificates, social security cards, insurance policies), proof of ownership of your condominium (possibly necessary to get back onto the condominium property after a severe storm where major damage was sustained), cash, and medications.
  • Learn about FEMA: Unit owners should familiarize themselves with FEMA’s Individuals and Households Program, which provides assistance to people whose property has been damaged or destroyed. Identify who to call and how to apply for aid in the event your home is unlivable after a storm.
  • Volunteer to Aid the Association: The association should consider encouraging unit owners to aid management and the Board in securing the property prior to a storm. Board members and property managers have their own homes to take care of and, because of this, it is not unusual for common areas to be neglected. Consider creating a list of willing residents and their contact information and update this list annually.

Association Routine Preparation

  • Tree Trimming: All associations should make sure that their palms and other trees are properly trimmed at least once per year in advance of hurricane season. There is quite a bit of controversy over whether or not palms should be hurricane cut. It is my opinion that hurricane cutting your palms can not only damage your palms but also create damage to property during high winds. Learn more about this here and talk to your landscapers today.  For those of you in and around the Tampa Bay Area, I highly recommend Fieldstone Landscaping Services for all of your landscaping needs. They have done a tremendous job with our property over the last three years.
  • Unit Access: Associations should have the keys to access each unit. I recommend making it a rule of the association that unit owners provide the association with keys to their unit. Unit access is particularly important in the aftermath of a hurricane if representatives of the association need to inspect property damage. Associations should consider testing the keys to each unit annually.
  • Resident Contact Information: Associations should make sure they have accurate phone numbers, addresses and email addresses for all residents. Contact information should be confirmed with each resident routinely.
  • Videotaping of Property: The property should be videotaped annually for insurance purposes. I would recommend providing copies of this videotape to your insurance broker, property manager and at least one Board member. Contact your insurance company and ask about their hurricane preparedness recommendations.
  • Vendor Lists: The association should have a list of known vendors that may be useful to the association after a storm. Relevant vendors may include restoration specialists, landscapers, plumbers, electricians, and insurance contacts. This list should include the contact information for each vendor and should be distributed to each Board member and management.
  • Official Records Storage: If your hard copy records are stored in a hurricane-resistant facility and your electronic records are stored in a web-based system, then there is nothing more that needs to be done. If not, consider purchasing watertight containers for your hard copy records. For electronic records, make sure they are being backed up onto an external hard drive or a web-based storage system at least weekly.
  • Hurricane Shutter Guidelines: Per Florida Statute Chapter 718.113(5), every condominium association in Florida is obligated to adopt hurricane shutter specifications (e.g., color, style) that unit owners must follow should they choose to install hurricane shutters. Boards cannot deny a unit owner the right to install hurricane shutters. Board members may, however, decide to install hurricane shutters on all units at the association’s expense. As this is a complicated topic, we will be dedicating a future post to it. In the meantime, please contact us if you would like assistance creating a hurricane shutter policy for your community.
  • Board of Directors/ Volunteer Education: All Board members and storm preparation volunteers should have a property “how to” guide. This should include instructions on how to operate any security, fire safety, irrigation, pool, elevator and other systems on property.   Further, maps should be distributed to this group detailing the locations of electrical meters, fire system panels, water shutoffs and any other relevant property features. Training sessions should be conducted annually.
  • Boarding Windows Policy/ Contracting: Associations should discuss the possibility of boarding the community’s windows (either all of them or simply the common element windows) in advance of a storm. Associations may consider contracting in advance with a vendor that will arrive on property upon issuance of a tropical storm/ hurricane warning to board the windows. If the association does not intend on boarding windows, a policy should be established regarding residents’ ability to board their windows from the outside.
  • Hurricane Disaster Response Contracting: For communities in high-risk areas, it may be wise to consider contracting with an engineering firm that specializes in hurricane disaster response. This type of contract guarantees that the firm will come to the property within so many days after the storm to survey the damage, provide a full written report of the necessary repairs, and, in some instances, bid out and supervise the work. This can be very helpful to the association and its insurance company. These firms are often swamped with work after a storm and, therefore, associations that have not pre-contracted with them may be out of luck. Typically, this type of a contract requires the association pay a several thousand dollar retainer annually which would be applied to their services if ever necessary. I have never worked directly with a hurricane disaster response team before; however, I have spoken at length with the engineers at Delta Engineering (serving all of Florida) about their hurricane response services. You may consider contacting them if you are interested in setting up a contract like this for your association.

After a Tropical Storm or Hurricane Warning

 Resident “To Do” List

  • Clear Patios & Balconies: Residents should bring any personal property on patios or balconies inside their units.
  • Designate a Safe Room: Designate a room in your unit that provides the most shelter from the storm. Typically, this is an interior room with no windows.
  • Stay Tuned: Keep the radio or TV tuned to emergency frequencies, the local news, or the weather channel for regular updates.
  • Consider Boarding Windows: If the association has not already done so, consider boarding your windows. If you are unable to board your windows from the outside, boarding them from the inside will still help to protect the interior of your home.
  • Establish An Evacuation Plan: Residents should know their community’s evacuation zone, where they will go once an evacuation is required and the location of the nearest shelters (including if the shelter accepts pets – see www.floridapets.net).
  • Charge Your Electronics: All residents should charge cell phone, camera and laptop batteries and consider purchasing backup batteries.
  • Prepare Your Vehicle: Residents should fill up their cars with gas and check tire pressure. The sooner this is done the better, as lines at gas stations tend to get longer as the storm approaches.
  • Fill Your Bathtub: Consider storing drinking water in large containers or in the bathtub, as tap water may not be safe to drink for some time after the storm.
  • Set Freezer & Fridge to Coldest Settings: Residents should set their freezer and refrigerator to the coolest setting to protect food for as long as possible in the event that electricity is lost. It is prudent to have several days’ worth of food on hand that does not require refrigeration.
  • Protect Personal Property: Residents should consider moving valuable items away from windows and doors. A supply of towels should be kept on hand to address any water entry during the storm.

 

Association “To Do” List

This list should be sorted in order of priority. Each action item should have sufficient detail for anyone to be able to complete the task. A specific person or vendor should be assigned to each task on the list.

  • Distribute the Hurricane Preparedness Plan: Consider re-distributing the hurricane plan to all residents via email or door posting. Place extra copies in common areas.
  • Emergency Board Meeting: Set up a meeting for the Board and management to review the hurricane plan and discuss each person’s responsibilities.
  • Emergency Community Meeting: Set up a meeting for residents to attend to ask any questions they have.
  • Invoice Payment: When possible, pay all invoices due in the coming two weeks to avoid any late charges.
  • Electronic Records: If relevant, make sure all electronic records are backed up onto hard drives. At least one Board member and the management team should have a copy.
  • Hard Copy Records: If relevant, place all hard copy records in watertight containers and place them in a high location. Better yet, determine if a Board member or manager is able to remove the records from the property and place them in a secure location.
  • Unplug Electronics & Appliances: Turn off and unplug any association computers, faxes, printers, camera systems, gym equipment, appliances or other electronics. If possible, remove electronics from the floor and place them in the highest available location.
  • Black Checks: Consider signing enough blank checks to distribute one to each Board member and one to the property’s manager. These may be used to begin restoration efforts after the storm.
  • Outside Property: Any exterior property (e.g. pool furniture, potted plants, dog waste stations, recycling bins, dumpsters & seating areas) should be brought inside. Certain items may be placed into the pool as well if there is insufficient inside storage. Any property that cannot be moved should be strapped down or otherwise secured.
  • Propane Tanks: Any propane tanks should be shut off.
  • Common Air Conditioners: Shut off any common area air conditioners.
  • Irrigation System: Turn off the association’s landscaping irrigation system.
  • Window Boarding/ Hurricane Shutters: Board windows and/or lower hurricane shutters as previously agreed by the Board.

 After an Evacuation Order

Resident “To Do” List

  • Traffic Check: Residents should check local evacuation routes to determine which is the best option and leave as quickly as possible (traffic becomes heavier the close the storm becomes).
  • Refrigerator and Freezer Clean Out: To avoid rotting food if power is lost, refrigerators and freezers should be cleaned out prior to evacuation.
  • Unplug Electronics & Appliances: Turn off and unplug any computers, printers, routers, coffee makers, and other appliances or electronics. If possible, remove electronics from the floor and place them in the highest available location.
  • Water Shut Off: Residents should shut off the unit’s main water source.
  • Electricity Shut Off:  Residents should turn off the electricity prior to leaving using the breaker panels in their units.

Association “To Do” List

This list should be sorted in order of priority. Each action item should have sufficient detail for anyone to be able to complete the task. A specific person or vendor should be assigned to each task on the list. Given that property managers and association employees/ contractors will likely need to tend to their own homes and families immediately preceding a storm, it is wise to assign these tasks to Board members or other resident volunteers. 

  • Communicate Evacuation: Send an email to the community and post notices in common areas of the evacuation requirement.
  • Disabled Residents:  Provide evacuation assistance to any disabled residents.
  • Check Each Unit: Knock on the door of each unit, if possible, to ensure all residents have evacuated.
  • Disable Access Systems: Unlock or open any entrance gates or doors so that residents may flow freely in and out of the property. The association may consider reactivating these systems after all residents have evacuated to deter possible looting post-storm.
  • Disable Elevators:  After all residents have evacuated, disable all elevators on the top floor of the building.

 

After a Tropical Storm or Hurricane

Resident “To Do” List

  • Returning to the Property: Prior to returning to the property, residents should obtain the “go ahead” from local authorities and the association. Once it is safe to return to the property, the association should inform residents via email or the community’s website.
  • Proceed with Caution: Returning to a damaged property can be dangerous. Local government generally provides guidance on things to consider when returning after a storm in their hurricane guides. The Red Cross also puts out a comprehensive guide on this subject.

 Association “To Do” List

This list should be sorted in order of priority. Each action item should have sufficient detail for anyone to be able to complete the task. A specific person or vendor should be assigned to each task on the list. Given that property managers and association employees/ contractors may need to tend to their own homes after a storm, it is wise to assign these tasks to Board members or other resident volunteers.

  • Survey & Photograph Property: Board members or mangers should return to the property when possible to survey the damage and photograph the property for insurance purposes.
  • Communicate with Residents: Associations should be sure to communicate routinely with residents via email or via the community’s website. Residents should be informed of the status of the property, the actions the Board is taking, and when they can come back. The association should identify any areas of the property that are off-limits due to extensive damage and communicate these areas to residents.
  • Hold Board Meeting:  Boards should hold a meeting as soon as possible (even if via phone) to discuss next steps.
  • File Insurance Claims: Associations should begin filing claims immediately. Insurance companies are often swamped with claims after a storm and the longer the association waits to file a claim, the longer it will likely take for the claim to be processed and payment to be received.
  • Consider Payment Options: After a hurricane, if major damage has been sustained, associations will likely have to pay a sizable deductible (discussed above) before their insurance companies will cover any damage. If an association has enough operating or reserve funds to cover the hurricane deductible, than the association may use such funds. However, if the association does not have funds available to cover the deducible, they may need to consider obtaining a line of credit.
  • Contact Appropriate Vendors: Associations should immediately contact their preferred vendors to begin cleanup and obtain bids for repairs. Landscaping companies typically offer a cleanup service to remove plant debris from the community. Further, the association’s fire safety systems vendor should complete a full inspection of the community’s system immediately to ensure it’s up and running.
  • Repairs List: Boards or property managers, in coordination with hurricane disaster specialists, restoration specialists or other vendors, should create a full list of necessary repairs in order of priority. The cost of each item should be included.
  • Power & Water: Reestablish power & water when feasible
  • Access Systems: Reactivate property access systems
  • Window Boards/ Hurricane Shutters: In situations where window glass is not broken, remove window boards and lift hurricane shutters.
  • Elevators: Reactive elevators
  • Association Property: Return all association property to standard locations

If you have any questions about establishing a thorough hurricane preparedness plan for your association, please do not hesitate to reach out.

Thanks,

Emily

Emily Shaw is a condominium homeowner in Tampa, Florida and a Director of VERA Property Management, a firm providing full-service community association management in the Tampa Bay Area as well as consulting, financial and legal services to all Florida community associations. 

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Your Florida Condominium Board Member Electronic Voting and Communication Policy

Posted on February 2, 2014 | 13 Comments

The use of email and other forms of electronic communication in the operations of condominium associations continues to be a controversial and confusing topic in Florida. The Florida Statutes are significantly behind the times as it relates to technological advances and, therefore, do not provide any guidance around when, if ever, Board email communication and voting is allowed. Further, these issues have not been sufficiently litigated to have a clear understanding of what Florida courts consider legal behavior.

One the one hand, using no electronic communication in this day and age is completely unreasonable. On the other hand, if a Board chooses to conduct all business electronically, the unit owners are denied their right to be present during Board meetings, which violates the law and leads to unit owner distrust of the Board. Given this, all associations can do is comply with the spirit of the Florida condominium statutes (Chapter 718) and use good judgment when conducting association business via email or other electronic communication. In order to ensure all Board members act consistently, I recommend that each association draft and approve a Board Member Electronic Voting and Communication Policy.

Florida Statute Chapter 718.112(2)(c) is clear that all unit owners have the right to attend any meeting of the Board at which a quorum of the Board is present. This means that any gathering of a quorum of the Board, whether at the standard meeting location, in a Board member’s home, or at a local restaurant, is considered a Board meeting if association-related topics are being discussed. It is a common misconception that in order for a gathering of the Board to be considered an official meeting, the Board has to be voting on something. This is not the case.

There are two notable types of meetings that are not open to unit owners:

1. Meetings between the Board and the association’s attorney to discuss litigation and obtain legal advice

2. Board meetings held for the purpose of discussing personnel matters (e.g., employee issues)

The Statute also states that notice of Board meetings (including date, time and location) along with a meeting agenda must be posted conspicuously around the condominium property at least 48 hours in advance of the meeting. This requirement also applies to the two types of meeting mentioned above that are not open to unit owners.

 NOTE: The Statutes are silent regarding where Board meetings may take place. However, the Statutes do specify that the annual meeting must be held within 45 miles of the condominium property so this is a good guideline for all Board meetings.

 Based on the above definition of a Board meeting, an email chain or other form of electronic discussion (e.g., a chat room, web-based conference) where association-related items are being discussed by a quorum of the Board would be considered a Board meeting. Notice for this meeting would have to be posted 48 hours in advance and all unit owners would have the right to attend. As this is impossible in the context of a Board member group email, technically any emails between a quorum of the Board are in violation of the Florida Statutes.

NOTE: In theory, the association could set up some type of web-based conference with a login that all unit owners have. So long as the meeting was properly noticed and all unit owners have access, I believe (though there is no case law to support this that I am aware of) this would comply with the Florida Statutes.

 So, given the rules just discussed, what is a Board to do? My recommendation is to use electronic communication (e.g., email, group texting) but do so in a responsible and considerate way. Remember, Board meeting rules are established to ensure unit owners may remain up-to-date on association issues. Unit owners are only going to become concerned if they feel their rights are being violated and/ or if the Board is acting secretively or unethically. Given this, when considering a Board Member Electronic Voting and Communication Policy, the Board should worry  less about complying with the exact letter of the law and more about ensuring the Board is acting in a way that unit owners would consider appropriate.

NOTE: If a unit owner files a complaint against the association to the Department of Business and Professional Regulation (DBPR) and the DBPR finds the complaint warranted, the association may be fined pursuant to the Florida Administrative Code. Learn more here.

Board Member Electronic Voting and Communication Policy

As association’s policy regarding electronic voting and communication should be reviewed and approved by a quorum of the Board at a properly noticed Board meeting. This gives unit owners the opportunity to provide feedback and helps to protect the Board in the event a unit owner complains about the policy down the road. As I recommend with all policies, the Board should review and re-approve the policy annually (perhaps at the meeting following the annual meeting given the likely presence of new Board members). In my opinion, this policy should include:

1. A requirement that each Board member and the property manager establish an email account for the specific use of association business. The Board member/ property should be required to stop using the account and provide the association access to the account once the Board member/ manager ceases to be involved with the association. Why do this?

  • This requirement can prove to be very useful when a Board member or manager leaves. As association business with attorneys, CPAs, maintenance vendors and unit owners is often conducted via email, losing all of those records can be detrimental to the smooth operations of the association.
  • Depending on the type of communication, these emails may be considered part of the Official Records of the association and, therefore, the association may be required to keep some of them for up to seven years.
  • Knowing that emails may be viewed by future Board members encourages the current Board members/ manager from saying anything via email that they would not want others to read. Comments made via email have hurt associations during litigation when emails were admitted into evidence.

2. A requirement that electronic communications between a quorum of the Board are only to be used as a means to transmit information and not as a discussion forum. For example, a Board member can send an email to the Board providing an update regarding an association project or providing an opinion on an upcoming meeting agenda item (perhaps the Board member won’t be there). These messages should be in FYI format and should not ask the Board to provide feedback. If an informative email from a Board member elicits a back-and-forth discussion, the emails should cease and a Board meeting should be scheduled. There are no restrictions on communications between less than a quorum of the Board.

3. A requirement that no Board voting take place electronically unless there is no other option. For example, the association’s insurance policies are up for renewal in 5 days and the Board’s next meeting is scheduled for tomorrow. At the time of the meeting, the insurance broker was unable to obtain all necessary insurance quotes. Due to scheduling conflicts, a quorum of the Board will not be able to meet again before the policies expire. Once the quotes are received, the Board reviews them and votes via email to renew the current policies.

These types of situations, calling for an electronic vote, arise from time to time and the association’s Board Member Electronic Voting and Communication Policy should outline how to proceed during and after the electronic vote. Here are some general guidelines regarding electronic voting:

1. Robert’s Rules of Order should be followed as best as possible:

  • A Board member should send an email with a motion to the Board
  • Another member should second the motion in an email to the Board and ask “All in Favor?”
  • All Board members should respond to the Board with a “yes” or a “no” vote

2. The vote should be included on the agenda for the next Board meeting and ratified

3. The minutes should provide an explanation as to why the vote was cast via email and a copy of the email chain showing the Board’s vote should be included with the minutes.

NOTE: You may have heard that Boards are allowed to vote via email so long as the vote is unanimous. This relates to non-profit law (Florida Statutes Chapter 617), which allows for voting outside of a Board meeting if all Board members vote unanimously in writing. Whether this Statute allows for written votes via email (as opposed to a signed document) is unclear. Regardless, for condominium associations the Florida Condominium Statutes (Chapter 718) overrule Chapter 617 when there is a conflict and Chapter 718 does not allow Boards to avoid a meeting by voting unanimously in writing.

I hope this overview of electronic Board communication has been helpful. Our management and consulting firm, VERA Property Management, will gladly draft a Board Member Email Voting and Communication Policy for your association. Please contact us today for a quote.

As always, feel free to reach out with questions or comments.

Emily

Emily Shaw is a condominium homeowner in Tampa, Florida and a Director of VERA Property Management, a firm providing full-service community association management in the Tampa Bay Area as well as consulting, financial and legal services to all Florida community associations. 

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Florida Condominium Association Board Election Procedures: Florida Statute 718.112(2)(d) and Florida Administrative Code (F.A.C.) Rule 61B-23

Posted on January 31, 2014 | 300 Comments

The Florida Statutes, in combination with the Florida Administrative Code (F.A.C), provide specific processes and procedures relating to condominium association Board member elections. These rules have been established to ensure fair elections and to provide all unit owners interested in running for a seat on the Board the opportunity to do so. Failure to follow these procedures not only creates unit owner distrust of the Board but may also result in fines pursuant to FAC Rule 61B-21. Further, the association may be required to repeat the entire election process. This post will outline the Board election process and provide guidance on issues including search committees and campaigning.

NOTE: These rules generally do not apply to timeshare condominiums. Condominiums with less than 10 units are not obligated to follow these procedures. In order to adopt different voting and election procedures , an association must obtain a 51% affirmative vote of the membership.

Regular Board elections to fill vacancies created by the expiration of a Board term must be held at the annual meeting of the membership regardless of whether a quorum is present. Any Board vacancies not filled by an election (e.g., not enough people ran for the Board, a Board member resigns) may be filled by a vote of the remaining Board members at a duly called Board meeting.

 

The Election Process

First Notice of Election

The first notice of election must be mailed, emailed (so long as an electronic consent form has been received) or hand-delivered at least 60 days prior to the annual meeting/ election day. This notice may be part of another unit owner communication such as a routine newsletter. There is no specific format in which this notice must be given but the notice should include, at a minimum:

  • The date, time and location of the annual meeting/ election
  • Details surrounding how a unit owner may become a candidate for the Board (discussed below)
  • Details surrounding the information sheet a Board candidate may submit (discussed below)

If the association fails to properly issue the first notice, the association must restart the notification process.

Receipt of Intents to Run for the Board

At least 40 days prior to the annual meeting/ election, all unit owners desiring to be candidates for the Board must inform the association in writing of their intent to run. Unit owners may send a letter (certified mail or regular mail), an email, a fax, or hand-deliver a written statement. I recommend that the association provide an “intent to run” form for unit owners to fill out. The association must issue a written notice of receipt of the unit owner’s intent to run and may deliver this receipt via mail, email, fax or hand-delivery.

At least 35 days prior to the annual meeting/ election, candidates for the Board may submit to the association an information sheet discussing their qualifications/ reasons for running for the Board. The information sheet must be a one-sided, 8.5”x11” sheet of paper. Associations may use two-sided printing when distributing the information sheets (discussed below) to reduce paper usage.

NOTE: At 40 days prior to the annual meeting/ election, if there are fewer candidates for the Board than spaces on the Board to fill, no election is necessary.

NOTE: At 40 days prior to the annual meeting/ election, unit owners that are more than 90 days delinquent in paying a monetary obligation to the association are not eligible to run for the Board. Further, felons that have not had their civil rights restored for at least 5 years are not eligible.

Second Notice of Election

The second notice of election must be mailed or hand-delivered (electronic transmission is not is NOT an option) between 14 and 34 days prior to the annual meeting/ election day. There is no specific format required for this notice but I recommend that it include:

  • Details surrounding how to cast a vote in the Board member election (discussed below)
  • Details surrounding how to fill out and submit the annual meeting limited proxy
  • Explanations of any specific items (e.g., surplus carryover, year-end financial reporting waive down) on which the association is requesting the membership vote

Along with the second notice, the association should include:

  • The agenda for the annual meeting
  • A limited proxy for quorum purposes (if interested, consider adding the vote to waive down the year-end financial reporting requirement to the annual meeting agenda and add the vote to the proxy)
  • A ballot including only the names of all candidates for the Board, listed alphabetically by surname (ensure all ballots are consistent in appearance)
  • An outer envelope labeled with the address of the property manager OR association (wherever you would prefer the votes go) and spaces for the owner’s unit number, name and signature
  • An inner envelope with nothing on the outside (unit owners that own more than one unit should have an inner envelope for each unit they own)

If the association fails to properly issue the second notice, the association must restart the notification process.

Voting in the Election

To cast a vote in the election, a unit owner must write their name, unit number and signature on the outside of the outer envelope. They must select their chosen candidates using the ballot (nothing else is to be written on the ballot, no write-in candidates are allowed) and place the ballot in the inner envelope. The inner envelope(s) must be placed into the outer envelope and should be mailed or hand-delivered to the association/ property manager. Unit owners may cast their votes using the same process at the annual meeting up to the point that outer envelopes begin to be opened. Once a ballot is submitted, it cannot be rescinded or changed.

NOTE: F.A.C has specific rules for voting machines.

Counting Votes

The vote count must be conducted at the annual meeting in a location that is visible to all attendees. Once all ballots have been collected, the names and unit numbers listed on the outer envelopes will be checked against a list of eligible voting by an impartial committee (i.e., no Board members, candidates, or family members of Board members/ candidates). Any outer envelopes without signature shall be marked with the word DISREGARDED and not included in the vote count. Once completed, all inner envelopes should be removed from outer envelopes and placed in a separate receptacle by the impartial committee. The inner envelopes will then be opened. Any inner envelopes with more than one ballot inside should be marked as DISREGARDED and not included in the vote count. The results should be announced at the annual meeting.

NOTE: In order for an election to be valid, at least 20% of the membership must have voted. If not achieved, the association must begin the election process again.

Runoff Elections

If there is a tie vote that creates the need for a runoff election, the association must send a Notice of Runoff Election during the 7 days after the annual meeting/ election. This notice must include a new ballot listing the tied candidates’ names, the candidates’ information sheets, as well as inner and outer envelopes. All previous voting and vote counting procedures must be followed. The runoff election must be held 21-30 days after the annual meeting/ election.

Fair Election Concerns

If unit owners are concerned that the association is not going to run a fair election, an election monitor may be petitioned using DBPR Form CO 6000-9. The F.A.C requires that the greater of 15% of the membership and 6 members sign the petition.

If a unit owner wishes to challenge an election, they must do so using the Department of Business and Professional Regulation’s complaint form within 60 days of the election results.

Election Official Records

The first notice, second notice, intents to run, information sheets, envelopes, and ballots (including those marked as DISREGARDED) are considered official records of the association and must be maintained for at least one year from the date of the election.

Search Committees and Campaigning

The F.AC is very clear that committees designed to officially nominate potential candidates for the Board (“ nominating committees”) are strictly prohibited. That being said, there is no reason why a Board can not put together a search committee responsible for identifying unit owners that may be good Board members and discussing with them the possibility of running for the Board. Further, there is nothing prohibiting current Board members or the association manger from encouraging certain unit owners to run for the Board.

Campaigning for Board elections is allowed per the FAC and the Florida Statutes; however, it is in the best interest of the Board so set up some guidelines regarding campaigning. For example, the Board may identify certain areas (e.g., an information board in a common area) that candidates can post campaign ads so as to avoid a candidate papering the property with “Vote for Me” posters.

NOTE: The community’s manager should remain impartial as it relates to Board elections. If your manager is telling unit owners how to vote in an election, consider submitting a complaint to the DBPR regarding their behavior.

If you have any questions about the above process, do not hesitate to comment or send me an email. Templates for any of the notices or forms discussed above are available upon request.

Emily

Emily Shaw is a condominium homeowner in Tampa, Florida and a Director of VERA Property Management, a firm providing full-service community association management in the Tampa Bay Area as well as consulting, financial and legal services to all Florida community associations. 

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Florida Condominium Association Board Members Voting By Proxy

Posted on January 29, 2014 | 14 Comments

I recently received a question asking if Board members have the right to vote by proxy. The Board member that posed this question was going to be out of town for an important Board meeting and wanted to know if he could give another Board member a general proxy to vote on his behalf.

According to Florida Statute 718.111(1)(b), Board members may not vote by proxy. Further, Board members not present at a meeting may not provide a vote in writing. The only real option for a Board member that is not physically at the meeting location is to vote via phone or webcam. Florida Statute 718.111(2)(b)(5) requires that Board members joining a meeting via phone must be put on speaker such that all meeting attendees can hear the Board member.

If an absentee Board member is only interested in one particular agenda item, there is nothing prohibiting the Board member from calling into the meeting for that vote only so long as a quorum of the Board is otherwise met.

Emily

Emily Shaw is a condominium homeowner in Tampa, Florida and a Director of VERA Property Management, a firm providing full-service community association management in the Tampa Bay Area as well as consulting, financial and legal services to all Florida community associations. 

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Interviewing a Florida Community Association Management Company: Part 2

Posted on January 28, 2014 | 10 Comments

On January 2, 2014, I posted a discussion of five key questions to ask a potential management company. Click here to review that post. Today, we will look at five additional questions.

1.     Do you have specific vendors that you work with? Do you receive any type of compensation for recommending specific vendors to Boards?

As one of your property manager’s key responsibilities will be selecting vendors to provide work proposals to the Board, it is important to understand how specific vendors are chosen. Often management companies have lists of preferred vendors that they use regularly. There is nothing inherently wrong with this. In fact, having a manager with experience and strong connections to local vendors is an asset. That being said, the Board should do their best upfront to ensure there are no potentially unethical reasons why a manager may recommend a specific vendor. Conflicts of interest may exist if a manager receives any type of compensation (e.g., cash, professional recommendations, networking opportunities) in exchange for using a specific vendor. A common example of a conflict of interest is key players of a management company having ownership interest in plumbing, maintenance, landscaping or other businesses that an association may hire. A more blatant example would be a management company receiving financial kickbacks from a vendor if a Board hires the vendor. Quite a bit of light has been shed on these conflicts in recent years and management companies have been cleaning up their acts. Still, it is worthwhile to ask the question and judge the manager’s response.

 2.     Do you have a set minimum threshold for competitive bidding? Are you comfortable with the Board setting a lower threshold than is required by Florida Statutes?

Florida Statute Chapter 718.3026 requires that any project costing more than 5% of the annual budget be competitively bid. Given this, most management companies do not promise competitive bidding below 5% of the association’s annual budget. For a condominium with an annual budget of $100,000, only projects of $5,000 or more would be competitively bid. For a large condominium with a budget of $500,000, only projects of $25,000 or more are required to be competitively bid. In my opinion, 5% is way too high of a figure. I strongly recommend that Boards vote on a lower threshold project size above which competitive bidding is required ($1,000 may be a good starting point). Further, I recommend that Boards confirm with potential management companies that they will honor the lower threshold. More competitive bidding means more work for the manager so the manager may want to adjust their management fee slightly to reflect this lower threshold.

NOTE: It is also worthwhile for the Board to establish a maximum expense amount that the manager may approve without Board consent. Ask the manager what they typically recommend. It often makes sense for the competitive bidding threshold and the manager approval threshold to be the same.

 3.     Will you be on property to oversee large projects (e.g., painting, paving)? Is there a fee associated with this oversight?

Unless your association has an on-site manager, most management company contracts only guarantee that the property manager will be on-site once per week for 1-2 hours to complete a property inspection. During big projects like painting and repaving, the limited on-site presence of the property manager can leave the Board struggling to meet vendors, review progress, manage parking and traffic patterns, and much more. Many management contracts include a project administration fee (typically 2-5% of project cost) that includes more comprehensive oversight of large projects. This fee is often automatically charged for any projects above a certain dollar amount. Be sure to confirm whether or not there are any additional fees associated with the administration of large projects and clarify what that fee includes. Regardless of whether or not the manager charges a project administration fee, be sure to ask the manager to explain how he/ she will handle a large project that the association expects to take in the near future. This discussion can provide vital insight into the manager’s project management style.

4.     Are you comfortable following Board-approved policies?

As is likely clear to those that have read my other posts, I am a strong believer in Board-directed property management. In practice, this translates into Boards drafting and approving policies and procedures for everything from violation identification and fining, to delinquent maintenance fee collections, to rental or sales applications, to the types of door hardware unit owners may choose for their front doors. These polices create a road map for managers to follow and provide obvious metrics against which the Board can review a manager’s performance. These policies also ensure that the manager is acting within the guidelines of the association’s governing documents and that all residents receive consistent treatment.

Most management companies have their own internal policies, particularly relating to maintenance fee collections and violation identification/ fining. They tend to use these same policies and same form letters for every community. For example, the manager’s internal policies may dictate that if a unit owner is more than 90 days past due in paying maintenance fees they are automatically sent to the association’s attorney to have a lien placed on their unit. This may be what the Board prefers. On the other hand, the Board may prefer a different approach (e.g., attempting to work out a payment plan or attempting to garnish rent from a tenant before placing a lien). Because their processes are streamlined and generally applicable to all properties they manage, certain management companies may be reluctant to change their policies for your community. If you are the type of community that wants control over how the day-to-day operations of the association are handled, be sure that the manager is willing to follow all of the Board’s policies and procedures. If you are unsure of how important this is to your Board, consider asking the manager for a copy of their internal policies and reviewing them to determine if they are in sync with the Board’s perspective.

5.     How big is your accounting team? What are their qualifications?

As all management companies offer a standard accounting package, many Boards tend not to focus on this aspect of a potential management company. Given the importance of quality bookkeeping, I strongly recommend that the Board take the time to learn as much as possible about the manager’s accounting team. Ask specifically about the size and qualifications (any CPAs on staff?) of the accounting team. Further, request draft financial statements and confirm that the manager is willing to provide customized accounting reports at the request of the Board. Lastly, confirm that the Treasurer of the Board will be able to deal directly with the accountant(s) assigned to your association.

 

As always, feel free to comment below or shoot me an email.

Emily

Emily Shaw is a condominium homeowner in Tampa, Florida and a Director of VERA Property Management, a firm providing full-service community association management in the Tampa Bay Area as well as consulting, financial and legal services to all Florida community associations. 

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