Articles Posted in Meetings and Elections

The other South Florida community association attorneys at our firm and I are often called upon by our clients with questions regarding how to more efficiently run their board meetings and control the conduct of members during those meetings.  Very often it seems that directors who are simply trying to be polite and respectful of owners by allowing them to express their opinions wind up losing control of the meeting and actually accomplish very little business.  This trend of owners seemingly “hijacking” board meetings is not a new one, but it does seem to be fueled in recent months by the political climate we find ourselves living in now where all people want to be heard.  Fortunately, the HOA and Condominium Acts provide board members with the tools they need to control their meetings while allowing all members to also have their “say.”

Association board meetings are defined as any gathering for the purpose of conducting association business by the members of the board of directors at which a quorum is present.  Unless the association’s by-laws or other governing documents provide for a longer period, notice of board meetings must generally be conspicuously posted within the community 48 hours in advance of the meeting.  However, in certain circumstances (such as the adoption of assessments or some types of rules), written notice must be posted and provided to the members at least 14 days in advance of a board meeting.

In accordance with Florida law, an item of business that is not noticed may only be addressed on an emergency basis, such as situations involving sudden damage to the building, natural disasters and similar events.  Emergency actions must be ratified or approved at the board’s next properly noticed board meeting at which a quorum of directors is attained.

meetThe notice of the board meeting should list specific business items on the agenda.  Boards and managers should make every effort to ensure that all reasonably anticipated topics of discussion are included.  The more specific the agenda, the easier it will be for the board to control the pace and flow of the meeting.  When agendas list broad topics without specific business items, boards leave themselves open to having to address issues brought up by members that would arguably “fit” under broad category headings.  As such, the agenda should be comprised of specific open items from the previous meeting requiring action; specific owner items that may require board action; building maintenance items, as required; project information, updates, requests and actions; and seasonal information, such as annual and budget meeting information as well as hurricane preparation matters.

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Nicole-Kurtz-2014-thumb-120x180-87971The firm’s Nicole R. Kurtz authored an article that appeared as a “Board of Contributors” guest column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which was titled “Disputed Condo Election Offers Important Lessons for Association Boards,” focused on a recent appellate ruling that illustrated the importance for boards of directors to act with a clear understanding of their capabilities to alter association election procedures.  Her article reads:

Allegations of questionable or even downright fraudulent tactics by candidates in annual association elections are not entirely uncommon. When suspicious activities begin to call into question the integrity of the election, some boards of directors hit the panic button and take actions that will not stand the test of their governing documents or the Florida Administrative Code.

Such appears to be what took place in a disputed election at the Palm Aire Country Club Condominium in Pompano Beach that culminated in a recent ruling by Florida’s Fourth District Court of Appeal. While the appellate panel’s opinion does not address the reasons for the association board’s actions, noting only that “there is some ambiguity as to what exactly occurred” at the board’s Feb. 29, 2016, meeting, the opinion essentially invalidates the board’s 6-3 vote at the meeting to postpone the annual election that was set for two days later on March 2.

Even though a majority of the board voted to postpone the election, it took place as originally scheduled on March 2, and new directors were elected. The management company for the property, M&M Property Management LLC, subsequently refused to recognize the authority of the prior board of directors and instead began working with the newly elected directors.

dbr-logo-thumb-400x76-51605-300x57In response, the prior board of directors filed suit against M&M seeking a temporary injunction to compel the management company to stop operating in service of the new board of directors. The prior board was granted the temporary injunction, and in turn M&M was ordered to recognize the board as it existed prior to the March 2 election.

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With the holiday season approaching, now is the time that many condominium associations in Florida are gearing up for their annual meetings and board member elections.  It is essential for the current board and property management to have a complete understanding of the condominium election process.

At least 60 days prior to date of the meeting and election, the association must mail, deliver or electronically transmit a first notice of the election to each unit owner.  This first notice sets forth the date, time and location of the meeting.  Those members who wish to be considered for board membership must then give written notice of their intent to run for the board to the association at least 40 days prior to the scheduled date of the election.  Although not required, candidates have an additional five days to submit information sheets about themselves.

A second notice of the annual meeting and election together with an agenda for the meeting must then be mailed, delivered or electronically transmitted to all of the members together with a ballot that lists every candidate who submitted their names to run for board membership. meetingvote Any information sheets submitted by the candidates must also be included with the distribution of the ballot – regardless of their content.  Return envelopes that allow for owners to print and sign their names and include their unit numbers should also be included with this mail out.

In order to have a valid election, and be able to open envelopes and count votes, at least 20 percent of the eligible voters must cast a ballot.  Unit owners are not permitted to allow any other person to vote using their ballot, and all of the ballot envelopes must be retained by the association for at least one year.

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One of the more notable developments resulting from the 2015 Florida legislative session included a change to community association statutes establishing the opportunity for associations to offer their members the ability to vote electronically.  While many community association stakeholders have had an immediate reaction to jump on the  e-voting bandwagon, we have counseled — and will continue to counsel — our clients to proceed with caution, as with all new innovations presented during the digital age.

We have come to find that electronic voting may benefit some community associations, while it may not address the voting concerns of others.  In light of this, we will continue to encourage community association board members, managers and owners to seek competent legal advice regarding whether electronic voting is a good option for their association.  If the decision is reached to implement e-voting as an option, community association board members and managers should work with their lawyers to evaluate which online voting provider’s system is best suited to meet the needs of their association, while making sure the software complies with the Florida community association online voting requirements.

Additionally, it is advisable that associations use an electronic voting system provider that is independent from its law firm and management company, so as to ensure that the integrity of the association’s voting process is best protected.

VTRIn our efforts to vet online voting systems, we realized that most lacked the basis for proper application in basic community association settings or lacked the flexibility to adapt to unique voting situations.

After multiple months of research, we were successful in identifying a provider well suited for community association use.  VTR, an e-voting software system owned and operated by FOB Software, is one provider we feel community association directors and managers should consider.

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Firm partner Roberto C. Blanch, who has written extensively about community association fraud in this blog and recently authored an article on the topic for the op-ed page of the Miami Herald, appeared on Spanish-language television network AméricaTeVé’s popular “A Fondo” live show hosted by Pedro Sevcec yesterday at 8 p.m.  He was joined by one of the two journalists from el Nuevo Herald behind the newspaper’s investigative series exposing possible fraud at several South Florida condominium communities.  The segment specifically focused on board of directors election fraud, and several cases of suspected fraud were discussed.

Our firm congratulates Roberto for sharing his insights into this important issue with the network’s viewers.  Click below to watch the Spanish-language segment.

 

Community association attorneys are often asked about the lack of uniformity in the Florida laws and regulations for condominium associations and those for homeowners associations. There are many differences between the statutes governing condominium associations and those for HOAs, and condominiums are much more heavily regulated.

In fact, all condominium associations in the state must pay an annual fee to fund the Florida Department of Business and Professional Regulation’s Division of Condominiums, which serves to provide regulatory oversight over condominium association elections and disputes stemming from the actions of their members and boards of directors.

Homeowners associations have been excluded from the purview of this state agency since its inception, which, among other things, has created significant discrepancies in the laws governing these different types of community associations involving their elections, meetings, board recalls, vendor contracts, and other areas. However, a bill that was introduced by Rep. John Cortes of Osceola County seeks to change that and bring HOAs under the regulatory oversight of the state agency.

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HB 653 represents potentially sweeping changes for HOAs in Florida. It seeks to rename the state agency in order to add homeowners associations to its name; authorize the agency to investigate certain complaints involving HOAs, conduct related investigations and adopt penalty guidelines; have HOAs pay an annual fee to fund the agency, provide notices for certain meetings, impose certain fines, and revise annual meeting requirements; and it provides for changes to the provisions relating to the transition of association control, and the requirements for voting by general and limited proxy and for board elections and vacancies.

The bill calls for the state agency to oversee the mediation of HOA disputes and maintain a list of certified mediators who the associations must use for these proceedings. HOA elections, which have historically been left to the protocols and procedures established under their respective declarations, would be required to adhere to the process that has been in place for condominium associations.

The changes involving elections are very significant, as are the measures pertaining to meeting notice procedures. If the bill is passed and these new provisions go into effect on July 1, 2016, HOAs across the state will need to be prepared to make dramatic changes to many of their policies and procedures. This will undoubtedly present some serious difficulties and challenges for many associations that have grown accustomed to their previous protocols over the years and decades, but the introduction of this bill appears to send the message that the time for uniformity in the state’s laws governing condominium and homeowners associations may now be upon us.

The year-end holiday season is also the season in which most community associations celebrate their annual meetings and elections. But no matter when your community association celebrates its annual meeting and election, it is important to begin the planning and organizing process well in advance in order to help ensure the best possible outcome.

The work should begin with a thorough review of the roster of current owners for each of the residences. Ideally, it is best to organize the roster in numerical order by the unit numbers or addresses in order to facilitate the registration and ballot verification process.

While a title search of the county public records deed database is the most accurate means to verify ownership of the residences, a more economical approach would be to turn to the county’s property appraiser’s office to verify ownership. Once obtained, the records should be organized in a binder, together with copies of the deeds in the same order as the roster or sign-in sheet. Using dividers to separate each floor/street is also advisable, as it may help to facilitate the verification of ownership on the day of the meeting or election. For those communities that require voting certificates to be submitted on behalf of units owned by corporations, partnerships, other entities or by more than one individual (including for units owned by a married couple), it is important for the board or management to ensure that binders are well-organized with copies of the voting certificates that have been submitted to the association in the past – as such forms are typically valid until revoked, modified or rescinded and the votes for those units cannot be counted unless the association is in possession of the forms.

Proxies that are received prior to the meeting should be verified in order to help ensure that they are dated and signed by the owner or other qualified voting member. Verified proxies should be logged in on the sign-in sheet for the meeting, and a note should be included on the sheet indicating those who have been designated as the proxies for corresponding units in order to help ensure that the designated proxies sign-in on behalf of the appropriate residences. Proxies that are found to be questionable or incomplete during the validation process should be set aside for the association attorney to review, and the valid proxies should be organized in a folder in the same order as the sign-in sheet for reference at the time of the meeting.

meetingvote.jpgFor those associations that suspend the voting rights of owners delinquent in the payment of monetary obligations, well-documented records should be maintained to confirm that the voting rights were properly suspended and the association’s accounting records should be updated to ensure accurate records of the amounts owed by such owners.

In addition to closely adhering to all of the statutory notice requirements for the meeting, associations would be well advised to go beyond those minimum requirements in order to help maximize attendance and participation in the election. Telephone calls, emails, and door-to-door visits by the management staff are encouraged, as these efforts will help to ensure that all of the owners are made aware of the date and the importance of their making every effort to participate by voting in the election.

While applicable statutes may provide for the posting of the meeting notice at one designated location, some communities opt to post notices in a fairly prolific manner in order to broaden the opportunities for all of the owners to view it. For those communities, in addition to posting notices in the clubhouse and recreation rooms, communities should also consider posting them in the mail room, elevators, fitness center and any other appropriate spots through which the residents typically pass.

Another important strategy to maximize the attendance and participation of the membership is to include information on the importance of the annual meeting and election for the financial and administrative wellbeing of the association in all of the notices and communications.

My colleague Michael Chapnick with our firm’s West Palm Beach office recently posted a brief video in the “Community Chatter” page of our website about some of the best practices for associations to maximize the attendance and participation of their members. Click here to watch Michael’s video.

By starting the planning early and working closely with qualified community association legal counsel in order to follow all of the prescribed protocols, associations can help to ensure that their annual meeting and election are a resounding success and in full compliance with Florida law.

MichaelChapnicksrhl-law.jpgFor the second consecutive day, an article on important issues for community associations authored by one of our firm’s partners appeared today as a guest column in the Daily Business Review, South Florida’s only business daily and official court newspaper. Partner Michael E. Chapnick with our West Palm Beach office wrote the article in today’s edition of the newspaper about the new electronic voting law for community associations. His article calls for the state’s Division of Condominiums to establish an approval and certification process for the e-voting systems providers. It reads:

“Properly implemented, electronic voting may enable associations to overcome the significant challenges created by so many investor-owned units and part-time residents who frequently do not participate in association votes, making it difficult for many associations to achieve quorum at members’ meetings and elections so that membership action can be taken.

However, there are some important and necessary measures that were built into the new law which will make the initial implementation of electronic voting extremely challenging for many associations.

With the voter identity verification and security protocols that are called for under the new law, online voting for associations will not be as simple as using an existing off-the-shelf electronic survey provider and adapting it for an association vote.

In fact, the vetting process for the vendors purporting to comply with all of the requirements under the new law will take some time, and the state’s Department of Business and Professional Regulation Division of Condominiums should move quickly to develop a vetting and certification process in order to help all of the associations in Florida to identify the providers that are in compliance with the statutory requirements.”

Michael’s article concludes:

“However, rather than leaving it up to every community association to conduct its own vetting process in order to determine which providers meet all of the law’s requirements, the onus should be on the state agency that oversees and enforces association election regulations as well as the other laws governing associations in Florida to create and implement a new vendor approval and certification process for the providers. The state’s Division of Condominiums is better equipped with the technical resources and expertise that is necessary to properly review and determine whether these online software application providers are implementing e-voting systems that meet all of the requirements and should be certified by the state for use by associations.

Electronic voting will not be a panacea for all of the issues caused by unit owner apathy and absenteeism in association votes and elections. There are many voters who will decline to use it and will wish to continue mailing in the completed ballots or voting in person at the meetings, so it is unlikely to completely replace the traditional voting methods, at least in the near future. It will, however, give the associations an important new tool for their toolbox that should greatly enhance their ability to conduct annual elections and obtain votes regarding alterations, amendments, reserves and other important association matters that require membership approval.

With the help of an effective approval and certification program for the e-voting system providers by the state, associations will be able to turn to electronic voting to help overcome some of the challenges that have plagued their votes and elections for decades.”

Our firm congratulates Michael for sharing his insight with the readers of the Daily Business Review on this important new law for community associations and calling on the state to enact an approval and certification process for the e-voting systems providers. Click here to read the complete article in the newspaper’s website (registration required).

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As the season for annual meetings and elections at South Florida community associations comes to a close, our firm’s other community association attorneys and I are reminded of the significance of following all of the necessary protocols to ensure that association meetings and elections run as smoothly as possible. This topic further serves as a priority to many of our community association clients, causing many of them to inquire about safeguarding their election procedures and other issues such as perceived discrepancies between statutory election guidelines and the related provisions of their associations’ governing documents.

Below is a recap of recommended best practices related to annual meeting and election procedures, many of which have been discussed in previous articles in this blog.

First, in an effort to promote participation and ensure voting by the qualified individuals, it is advisable that association management take the steps to verify that the association’s roster of owners is current and includes a description of all the individuals on title to the home or unit. The roster should further be organized in numerical order by unit numbers or addresses to facilitate the registration and ballot verification process. While a search of the county public records deed database is the most accurate source to verify ownership of units or homes, a more economical approach is to verify the ownership from the county’s property appraiser’s office. Once obtained, these records should be placed in a binder, together with copies of the deeds organized in the same order as the roster or sign-in sheet. Consider organizing the binder with dividers separating each floor/street, as this step may further facilitate the verification of ownership on the day of the meeting or election.

Proxies received prior to the meeting should be verified so as to ensure that they are dated and signed by the owner or other qualified voting member. Once the proxies have been verified, they should be logged in on the sign-in sheet. A note should be included on the sheet indicating the person who has been designated as the proxy for the corresponding unit, in order to ensure that the designated proxy signs-in at the meeting on behalf of the appropriate unit or home. If a proxy has a deficiency or is found to be questionable during the validation process, it should be set aside for the association attorney to review.

meetingvote.jpgAdditionally, the period between the proxy verification process and the time of the meeting may be used to enable the unit owner to cure any defects or resolve problems that may have been identified with regard to the proxy form. The valid proxies should be organized in a folder in the same order as the sign-in sheet for reference at the time of the meeting.

Ballots received in advance of the election should be organized in the order of the roster. The board should further consider appointing an independent committee to validate that the outer ballot envelopes have been properly executed and signed by the qualified voter(s) prior to the scheduled time of the election. This process will serve to further streamline the ballot validation process, which would otherwise have to be performed at the time of the meeting. Bear in mind that outer ballot envelopes may not be opened prior to the meeting.

It is important to remember that unlike proxies, voting certificates do not expire unless they are rescinded or replaced by another voting certificate. As such, a voting certificate binder should be organized in numerical order by unit or lot number or by street address of the unit or lot. As the voting certificates tend to remain valid until rescinded or as otherwise specified above, those received for the scheduled meeting or election should be included in the binder as replacements for any voting certificates previously provided for corresponding units or lots. Voting certificates are typically required for all units owned by multiple individuals or by a corporation or other legal entity. However, we caution that many community association documents require that voting certificates be submitted for units owned by husband and wife as well.

The executed Proof of Notice Affidavit for the annual meeting should also be available at the meeting. In addition, be sure to have plenty of blank ballots, envelopes (inner and outer ballot envelopes) and voting certificates on hand at the election for use by any owner who has lost or misplaced their ballot or voting certificate and would like to cast a ballot in person at the election.

By adhering to these suggested best practices, working with qualified community association legal counsel and following all of the other prescribed protocols for the annual meeting and election, associations can help to ensure that their elections are in compliance with Florida law.

GaryMars.jpgThe following article authored by the firm’s Gary M. Mars appeared in the April issues of Our City Weston and Our City Davie magazines:

A recent case in Las Vegas has set a new bar for the heights to which criminals will go in their efforts to defraud condo associations and HOAs for contracts worth millions of dollars. A U.S. Justice Department investigation revealed that 11 homeowners and condominium associations in Las Vegas were defrauded of millions of dollars in a board of directors takeover scheme that took place from 2003 to 2009. Federal prosecutors are seeking jail time for the defendants in addition to approximately $25 million in restitution, and 37 defendants have taken plea agreements and are facing prison sentences while the remaining four defendants are awaiting trial.

The defendants are accused of getting their straw unit buyers elected to community associations’ boards of directors through forgery, bribery, ballot stuffing and dirty tricks, all with the help of a Kung Fu grandmaster to intimidate wary board members. As disclosed under his plea agreement, this martial arts expert admitted that the conspirators would rig the associations’ board of director elections by using stolen and forged ballots so that they could win a majority voting control of the boards in order to secure lucrative contracts once control of the board and association was obtained. Co-conspirators traveled to Mexico to print phony ballots, used the master key at a condominium complex in order to remove ballots from mailboxes, and retrieved discarded ballots from a condominium’s dumpsters.

Community association boards control the purse strings of the communities that they govern, and they have been long-standing targets for unscrupulous board members. For those who own residences in condo and HOA communities, this board takeover scheme underscores the level of involvement and vigilance that is necessary in order to help ensure that their community associations avoid this type of fraud.

Unit owners should make every effort to vote in all elections and submit their own ballots, as fraudsters will typically attempt to secure and utilize forged ballots from those who do not normally vote in the elections. They should also attend the election meeting and determine whether their ballot was counted or disallowed due to the submission of more than one ballot for their unit.

OCweston.jpgIf association members believe that the integrity of their board of directors has been compromised, they should consult with highly experienced legal counsel in order to discuss and determine their next steps. Election recalls, court appointed receivers, and injunctions precluding boards from awarding contracts are among the measures that can be pursued, and criminal investigations by state and federal law enforcement are also possibilities that can come into play.