Articles Posted in Meetings and Elections

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that have been submitted to the association in the past – as such forms are typically valid until revoked, modified or rescinded and the votes for those units cannot be counted unless the association is in possession of the forms.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.

For 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.

Yet another report about an ongoing dispute involving alleged board member malfeasance at a Broward County condominium association has made the local nightly newscast on Local 10 News (WPLG, ABC). The report by the station’s Bob Norman chronicles the concerns of a number of the residents at the Summer Lake Condominium in Oakland Park over the actions of their association’s board of directors, which has been fined by the state’s Division of Condominiums for failing to hold timely elections.

In the report, the concerned residents complain to Norman that the directors have also refused to disclose the association’s financial records. They also say that former president of the association had signed off on payments in excess of $300,000 over a two-year period to a management company that was founded by his wife.

The residents claim that the former and current board presidents have used their positions on the board to facilitate their buying, renting and flipping condo units in the community using their private real estate investment company, which property records indicate has earned tens of thousands in profits from the purchase and sale of distressed units in the development. In one case, the two men orchestrated a short sale of a unit that had been deeded to Summer Lake to their own company for $83,000 and then sold it just four months later for $101,000. The concerned residents also say that they have seen the condo association’s maintenance men working in the middle of the day on units owned by the men.

Click below to view the station’s report.

With the new year comes new plans, new resolutions and . . . elections. For many community associations election season is well under way and, as easy as an election may seem (go out, get the votes, and count the ballots – right?), there are so many statutory nuances in the electoral process that, if handled improperly, can invalidate the entire election and cost the association both time and money. In an effort to assist association boards and hopefully avoid costly mistakes during the process, we have outlined the pertinent information that you need to know.

The Election Process:

First notice of election

The first notice must be mailed, emailed, or hand delivered to the membership at least 60 days prior to the annual meeting/election day.

The notice must include:

  1. The date, time and location of the meeting and election.
  2. The number of seats that are open for election.
  3. Details surrounding the information sheet that candidates must submit if they wish to run for the board.

Receipt of intents to run for the board

  • All eligible persons who wish to run for the board must submit their notice of intent to be a candidate for election no less than 40 days prior to the annual meeting/election.
  • Notice of intent may be submitted via mail, email, or hand delivered statement.
  • Any notices of intent received on the 39th day before the election (regardless of the day of the week that the 40th day falls on) – are deemed invalid and those names may not be placed on the ballot.
  • Each eligible candidate then has an additional 5 days (35 days prior to the election) to submit an information sheet (resume) to the association which will be mailed out with the second meeting notice.

Second Notice of Election

  • The second notice of election must be mailed, emailed or hand delivered to the membership at least 14 days prior to the annual meeting/election.

The Second Notice should include:

  1. Instructions for casting a ballot.
  2. The notice and agenda for the annual meeting (which will include the election).
  3. Any information sheets (resumes) submitted by eligible candidates.
  4. The ballot listing all of the eligible candidates’ names in alphabetical order.
  5. An inner envelope labeled “Ballot Only” and an outer envelope labeled with the address of the property manager or the association.

MeetingVote.jpgVoting

  • In order to be valid, the unit owner’s name must be printed on the outer envelope, together with the unit number, and the eligible voter’s signature.
  • The eligible voter must select a candidate using the ballot included with the second notice and place it in the inner envelope.
  • The inner envelope must then be placed in the outer envelope.
  • The outer envelope may then be mailed or hand delivered to association or property manager.
  • The same process must be utilized (ballot, inner envelope and outer envelope) at the annual meeting up until the time that the inspectors of the election begin to open the outer envelopes.

While this process may seem tedious and time consuming, it is extremely important to remember that the process is in place to ensure a fair election. When casting your vote, keep in mind the importance of the board in your community. The board generally serves as the “people’s voice” and handles the day-to-day operations and decisions of the association and, in conjunction with the manager, ensures that the community runs smoothly. Annual meetings and elections are an extremely critical time for any community association, so it is important that they are treated as such.

Please be advised that you may contact your attorney to handle the election for your association, as they are able to monitor and assist with the process to ensure all steps are followed correctly.

Nicole Kurtz, one of our firm’s other community association attorneys in our Miami office, wrote in this blog in September about a fight caught on video at a Sunrise HOA board meeting that was aired by WPLG Local 10 on the station’s nightly newscast. Well, it did not take long for the station to air another story featuring a brawl as well as nasty arguments videotaped at another local HOA community.

It appears from the report that the situation at the Mainlands 3 retirement community in Tamarac has escalated to the point of becoming a complete debacle. The residents are clamoring to remove the current directors from the HOA’s board, and the president and vice president of the board are resisting their efforts by adjourning or cancelling meetings in order to prevent votes by the members to recall the current board and demand a new election. One of the homeowners in the community is even quoted saying that she believes many of the combatants are carrying concealed weapons to the meetings, and as a result, she is in fear for her and her neighbors’ safety.

Click below to view the report from Local 10 News.

An arbitration decision rendered earlier this year by the State of Florida Division of Condominiums involving a dispute over alterations approved by a condominium board without a prior meeting and vote of the unit owners did not surprise our firm’s community association attorneys. We often find ourselves reminding association directors and property managers that the changes they are considering – albeit seemingly minor in nature – could be among those changes that are considered “material alterations” requiring approval by the membership.

While what constitutes a “material” alteration is not always clear, the rule of thumb is that if it changes the color, form, shape, elements or specifications from the original design or plan, or existing condition, in such a manner as to appreciably affect or influence its function, use, or appearance, then it is material. And, while the additional costs and time commitments that the approval process entails can be considered a bit ponderous, this recent decision serves as an important reminder of the potentially significant economic repercussions of forgoing the vote.

The case involved alterations that were approved by the Nine Island Avenue Condominium Association board of directors, which included changes and improvements to the pool deck furniture including cushions and fixtures, trellis, observation deck, pool steps and ladder, landscaping, the color of the paint in the koi pond, and the removal of a water filtration system. pool deck renovation.jpg After a hearing that took two full days and included a number of witnesses and experts for both the unit-owner petitioner, Ms. Jacqueline Simkin, and the association, the arbitrator found in favor of the unit owner and concluded that prior approval by the unit owners was required for practically every single alteration that had been made at the property.

The order concludes:

“Unless the alteration is approved by 66 2/3% of the unit owners, no later than December 31, 2014, the Association shall:

a. Return the color of the recreation deck waterways and curbing to the original light gray, and return the color scheme of the deck furnishings to original grey-blue, or something substantially similar;

b. Rebuild the trellises to the original footprint, design intent, appearance, and natural weathered wood finish, subject to current code requirements;

c. Return the gazebo to its original natural weathered wood finish;

d. Rebuild the wooden observation deck over the waterway;

e. Replace the pool egress ladders with ladders substantially similar to original, such that the steps extend farther down into the water and can be used as a means of egress from the pool by unit owners;

f. Return the entrance drive landscaping to its original, or substantially similar, condition; and
g. Repair or replace the building water filtration system with a comparable system utilizing current technology.”

Depending on how the final vote of the members turns out, the association may be facing significant expenses in order to return some or all of these elements to their original condition prior to the alterations being completed. These expenses, not to mention the potentially contentious nature of the meetings that will lead up to the vote as a result of this significant lapse in judgment, will certainly prove to be more costly and difficult for the association than the vote that it should have undertaken prior to moving forward with the alterations. Not to mention the attorneys fees and costs incurred by the association in defending this proceeding – and the unit owner’s attorneys fees and costs which the association will be responsible to reimburse.

This costly lesson comes free of charge to all other Florida condominium association boards of directors that are considering moving forward with what potentially may be considered a “material alteration” without obtaining prior membership approval as required by the Condominium Act. Bypassing the approval process is simply not worth the financial risk, as this condominium association learned the hard way.

Our firm’s other community association attorneys and I have witnessed, or heard about, scores of heated exchanges between disgruntled unit owners and board members at community association board of directors’ meetings. However, a video that aired on WPLG Local 10 nightly news last week involving the physical attack of a unit owner by the then-president of the condominium association governing the Waterbridge Condominiums in Sunrise left many of us shocked.

In the video, association member Stephen Smith is shown requesting association financial documents from the members of the board at a 2009 video-recorded board meeting. Subsequent to his request, the then-president of the association, Jacqueline Chance, physically attacks Smith, causing a brawl between the two and others present at the meeting. WPLG reports that Chance was charged with battery as a result of the altercation, and she pled no contest to same. The station further reports that the depicted violent exchange was not the first time Smith was attacked by a board member within this community. Smith was apparently criticized and confronted by board members in previous years in connection with his requests for association records.

Smith explains that in addition to being assailed by board members for requesting association records and questioning the status of the association’s reserve account, he has also been harassed for requesting that his unit be repaired by the association following a fire to the condominium building.

Smith has filed a lawsuit against the condominium association based upon a theory of negligence, which Smith says arose because the actions and decisions of the association’s board of directors have resulted in his inability to sell his unit. We actively await the outcome of Smith’s lawsuit (the next hearing is scheduled for November), as the video and audio recordings included in the report by Local 10 are undoubtedly very damaging to the association.

Click below to watch the video, and click here to read the report on WPLG’s website.

One inquiry community association members often present is how a director may be removed from the association’s board. The response to this question is usually a simple one for an attorney to provide – but understandably a complicated one for many owners to comprehend. While some situations may result in a board member’s disqualification from the association’s board (e.g., nonpayment of monetary obligations exceeding 90 days, selling home in communities having ownership requirements for directors, voluntary resignations by directors), in Florida a qualified community association director may only be removed pursuant to a procedure known as a “recall.”

Members of a Florida community association board may be recalled and removed from office with or without cause by a majority of all voting interests of the association by vote at a meeting or by agreement in writing. If the recall is to be achieved at a meeting, a minimum of 10 percent of the association’s voting interests must provide for the giving of notice of the meeting. meeting vote.jpg The notice for such meeting must state that the purpose of the meeting is to recall one or more directors, and if a majority or more of the board is subject to recall, the notice shall also state that an election to replace recalled board members will be conducted at the meeting. If less than a majority of the board is recalled, the existing board members may fill the vacancies. If a majority or more of the existing board is recalled, an election shall be conducted at the meeting to fill the vacancies resulting from the recall.

Within five days of the adjournment of the members meeting to recall one or more of the directors, the board shall properly notice and hold a board meeting to consider whether to certify or reject the recall. If the board certifies the recall, then the recall is effective upon certification.

Alternatively, directors may be recalled by written agreement. A sample of the form to be used in a recall by written agreement is available from the Division of Florida Condominiums, Timeshares, and Mobile Homes (“Division”) by clicking here. In this form of recall, the name of the directors sought to be recalled must be listed and the form must provide spaces by the name of each board member sought to be recalled so that the person executing the agreement may indicate whether the director should be recalled or retained. If a majority or more of the existing board members are to be recalled, the agreement shall list at least as many eligible persons who are willing to be candidates for replacement board members as there are board members subject to recall, and it should contain additional spaces for write-in votes. Further, there must be a signature line for the person executing the agreement to affirm he/she is authorized to cast the vote for his unit. The original agreement must be served on the board by certified mail or personal service. As with recall efforts conducted at a meeting, the board must call a meeting within five business days after service of the agreements and either certify the recall agreements.

In the event the board fails to certify the recall (whether a recall by written agreement or by vote at a meeting), they must file a petition for arbitration with the Division within five business days of adjournment of the board meeting. If the board fails to duly hold a meeting to vote on whether to certify or reject the recall, then the recall shall be deemed effective.

The foregoing serves as a brief outline of the recall procedures for removal of community association directors in Florida and shall not be exclusively relied upon for recall efforts. While the owners seeking to remove a director must always consult with the governing documents for the association in case there may be additional requirements or procedures for the removal of a member of the community’s board, Florida law provides the minimum requirements that must be adhered to for the removal of such director. Although there have been little changes to such procedures for many years, an increased understanding of community association laws and procedures seems to have led to greater use of the recall process to remove directors deemed to be undesirable. Fortunately, careful adherence to the legal procedures will provide successful results for the parties seeking the recall. However, just one seemingly insignificant failure to follow such procedures may render an otherwise well supported recall effort ineffective. In light of this, owners seeking to commence recall efforts are encouraged to seek the advice of counsel or the representatives from the Division in order to ensure a successful outcome to their recall effort.