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The Smart Board & Property Manager Legal Guide: Effectively Dealing With Covenant and Rule Violators

Alan Tannenbaum, Esq.:

Welcome everybody. This is Alan Tannenbaum, Tannenbaum, Lemole, and Hill. I'm here with my partners, Cindy Hill and Jon Lemole and our associates, Jim Turffs and Destinee Small. We're going to run today's session primarily as a panel. So we're going to each be chiming into a degree on all the topic matters, and today's session is about effectively dealing with covenant and rule violations. Send your questions through chat. We're going to mute everybody during the session. We will attempt to deal with your questions during the session. We will go on after noon. If there's a number of questions to be answered, we'll continue on past the noon hour. And this presentation will be available on our website probably about a week after we're completed. So if you want to share it with anyone, that would be the place to do it.

So as an introduction, one of the most difficult things for community associations is to enforce its covenants and rules and regulations. It's become even more difficult in the last few years based upon a decrease in the civility in society in general. There are more obstinate owners who don't want to comply with rules. People have emphasized their individual freedom over governmental oppression, and it certainly has impacted also in the community association field. And I'm sure what you'll hear today from some of our panelists is there are situations that are just very difficult because of the individuals involved. But we're going to give some tips on really how to mitigate some of the challenges that you're going to have in enforcing your rules and regulations.

So these are the topics we're going to cover today, which basically covers the gamut of covenant and rule enforcement. And I'm going to start and bring on my partner, Cindy Hill, to talk about establishing clear restrictions and processes and the documents and in the rules and regulations. Cindy, you're on.

Cindy Hill, Esq.:

All right, thank you, Alan. Okay, so even though this is going to be more of an interactive presentation, I'm going to start with some of the basics here at the beginning of the presentation so that we're all on the same page, so to speak, before we start getting into the more substantive discussions. So there's an important distinction between use restrictions or what is also called covenants, and then board-created rules and regulations. Your use restrictions or your covenants are going to be the use restrictions in your declaration of condominium or your declaration of covenants of your homeowner association. So those are generally going to be parking limitations, maybe some limitations on pets. If you're in an HOA, limitations on fences. Those are going to be in your recorded declaration of condominium or declaration of covenants or restrictions.

Those use restrictions in covenants have a strong legal validity when challenged in court because the court deems the purchaser to have notice of those restrictions before they bought the property. The fact is that no one buys a property being forced to do so. When you buy a unit in a condominium or you buy a lot in an HOA, you've made a decision to purchase that property and the court deems you to be making an informed decision about purchasing that property. So those recorded restrictions that are in declarations are given a high presumption of validity.

Now of course, there are the conversations where people say, "No one told me. I didn't know." But that's a different conversation. For this opening here, I want to distinguish between those recorded covenants and restrictions and then what can be board-created rules and regulations. Board-created rules and regulations can be, the example I like to give that's the easy one to process. For instance, if you have a community pool, the pool rules. The board can create the rules for the use of the community pool. Those are not the same concerns as parking, pets, fences, other issues. These are rules that just make sure the pool's being used in a manner that's not only consistent with state and county requirements, but also consistent with your community and the noise levels, the use levels, the size of the pool, all those factors.

So board rules and regulations can be very useful for those rules that are more about the day in, day out that aren't rules that necessarily would stop someone from purchasing a property if they knew about them. But they cannot be in contradiction with your use restrictions and covenants. You cannot have a contradiction there. So your board can't be overreaching. For instance, if your declaration of covenants or condominium doesn't say anything about pets, you cannot create a board rule that says no pets or only two pets or pets are limited to 30 pounds because there's nothing in that declaration limiting pets. And again, I'm trying to give some broad examples here so that we're all on the same page going forward. I know there's going to be a lot of questions about some of the nuances of these issues.

Board rules and regulations are also subject to a test that's been established by the Florida courts for decades. And going back to, well, does the board acted within the scope of its authority? The number one part of that test that's listed on the slide, meaning is there even any authority for the board to create a rule about pets, for instance? I even see some documents that don't even give the board authority to create any rules, period, or maybe just give them the authority to create rules for the common areas, but not for the units or the lots. So that's an important distinction that really is essential that you know that legal counsel has guided a board on that issue so that you don't lose any rule enforcement concern over the fact that you just didn't even have the authority as a board to start with the rule.

And then the second part of the test, is the rule reasoned or is it in contrast arbitrary and capricious decision making? Usually a board rule is going to be deemed reasonable and reasoned if it has the interest in the safety and welfare of the community, if it's consistent or industry standard with many other communities. In contrast, it's going to be arbitrary and capricious if it seems to have no real value or is maybe even meanly targeted at certain people or certain activities on the property.

Similarly, ACC or ARC, architectural rules, although those might be created by a committee or the board, you have some of the same similar concerns there. Generally those rules are to help assist in determining, for instance, what colors of paint you can use for certain improvements to your home or types of construction material or permitted plants. But again, you need to step back and make sure that the ACC has the authority to control those colors to offer the limitations on plants or the construction materials. So I know that's a lot to take in in a very short few minutes there, but those are the big picture considerations for the differences between use restrictions, covenants, and board or architectural rules and regulations. So moving on to the next slide.

Alan Tannenbaum, Esq.:

Cindy, there's a question whether rules and regulations have to be recorded.

Cindy Hill, Esq.:

There was some confusion on that at one point. There were changes to the homeowner association act that seemed to imply they did. That was not the intent of the legislature. They came out and changed that and said that that had not been their intent. So there was a time period going back a couple years. I lose time in COVID. It might've been three years, where the position was you did need to record them. The legislature changed that reading, specifically changed that statute. So no, unless there is a particular requirement in your community's documents, there is no statutory requirement to record rules and regulations for either a condominium or a homeowner association.

Jon Lemole, Esq.:

Cindy, are the rules and regulations, and this is a question in the chat, are the rules and regulations enforceable to the same extent as the, let's say, the declaration or provisions, restrictions in the declaration?

Cindy Hill, Esq.:

Well, presuming that the rules and regulations were properly created and are reasonable, yes, they are. So again, you want to make sure that your rules and regulations have been vetted, so to speak, by legal counsel to make sure that you don't lose enforcing a rule because you just didn't check all the boxes, which is what I'm getting to with slide two, enforcing your rules and regulations. This is an example of an arbitration case before the division of condominiums up in Tallahassee. For those of you who don't know, there is an arbitration section, and we're going to discuss some of that in this presentation that does hear certain condominium disputes.

And this case is an example of a potential enforcement problem with drafting restrictions or rules. And this particular condominium, there were board rules that stated, and I do have them listed on the slide and I'm summarizing the important parts for the discussion, that driveway and sidewalk areas must be pressure cleaned as required and that driveways may be stained in a light tan color. This case were involved a number of violations, but for this one on point, the driveways. The association claimed that the respondents, the owners, were leaving their driveway discolored from staining.

And the association requested an order from the arbitrator requiring the respondent's owners to "clean the driveway of all oil stains and if the oil stains cannot be removed through cleaning, to submit the proper application to stain the driveway the approved color." That's the end of the quote. The association also took the position that the owner should replace their driveway if the stains could not be completely removed. So what did the arbitrator do with this? Next slide. This is a bit of a long read here, but I think it's important for understanding how rules may not play out the way that a board intended to understand this one. Go back to the next slide, Alan.

Alan Tannenbaum, Esq.:

All right, there you go.

Cindy Hill, Esq.:

There we go. This is what the arbitrator said. "It is undisputed that respondents, the owners, caused their driveway to become stained. However, nothing in the association's rules or other governing documents make it a violation for a homeowner to have stains on his or her driveway. All the rules require is that a driveway must be pressure cleaned as required. The undisputed evidence is that respondents have pressure washed their driveway numerous times, that they intend to keep doing it, that the stains got better with each pressure washing, and that the respondents wish to stain the driveway a gray color to remove the stains, but the association denied their application to do so. Respondents have in good faith tried to remove the stains and intend to continue trying doing so. The arbitrator concludes the association failed to carry its burden to provide that petitioners violated the rules by causing stains to occur on the driveway."

And then in a footnote to this paragraph, importantly, the arbitrator adds, "Moreover, even if there were a violation, nothing in the rules or governing documents give the association the right to require a homeowner to pay or have his or her driveway demolished and re-poured." So the arbitrator gave a pretty hard no to the association here. So what are the takeaways? Be sure that the rule requirements you have are consistent with enforcement demands. Here there was no basis to demand the complete removal of the stains or to replace the driveway and noticeably not to replace the driveway. There's nothing about that. What's the other takeaway here? Be reasonable. Here the rule allow the driveways to be stained a light tan color. But notice that the arbitrator mentioned that the owner wanted to stain the driveway a gray color to cover the stains. The arbitrator brought that up. While we cannot know why, it does seem that the inference can be made that it was not reasonable to only allow a light color that would not cover the stains when a darker color might've done so.

So I hope that this example serves to give some of the what might be unperceived pitfalls and what seemed to be a pretty straight-up situation, a stained driveway. But pitfalls and rules can be a lot more complicated than this example. Unless there are questions, we can move on to the next slide, which is the very last part of my opening before we get into the more meat of the matter, so to speak.

The last consideration then is your Fair Housing violations. We could speak for a whole hour, if not two or three, about the violations of the Fair Housing Act that can occur in condominium and homeowner associations. But these are just some of the examples to be cognizant of if you're making board rules. There are federal courts who have ruled against associations who had rules against playing. Well, you think, well, why might that be a problem? No playing in the stairways, right? Well, playing implies children. So when you are making rules governing what might be a poor use of the stairways, let's say, you want to be careful to say, instead of saying no playing in stairways, maybe no running. No use of sporting equipment. No loud activities. Don't use playing.

A similar restriction is having a restriction on toys. Again, implies children. Can be discriminatory against families. So instead of saying toys, no use of toys in a certain area. Say no use of skateboards, no use of bicycles, no use of pool floats, whatever the item is. Don't use toys. Don't use playing. Rules prohibiting noise that targeted against children can be a problem. If you are limiting noise in an area that's primarily used by children, such as an open green area where they play or a playground, that can be problematic. Rules limiting the times or areas where minors can use the amenities such as a adults only time at the pool from 2:00 to 4:00, let's say, every day. You can't limit the use for families to use the pool in the same manner that everyone can. All these, by the way, are accepted if you're an over 55 community. That's the legal exception.

And then finally, rules requiring that minors be supervised by an adult. A lot of people think that that's pretty much a no-brainer. You can require that. No one would disagree, including the federal courts. You're talking about a toddler. But if you're talking about kids 14 and older, you're really getting into a danger zone and that those kids, federal courts have deemed to be old enough to not necessarily need adult supervision. And that the answer to that is just if a particular child is problematic and acts in such a way, that you can demand that that particular child's parents control that child. But you can't just make a blanket limitation. So I've exceeded my slotted time for our opening here, and I know there's a lot of questions. So Alan, do you want us to proceed on to Jim or how?

Alan Tannenbaum, Esq.:

Yeah. I'm going to bring on Jim Turffs at this point. And next several portions of the presentation are going to be about tips for better enforcement. And Jim's going to talk first about the importance of educating the membership about what the declaration requirements are and what the rules and regulations provide for the community. So people in theory are not surprised when they get contacted or get a letter about an enforcement situation. Jim, take it away.

James "Jim" Turffs, Esq.:

And as Alan and Cindy have both talked about, you get this great set of rules. You've got your bylaws, you've got your declaration. But when I'm talking about rules and restrictions here, we're also going to be talking about your rules and regulations, your architectural guidelines, all that great stuff. You put that all together, you've got the framework to run a really great community. But of course, if your members have never read it, doesn't do you a lot of good. So one of the key things that an association can do is make sure that your members are getting copies of these rules and regulations, of bylaw amendments, of declaration amendments. And as you pass those things out and as you make those more available to the unit owners, you're going to start to get more compliance. People will have a better grasp of what restrictions they're living under. And of course it helps when you're dealing with owners who are in violation.

So as the default right now, if we're talking about a covenant enforcement action, you've got an owner who's violated a rule or an architectural guideline. If anybody's been through that enforcement process, they have certainly seen the owner go, "Well, I didn't know that was the rule. Nobody ever told me." And the current rule in the courts is adopted that old cliche, ignorance of the law is no excuse. The courts will tell that owner, that defendant, once you get to that point, "Too bad. You took ownership in an HOA. You took ownership of a condo. It's your responsibility to go out and understand what you just agreed to by doing that."

That's really helpful once we get there. But of course, for every group of owners who's sitting there going, "Oh, I didn't know." There's actually a group in there, a subset of what I like to call innocent violators. Those innocent violators really wouldn't have painted their house green if they knew there was an architectural restriction that said you could only do it white or gray. And so for those innocent violators, keeping them educated would actually save them from violating in the first place. So it's always a best practice for an association to make their documents. And again, by documents, I'm not just talking about your declaration and those amendments, but your rules and regulations and those architectural standards.

Make those available for your unit owners. You're going into a board meeting or a members meeting, keep a stack of governing documents with you to hand out for people who need them. To some degree, condos have a requirement now to keep their governing documents available on their website as long as they have 150 or more units. But otherwise, there's really no obligation at the moment for associations to provide those documents to the owners. But you still should. And-

Alan Tannenbaum, Esq.:

What about a new member package? You, as new owners, come into the community. Do you recommend that the association give a welcoming letter and-

James "Jim" Turffs, Esq.:

Absolutely. That's a great practice.

Alan Tannenbaum, Esq.:

... advise them of what the general rules and regulations are and so forth?

James "Jim" Turffs, Esq.:

Absolutely. That's a great practice. That's a very first step. And I've even seen some associations that make new owners sign a document saying, "We've received the governing documents at this point." And again, very helpful. I mean, at that point, it eliminates that violator's ability to say, "Oh, well, I didn't know." And that also ties into what I was going to get to next here with the new proposed bill, House Bill 59. Sister bill is the Senate Bill 50. And this is not a law yet, may never become a law. But if it does, what it requires in its current version is that HOAs, and this is specifically designed to address 720 HOAs, like I said, 718 condos already have some requirements similar to this.

But the change to 720 would require that associations provide a copy of all the governing documents to all current members before October 1st of this year, and then also provide copies of those governing documents to every new purchaser as they buy into the community. So that ties into that welcome packet. If this is enacted as law, it would be more than a voluntary submission to the owners. It would be a requirement. Now that proposed bill does allow for e-distribution. Under certain circumstances, posting on your website's going to be sufficient. If people consent to receive notices through email, you can email them the governing documents.

And so on top of everything else, it's also really important to remember how technology makes it a lot easier now to give your governing documents and those rules and those architectural rules and the changes to them just via email. And it's certainly becoming more prevalent. We're seeing a lot more associations having owners sign email consents. So a lot of things just being sent out by email anyway. So going forward, it's a best practice I think for associations to just make your governing documents and rules, regulations, and especially changes to them over time, available to the ownership so that they can honestly, at least the association can honestly say, "Ignorance really is no excuse. We've informed you. We've given you every opportunity to learn this, and you have no excuse not to comply with our rules."

Alan Tannenbaum, Esq.:

We'll get to as many as we can. But Destinee, you're going to talk about attempt to resolve violations first in an informal non-confrontational manner.

Destinee Small, Esq.:

Yes, I am. Thanks so much Alan. So yes, I'll be covering attempting to resolve violations in an informal manner, meaning before an official notice is sent or before contact between an owner and legal counsel is initiated. So this section is a little bit different because rather than understanding statutory guidelines here, the most important part of informal contact is actually understanding just basic human nature and the context of each specific situation. So it's important to understand that informal communication is great, but when possible. But it's just simply not always possible to do. So for example, if an immediate health or safety risk is present, then informal contact is likely not the best starting route. Similarly, if an owner is a repeat offender and non-confrontational, likely did not work in the past and would not work in the current situation.

But generally board members are in the best position to know if it even is possible to resolve these violations in an informal manner. Board members will know the context of the owner's previous interactions and whether that owner has previously been violent or hostile, for example. And in that case, we would recommend that that owner receive a formal letter right away. So now that we've covered when informal communications are likely not possible, let's discuss when these informal communications would generally work. It's important to understand that informal and non-confrontational contact provides the board with very broad discretion. However, informal contact does not mean just showing up to an owner's front doorstep. It can mean contacting an owner via email, a phone call, a friendly reminder from management. It can even be a private interaction after a board or member meeting if that owner is in attendance. But what's important is gauging these interactions and reading context clues. That's vital for the board before and even while engaging with an owner in informal contact.

So generally, if you have to second guess whether that informal approach will work with a particular owner or if you've just never had any interactions with an owner, if you don't have enough information on their previous behavior to make an educated guess as to whether the owner would be even open to informal interaction, then it is likely better to simply start with just a formal route. But again, all of this, it requires a circumstantial context. So just in general, a lot of personal judgment is involved and each of these previously mentioned factors to determine whether or not informal communication will work is all relative. So it's up to the board to use human judgment and understand the correct context to determine two things. First, is the friendly approach even proper in this situation? And then number two, if it is, what route are we going to take? How are we going to do that informal interaction?

Alan Tannenbaum, Esq.:

All right. Thank you, Destinee. We're going to move on to the next topic, really important of uniformly enforcing the rules and regulations and the covenants because it brings up a potential defense for against enforcement. Jon, take it away. Jon Lemole.

Jon Lemole, Esq.:

Thanks Alan. Yeah, so eventually in the life of an association, there comes a time when you've exhausted all the possibilities of trying to resolve a problem in the community with a particular owner, and you've got to ratchet it up a little bit and take the next steps. One of the things that, and I know this may sound a little bit, and I don't mean it to sound trite or denigrating in any way. But one of the things that I as a parent of four kids, and Alan also has four kids and we've discussed this in the past, is you have to look at the owners in your community almost like the way you would look at your children if you're a parent. I mean, how many times as a parent has the lack of uniform application of the rules and regulations and expectations come back and turned the tables on you?

So when you're dealing with your owners and you're dealing with restrictions and covenants and rules and regulations and so forth, one of the guiding principles in your community has to be uniformity of application. There's a number of reasons for that. Apart from the practical considerations is that people need to have an understanding that everybody will be treated the same. There are some serious legal implications that can result from the lack of uniform application of your covenants, restrictions, rules, and your lack of uniform application of your enforcement procedures. We call this in the law, you'll hear the term from time to time something called estoppel, and that is a huge defense. If you find yourself in a situation where you are having to bring some enforcement action, whether it be in arbitration at the DBPR or whether you have to even go to the most drastic step, which is filing a lawsuit against an owner in your community.

Estoppel is a legal defense, which essentially means you are held to your past conduct. If you did something in the past and the person has relied on that conduct, that's a defense. And so I've got up here on the slide, two important cases in Florida that have addressed that issue. Probably the most important case is the first one that I've cited there. It's a case called White Egret Condominium versus franklin. That was a Florida Supreme Court decision from 1979. And what was going on in that case is that an owner in a condominium had children residing in the condominium and there were rules regarding children residing in the community. And unfortunately in that community, in that condominium, there were other instances where the board did not uniformly apply those restrictions. And so the court held that condominium to task for that. And the quote that I've put up on the screen, and I'll read it.

"At the time Marvin Franklin," Mr. Franklin was the condo unit owner, "purchased his condominium apartment, at least six other children under the age of 12 were living in this condominium complex. Further, the record reveals that the six children were in two separate households and that some of the children were substantially under the age of 12. We agree with the district court's finding that this constituted unequal and arbitrary enforcement of the restriction. Although the restriction was reasonably related to a lawful objective..." In other words, the court is saying there, they may have been able to enforce this restriction under general circumstances. In this case, the White Egret Condominium was estopped from enforcing or selectively enforcing the age restriction. And so that case in 1979 was what really solidified this estoppel defense. And so if you're going to bring an enforcement action either in arbitration or in circuit court against a unit owner, you better have a real understanding of how you've applied that particular restriction in the past, and you better be certain that you haven't turned a blind eye to other violations of that.

So another good example of this concept is in another often cited case called Plaza del Prado Condominium Association versus Richman. This was an... Can you go back, Alan? This was an intermediate appellate court decision, but it's very often cited. In fact, it was a 1977 case that was cited in the White Egret Florida Supreme Court decision. This is a case where a unit owner wanted to make some changes to their terrace railings and they were denied the ability to do that and they ended up suing or making those changes and they ended up getting sued by the condominium association. The quote I have here is that, "The record also reflects that the defendant's brother," Mr. Richman's brother, "who owns the unit directly below him, had previously been granted permission by the developer/owner to make the identical changes to his terrace railings. Further, other unit owners were also permitted to make changes to their terrace railings with the permission of the owner/developer or the association. Based on this evidence, the condominium association is a estopped from claiming any lack of compliance with the bylaws."

So again, that's a situation where the association had allowed something in the past, decided that in this particular instance they weren't going to allow it, and the court prevented them from enforcing that restriction. There's another aspect to the Plaza del Prado case, and that raises another issue with how you enforce things, and that is something called... It's an equitable defense called laches. It's a time-based defense. So another part of that decision, the court said, "Under the circumstances, we also point out that the condominium association was under a duty to assert itself sooner than one year after the defendant's alleged violation of the bylaws." So two things we get from this case, uniformity of enforcement, uniformity of how you apply your restrictions, your governing documents, your rules of regulations. That's number one.

Number two, in those instances where there is a violation, you need to do something about it. Now, there's this five-year statute of limitations, but there is an equitable defense and that was raised in Richman called laches. And so even though you may be within the statute of limitations, if you sat on that issue and the other person relied upon it to their detriment, the unit owner or the lot owner relied upon it to their detriment, maybe evidence was no longer preserved or some other thing that caused some prejudice in the case or to their ability to defend the case, you may be faced with also a defense based upon your lack of pursuing that in a timely manner.

Now, I'm going to leave you with one thing. We know that in the history of various communities, there's been lax enforcement in the past. That doesn't mean that you cannot enforce things more robustly in the future, but what you need to do is you need to basically put the word out to your community. Whatever may have happened in the past, we are not going to do that anymore. We are going to strictly enforce our rules and regulations and our governing documents. So if you're in a situation where there are things that you now want to enforce robustly that were not enforced so robustly in the past, one of the best things you can do is inform your entire community that going forward, this is the standard so that everybody's on notice of that and you can successfully avoid a defense of lack of uniform enforcement of your rules, regulations, restrictions, and covenants.

So with that, we are now going to go back to Cindy and she's going to talk about setting clear deadlines for compliance, making clear demands for action when you're in that situation that you have to move forward in your enforcement timeline.

Alan Tannenbaum, Esq.:

And Cindy, keep in mind that we're a little bit behind time, so let's go through this as expeditiously as possible.

Cindy Hill, Esq.:

No problem, Alan. I plan to do so. There are a lot of questions in the chat about how you make sure that owners and tenants do know about rules and regulations. So following up on what Jim has said, another opportunity you have here is when you do send out the violation letters. I see some violation letters that are sent out where it just says, "You need to fix this and this is why." And it maybe even says, "Pursuant to rule 3.5F." But it doesn't actually write the rule in the letter. I'm of the opinion that putting the actual violation, the covenant or rule that's being violated, putting it in the letter will go a long ways to helping any arguments about, "I don't understand why I need to do this," coming from the owner or the tenant. Or, "I don't understand why you're telling me to do this." Or, "I don't know anything about these documents you're talking about."

Because the other problem I see is a citation of let's say rule 3.5F. That's a typo. It's actually 4.5F. So I'm a firm believer in actually putting the rule or a covenant being violated in the letter or you can print from the page that it's in the declaration of rules, attach it, highlight it, but make sure that the owner or tenant is seeing that rule because that's again, another opportunity to get rid of these arguments that nobody told me I didn't understand. So that's clear demand part of it.

Clear deadlines. Are there specific deadlines in your documents for which owners have to undertake action for violating? If so, you're going to want to follow those because otherwise you're opening up a door to a counterargument being you didn't even follow your own declaration and demanding that I fix this or your own set of rules. You don't want that coming back from an owner or a tenant. And by the way, if you don't like those deadlines, if you think they're too short or too long, well, get with your counsel and consider amending them. But do look in your documents to see if there are set deadlines that tenants have the opportunity to, to correct actions.

So next, what timeframes for corrective action are reasonable? Well, 10 days seems very reasonable to ask someone to get a boat out of their yard but not to put a new roof on their house. So not only do you want to consider industry standards in terms of what other communities would be asking, and you want to be consistent with that, but you want to be thinking about the actual demand you're making. And particularly after we had hurricane damage in this area, the fact that people couldn't even get contractors to make certain repairs for months was something that was frustrating to some communities, but really did need to be recognized because those are legitimate concerns.

Finally, should a demand letter threaten next action if the owner doesn't fix it? I'm a firm believer in, don't make a threat you're not willing to go through with. So if you don't actually want to sue an owner as an association, don't threaten you're going to sue them. If they don't take next action, you just say the board will take the next legal steps it determines in its discretion. You can put something in a letter, counsel can do that for the board, where it's going to be clear that the board's not just going to let it sit. But don't say you're necessarily going to sue someone or take them to pre-suit mediation or fine them if you're not prepared to do so. So Alan, that's my two-minute spiel on that slide so that we can move forward.

Alan Tannenbaum, Esq.:

I think on this topic following through, I think Cindy hit that correctly. The boards are in a difficult situation. You don't want to seem too top-heavy. You don't want to be running a fascistic dictatorship in your community or have the owners have the impression. But at the same time, if you're too lax, owners are going to feel that they can violate the rules with impunity. So give people an opportunity to comply, send them a very clear directive if they don't. And if they still don't comply, take action and follow through. That's the only way that you're going to have an opportunity to have a reasonably controlled community where everybody can enjoy the property. And Jim, why don't you say a few words about fining? We have several questions about fining. Why don't you set forth what the parameters are?

James "Jim" Turffs, Esq.:

Sure. And of course we could probably do a whole presentation just on fining in general. So I'm going to hit some really broad notes and we'll head back into the chat to try to get more specific answers. But broadly, both 720 and 718 have very similar if not completely identical fining statutes. When your governing documents authorize you to levy fines, and yes, your governing documents, your bylaws, or your declaration somewhere in there has to say, "The board can levy fines." Once that authority is given to the board, they have to follow the statutory guidelines. There's very little room for deviance in there. You can come in and say, "The statute says I have to give you 14 day notice before a hearing. Here I'll elect to give you 21." I can be a little bit nicer to you via modification in my governing documents, but I can never be more strict than what the statutes say.

You can alter the fee cap, the fine cap. Each statute says there's $1,000 cap. Currently, by amendment you can waive that and you can increase that, but that does require an owner vote to supersede that limit. You have to be very careful when following that statutory process. When you have a strict statute like that, the courts are going to hold you to it very closely. So if you do deviate, if you give 13 days notice before a hearing instead of 14, if you levy a $1,200 fine when in fact you were only allowed to levy $1,000 fine, not only do those fines become invalid, but if you attempt to enforce them in court, the owner's going to get a judgment in their favor and you're going to have to pay your attorneys and you're probably going to have to pay their attorneys for having to defend that action.

So when it comes to fining, make sure you have the authority, make sure you follow the statutes as closely as possible, and be very careful before you elect to go forward and certainly consult with counsel at any point where you have any questions. It's a daunting process. There's a lot of legalese in the statute, but once you get the hang of it, once your lawyer explains that process to you a little bit more, you'll find it's not that difficult. So those are the very broad notes about fining, and I'll jump back into the comments here in a minute. I'm also going to go on to the next section as well. So...

Alan Tannenbaum, Esq.:

Yeah. I did see one question about whether you need to have a fining committee in order to exact fines. I guess the issue is can the board be the fining committee itself? How is that done?

James "Jim" Turffs, Esq.:

Yeah, and in fact, no. Both statutes require a fining committee and they require the fining committee to be comprised of people who are not on the board and are not married to board members and things like that. So a fining committee is required. It has to be a somewhat neutral board in order to ensure the fairness of the process. The way the statutes are set up is to give what is really due process rights to owners who are facing monetary damages here. So it becomes a small court process in and of itself. So you have the right to notice. You have the right to essentially an impartial committee to review your fine, and that committee is the one who ultimately decides whether your defense is valid and whether that fine is enforceable or not. So no, do not let your board become its own fining committee. You'll be in trouble.

Alan Tannenbaum, Esq.:

And there was a corollary question that if the board can't get anybody to serve on the fining committee, that association I suppose is not going to be able to exact fines. 

Cindy Hill, Esq.:

That's right, Alan. I'll just jump in there because I get this complaint a lot where we can't get volunteers. We can't get people who want to be on the fining committee. Well, it's a requirement. There's no getting around it. If you can't get the volunteers, fining is not going to be an option for your community. And there are other enforcement options, fining's just one of them. So not being able to fine doesn't mean you can't enforce your covenants or your rules, but it does mean you're not going to be able to fine.

Alan Tannenbaum, Esq.:

All right. We're going to quickly move to the last segment, which you could probably do a whole program on this one to., and I'm going to ask Jim and then Jon a very quick overview of what happens. All the attempts have been made, the letters have been sent, and now it's time to go to either mediation, arbitration, or the court system. What do the statutes require?

James "Jim" Turffs, Esq.:

So that also dovetails into that question, what do we do if we don't have a fining committee? Well, assuming the violation is ongoing, you still have these other enforcement mechanisms. And so I'll go a little out of order and start with arbitration. Arbitration used to be the go-to method for resolving use violations. DBPR had a program set up. You as the association would mail in your complaint about what this owner has done after you've gone through all the pre-suit stuff, the owner would send in their answer, the arbitrator would read everything and usually just issue a written decision. It could get more complicated than that, but that was really the typical process.

However, over time the number of complaints that were coming into arbitration really started to skyrocket. Resources for the DBPR started to dwindle. And so the statutes have recently been changed to focus more on pre-suit mediation. So DBPR now is really going to only arbitrate, at least for HOAs, election disputes, recall issues. Every use violation is going to be subject to pre-suit mediation. So under the statutes, pre-suit mediation is required if you want to preserve your right to attorney's fees at the end of an enforcement action. So you at least have to make the attempt. You have to send out a demand to the owner saying, "Here's our demand to pursuit mediation." The statutes have that whole form laid out. We send that, we schedule the mediation. Mediation-

Alan Tannenbaum, Esq.:

Will that apply, Jim, to condo and HOA?

James "Jim" Turffs, Esq.:

It does. 718.1255 is also relying very heavily on pre-suit mediation now. Basically the DBPR is trying to wash its hands of that and put it more into the cooperative person to person resolution here, which is really what mediation offers, a chance for the board or at least some board members to get into a room with the owner, lets both sides talk to each other directly or not depending on the circumstance. Sometimes you end up in different rooms with the mediator translating for you. But once you get that conversation started and you get the people in a room, we find very good success in mediation. And that's because when you're in arbitration or when you get to the court system, judges are only able to award money or force the owner to do something.

When it comes to mediation, you can be a lot more creative. You can say, "Hey, the owner concedes that this improvement has to go away." But the [inaudible 00:45:35] say, "Right. Well, we'll come in and we'll pay to tear it out for you." That's something that a court couldn't do, and under certain circumstances, that's the quickest, cheapest and best way to resolve an issue. So mediation is great. At the end of the day, if you don't reach an agreement, you're free to go onto the courts. But if you do reach an agreement, all the parties sign a contract right there in the room and that makes it a lot easier to enforce if somebody still doesn't do it.

So let's say you have a mediated settlement agreement where your owner is agreed to tear out an improvement. 30 days or whatever timeline passes and they still haven't done it, now the board has a contract where they can just go right to court and say, "I don't need to prove the violation, I don't need to do anything else. I just have to show you that this owner said they were going to tear it out. They didn't. Now I need a court order to force them to do that." So it simplifies the process. Most of the time that doesn't happen. When a party agrees to a deal, they usually mean it. And so compliance almost always follows a mediated settlement agreement and it provides a great option. But at the end of the day, even arbitration decisions and mediation may require court involvement and that's where I'll let Jon jump in to talk a bit more about the circuit court.

Alan Tannenbaum, Esq.:

Jon, a couple minutes, just a general thought on what the litigation process is about in covenant enforcement.

Jon Lemole, Esq.:

Yeah, sure. As unpalatable as it may be, there are times where the association may have no choice but to go access the court and step up the enforcement action into litigation. That is a case that is like any other litigation. It's a time-consuming, long, lengthy, most times expensive practice. In a typical circuit court action to enforce the covenants, the governing documents, rules and regulations, whatever they may be, the association would be bringing an action for a mandatory injunction, injunctive relief. That is an action which is tried in front of a judge, not a jury. But despite that, like any other litigation or it is the same as any other litigation and so the association needs to make that decision with due deliberation. But again, there are times where it's just you have no other choice.

Now the one good thing or the one thing to keep in mind about litigation is you have to go that route is that both the condo act and the homeowner's association acts provide for prevailing party attorney's fees. If you are the prevailing party, if you're the association and you win that lawsuit, you prevail in that lawsuit, then you have the opportunity to recoup the fees, the attorney's fees that you expended to bring that action. That's not normal in American litigation. But in the case of community associations, that provision is there. To get back to the pre-mediation part of this, that's why the pre-mediation step is really very important because if you ask for pre-litigation mediation or pre-suit mediation, if the unit owner or lot owner does not take you up on that, they lose. They may lose their ability. Even if they won in litigation, they may lose their ability to seek reimbursement of their attorney's fees. On the contrary, if the association wants to preserve its ability to seek attorney's fees in litigation, that pre-suit mediation step is vitally important.

So when we get to that stage in our office where the violation just has not been able to be resolved by all of the other means that we've been talking about or have been exhausted, then the first thing we do is a pre-suit mediation demand to preserve all of our rights regarding attorney's fees and also hopefully, as Jim said, to try to resolve the matter. And if that fails, either the unit owner or lot owner doesn't take you up on that offer or they do and you're just not able to resolve it, you have to take that next step of enforcing it in court. Again, you've done everything that you need to do in order to preserve your right to recover attorney's fees assuming you win that enforcement action.

One other thing because there's a question in the chat I want to address, what if the association doesn't follow up on a violation that somebody else has alerted the board to? An association needs to keep in mind and a board needs to keep in mind that its prime duty is to enforce, besides operating the community, is to enforce the governing documents of the community. If the board just turns a blind eye of violation, then the board is and the association is at risk. A unit owner or lot owner may be able to sue the association to force the association to enforce those governing documents. And that is a case again, where if a unit owner or lot owner prevailed in securing a court order for the association to enforce its governing documents, again, attorney's fees are a real risk there. So these are all very, very important considerations. They should not be taken lightly. You should be consulting with general counsel when you get to that stage where all other efforts have failed and now you need to step up your game. Don't do it without some guidance from general counsel for your association.

Jon Lemole, Esq.:

Alan, there was a question, I flagged it and I forgot to raise it on what I was just saying. So someone asked a question, well, what do you do in the situation where another resident sees a violation but doesn't want to put in a formal complaint, doesn't want to put something in writing, doesn't want to be known, doesn't want their identity exposed? What can you do about that? That happens really often. We see it a lot. People just don't want to create a bad relationship with their neighbors. So they may see something, they may report something confidentially to the board, but they don't want to really be formally involved in the process. That makes it very hard to enforce.

You may be able to get away with some basic enforcement tools like, hey, we've got information that this violation is taking place. A cease and desist. We demand that you stop. But if you really want to step up your game and you have to follow through on this, especially if you have to follow through in litigation, court cases require evidence, it can be awfully hard to prove something if you don't have somebody who's able to provide evidence that's admissible in court as to the nature of the violation. If it wasn't seen, if it wasn't observed by whatever board representative is testifying on behalf of the association, it can be very hard to prove. So that happens a lot.

Cindy Hill, Esq.:

There have been a lot of questions about the Fair Housing Act questions or issues, and I want to just generally say that some of them are so specific, they cannot be answered without looking at a community's documents. But yes, an over 55 community is a legally created exception where there is no requirement for the community to prioritize families in the way that everyone else has to. That being said, over 55 communities still have to follow the requirements of the Fair Housing Act that aren't families. For instance, persons with disabilities, persons of different backgrounds or religious leanings. So it is not a get out of jail free card, but it is a community that can rightly restrict minors.

Alan Tannenbaum, Esq.:

There was a question, Jim and Cindy. What happens if the association fines an owner, they don't pay the fine? What could the association do?

James "Jim" Turffs, Esq.:

And your governing documents may shape that to some degree. Usually your fines aren't going to become a lien, so it's not like you can go foreclose on them. Sometimes they are a lien. Again, it depends on what your documents say. But that aside, those fines operate as a pseudo lien on the property. So when a new purchaser is coming in, they're requesting their estoppel. They're being notified that there is a fine on that account and they have to pay it. There's going to be a statute of limitations that's going to apply to that fine as well, so it will become unenforceable after five years. But you can also elect to sue to collect the fines, but that's not usually the best course of action. The attorney's fees and costs will outpace it and you create a lot of animosity usually for something that's $1,000 or less. So voluntary compliance is really the goal. It's usually the best you're going to hope for, but depending on the circumstances, there are enforcement options and collection options available.

Alan Tannenbaum, Esq.:

I also saw a question about if you fine an owner for a violation and they pay the fine, does that mean they don't have to correct the violation?

Cindy Hill, Esq.:

It does not mean that, but it's surprising how many owners think that. And that can again be a pitfall with the fining process, that owners figure if they pay the fine, well then they're good to go. So your fining process totally did not achieve your result. And if you're not already picking up on it, I'm not a big fan of fining as a resolution for some of these issues because it seems to potentially create more problems than it solves. And as Jim was just saying, if you do have to sue to collect the fine, you create a lot of animosity.

Alan Tannenbaum, Esq.:

What about violations by renters and guests? Who are those enforced against, if they can be enforced?

James "Jim" Turffs, Esq.:

The owner is going to be held responsible for anything their guests, tenants, anybody that they're assigning their rights to. Those people, the owners are, it's always going to come back to them. Again, your governing documents can be tailored to be very specific about that. For example, if you're leasing it out, you can put provisions in your declaration that say, "All leases have to include a copy of the declaration and rules and regulations." And again, specifically say, "Owners are going to be responsible for the acts of their guests or tenants." But that's where the responsibility lies.

Alan Tannenbaum, Esq.:

All right. There's a question about what do you do about children who come in from other communities, from outside the communities and break the rules? It sounds that's maybe more like a police situation with or trespassing action. Cindy and Jim, what do you have to say about that? How do you curtail that?

Cindy Hill, Esq.:

Well, Jim, I saw that you did answer that one on the chat at least partially if you want to run with it.

James "Jim" Turffs, Esq.:

Yeah. Again, so I'm willing to bet there was more to that question than they put in the chat. I've seen similar circumstances and I'm willing to bet there's a neighboring association or a master association or something like that involved. But without knowing more, basically if somebody's coming onto your property and they don't belong there, you're looking at a trespassing. Contacting the authorities is the best way to do that. If it's cost-effective for the association and they have the ability, putting up fences. Pools need to be fenced in in general as a matter of civil liability and just avoiding people tripping and falling into your pools at night. But you can take certain security measures. We don't want you to go overboard with security. Don't hire guards or things like that. But usually contacting the authorities. We'll have them come in and at least provide notice. Say, "Hey kids, get out of here or you're going to get arrested." And usually it works.

Alan Tannenbaum, Esq.:

There's a question from Linda about a board's knowledge of violations and she makes a comment that they don't want to walk around looking for violations. So other than waiting for a report to come in from another owner about a violation, Cindy and Jim, do you advise at least a periodic drive around the community to pick up on what may be obvious violations?

Cindy Hill, Esq.:

Well, I guess I'll run with this one. A lot of communities have their management at least drive through once a month. Sometimes some of the bigger ones once a week. And if you're going to do any drive through or looking for restrictions, I would recommend you have your management company do it because it can get personal if you give it to a particular owner who will maybe take the role a little more seriously than they should and walk through the community of the clipboard on a regular basis, turning in all the violations. So if you are going to have anyone review violations on a regular basis, I recommend the management company so you don't get any of that personal dynamic that can really make something more difficult than it needs to be.

At the same time, that being said, if you're not a large community and you don't have a manager contract where they drive through, it's not a legal requirement that that happen. The board is only obligated to act on what it has been informed as to and then what it should reasonably know. So what does that mean? Well, that means if somebody does report a violation, the board needs to look into it. But if a violation isn't reported, if it's not apparently open and obvious or there's not a reasonable basis for the board not to have seen it, it may be that they would be in a position to say that they did not need to take action because they didn't know. But I can't give a black and white answer to that issue. Jim, do you want to add anything?

Alan Tannenbaum, Esq.:

And there was a question about whether the board can be stricter in its requirements than the statute allows. What's your take on that?

James "Jim" Turffs, Esq.:

I'll lead off there because I think that's based on something I said. It just depends on how you're using the term stricter or looser, I think is what the discrepancy there was and what I said. So for example, when I was talking about fining and I said, "The statute requires 14 days." You can, by rule, provide a longer period of time. So really the issue is you can be more friendly to the owners in your governing documents than the statutes are, but you can never be meaner than the statutes are. So I think maybe that's just a better way to phrase that and I hope that answers the question.

Alan Tannenbaum, Esq.:

Okay. Let me see.

Jon Lemole, Esq.:

Cindy, Jim, there was a couple of questions, and I think this comes up fairly often during turnover where maybe the developer was not as proactive about enforcement as maybe the now turned over owner control board would like to be. So what should a board, a new recently turned over board of directors do in order to level set and be able to uniformly enforce things across the board going forward where maybe the developer hasn't done so in the past?

James "Jim" Turffs, Esq.:

Yeah. I'd have to be cautious in the answer there because I have a law professor that said, "You're always looking for the one-handed lawyer so that he can't go, 'Well on one hand but then on the other hand.'" And unfortunately that's the case here, so it really does depend on what rule enforcement we're talking about. If the developer let an entire phase of the community go through and install fences when the declaration said they weren't allowed, you're going to have a real hard time as a post turnover board trying to go back and say, "You have to take out all those fences." On the other hand, if the developer wasn't enforcing a yard decoration ban, you're probably going to get away with saying, "All right, the developer maybe didn't notice that, and we can still go ahead and enforce that."

But one of those options regardless is if you find yourself in a situation where the developer sat on a right to the point where it may now be unenforceable is you can issue a line in the sand letter. And a line in the sand letter is a tool we use that is sent out to all the members and it says, "Previously the board didn't enforce this restriction. We had the right, we didn't. Sorry about that. Going forward from this day on anybody who violates that restriction again, they're going to be subject to enforcement." So you can reset that. But again, it really depends on what exactly we're talking about as far as the violation in the first place.

Alan Tannenbaum, Esq.:

Yeah. There's a question from Bridget, other examples of what you could do to enforce if you aren't enacting fines. Basically the only other option is to go the mediation circuit court route. You're not going to get assistance anywhere else. So that's basically what it's been down to. There's a question about rental restrictions. If the documents have an original rental restriction, what's going to be required documentation-wise to make that stricter?

Cindy Hill, Esq.:

Well, that one, and I'll run with that one. That's a general question about restrictions. If you're going to change your rental restriction so that for instance, maybe before you didn't require an interview but now you're going to, that's a different change than changing, let's say maybe the terms of rental used to be six months and now that you're going to change it to one year. For that second example, if you're going to change the terms under which units or lots can be rented, there are statutory provisions that control. So if you're going to make that change as an amendment to your declaration, you're going to have to keep up with who votes yes and no because those statutes do say that if an owner does not agree to that change, they are grandfathered in on those terms. So that's a conversation I could spend another 20 minutes discussing. But the long story short is that it depends on the terms being changed and really because there are statutory provisions to control, I recommend consulting general counsel for any changes like that.

Alan Tannenbaum, Esq.:

There's a question about what in a community with private roadways, what do you do about speeders? Any insights on that?

James "Jim" Turffs, Esq.:

Oh, that's just an incredibly hard question to answer. I mean, in some ways it's maybe really easy to answer. Quite frankly, not much. Signs. If the community is willing to pay for it and it's cost-effective, you can put in speed tables, speed bumps, things like that. We don't normally see association membership approving that sort of thing. There is a statute that says you can contract with the local authorities that come in and police the speed in your community. In my years of practice, I've never actually seen that accomplished. The local authorities don't like to get involved in it. They're going to do everything they can to avoid it because it's more work for them and it may open them to liability if everything isn't done exactly right.

So the best you can do maybe is keep some record of who is speeding, whether that's a camera at the gate or a speed camera or something. Again, if that's cost feasible, and then treat it as a violation. And again, a lot of work has to go into that. You need to set up your documents properly to make that an option. But if you do, you can act as an enforcement agent. But yeah, really there are a lot of hoop to jump through before speeding is something you even want to think about.

Alan Tannenbaum, Esq.:

What about towing? At what point can the association tow a vehicle that may be in violation, let's say, of a parking restriction?

Cindy Hill, Esq.:

Well, that's a twofold answer because you're going to need some towing rights or some just general property rights to even have the ability to do that. And by general property rights, I mean that we all know you can't necessarily park a car in certain places anywhere you go, for instance, on the grass in front of a building. But as for parking spaces, whether or not there's towing rights for an association, could be related to what's in your documents. You're going to need that right. And then there's a towing statute specific as to signage that has to be put up, a process that has to be followed. The towing companies are very familiar with that statute and know its limitations.

But as Jim was saying, with speeding, this is really a very loaded answer in terms of you don't just want to start towing cars. That's not going to end well. You certainly don't want to be towing cars without using a professional licensed and insured company. And then you're going to have to look at your documents and see if you even have any towing rights other than, again, we all know that vehicles can't be parked in certain places and be left there.

James "Jim" Turffs, Esq.:

Towing does open you to liability. And so I'm not a fan of it. In fact, I'm passionate about advocating against towing in communities. Just too many things can go wrong. The association can open itself up to too much liability. Fine them, sue them. Don't try to become a towing authority. It's just not a good idea.

Cindy Hill, Esq.:

Yeah, but I would add to that sometimes there are people who park and block access, block emergency exits, block... So some communities really do have to at least be prepared for that problem.

James "Jim" Turffs, Esq.:

Yeah.

Alan Tannenbaum, Esq.:

The last question before we close, and again, any questions we don't answer, if you want to email us, we can attempt to answer. It was about home-based businesses. If somebody is selling furniture on the Facebook Marketplace, is it considered a commercial use? My thought, and Cindy or Jim may disagree with me, is if somebody on a one-time basis is selling their own furniture through Facebook Marketplace, it's probably not operation of a business. But if they're bringing furniture in from the outside and people are coming to the home to pick up furniture that's brought in, that does sound much more like a home-based business that could be a commercial enterprise that could be prohibited. So Cindy or Jim, you have any disagreement with that?

Cindy Hill, Esq.:

No.

James "Jim" Turffs, Esq.:

No. I think you're spot on. I think-

Alan Tannenbaum, Esq.:

All right. So we're going to conclude, again, especially Jim and Cindy have answered several questions in the chat in writing. You can certainly review those questions and answers in the chat. You can email us with any additional questions and we can attempt to answer. Not specific to your documents, but a general question. This session will be available on our website in about a week to 10 days. You can see it there. If you'd like a copy of the PowerPoint, contact Michelle Colburn, and you'll see on the bottom of the Q&A her email address. And at this point we're going to say goodbye for the day. We will see you next month with hopefully a new and topical item to be discussed. And we thank everybody for attending today. Thank you.