Making Lemonade Out Of Lemons
As a result of the unexpected COVID-19 crisis and its ramifications on Florida’s community associations, there are lessons that can be learned. Early on, an unexpected issue many community associations faced was whether the board could rely on the emergency powers set out in the Florida Statutes to help protect both residents and property alike during this time of uncertainty (the “emergency power legislation”). The Condominium, Cooperative, and Homeowners’ Association Acts each provide that the board of directors is granted certain emergency powers in response to damage caused by an event for which a state of emergency is declared by the Governor. While local governments at the city and county level may similarly declare a state of emergency, the emergency powers only spring into existence upon the Governor’s issuance of an executive order declaring a state of emergency in response damage caused by event.
These emergency powers include, just to name a few, the ability to cancel and reschedule meetings, conduct such meetings with as much notice as may be practicable, levy assessments, restrict access to the property and so much more. More specifically, Sections 718.1265 as to condominiums, 719.128 as to cooperatives, and 720.316 as to homeowners’ associations, Florida Statutes, each provide enumerated emergency powers available to the board of directors that may be exercised “in response to damage caused by an event for which a state of emergency is declared…”. However, in light of COVID-19 pandemic the interpretation of the phrase “in response to damage caused by an event” created questions and confusion to both laymen and lawyers alike.
At issue was whether the emergency power legislation only applies to situations where there is actual property damage and/or as a result of a hurricane damage. Even if not necessarily intended for COVID-19 type situations, to many lawyers, including this author, there was no question that the emergency powers could be utilized by board members of Florida’s community associations in response to the instant pandemic. Nevertheless, others questioned whether the emergency power legislation should apply since it was initially drafted in response to hurricane type events, and not a medical event such as the COVID-19 pandemic.
By way of background, the emergency power legislation was drafted in response to the series of hurricanes that hit Florida in 2004, however, it took the Florida Legislature approximately four years to pass them into law. A plain reading of the emergency power legislation even demonstrates that these statutes were drafted with hurricane type damage in mind, and not other disasters, such as global pandemics. But, that does not mean they cannot be applied to other situations. In fact, on March 27, 2020, the Florida Department of Business and Professional Regulation Division of Condominiums, Timeshares and Mobile Homes (the “Division”) issued an unexpected order that provided that the phrase “response to damage caused by an event” should not be considered when reading the emergency powers legislation. Then on May 20, 2020, the Division entered a second order explaining that its prior order would expire on June 1, 2020 which is slightly more than a month before the Governor’s state of emergency is set to expire on July 7, 2020. Without regard to whether the Division had the necessary authority to issue such orders in the first place, the result of its second order has attorneys asking, once again, does the emergency power legislation apply? While a great many lawyers experienced in the body of community association law believe so, that does not mean that a court would agree upon legal challenge. Candidly, it would be surprising if the court did not agree, but one never knows with certainty how a court will ultimately rule, most especially on issues of first impression, for which this certainly qualifies.
There is already legislative chatter about the need to revise the emergency power legislation to make it more adaptable to the different types of disasters that can occur. But, community association boards should be able to rely, right now, on the emergency powers in any situation where the Governor has declared a state of emergency where health of the members can be at issue. Even if the Florida legislature does amend the emergency powers to make it patently clear that the board may exercise its statutory emergency powers during a declared state of emergency for a pandemic, such an amendment will take time and that could mean anything but a fast fix. So, what is an association to do to prepare for the next unanticipated state of emergency?
Well, at least in this instance it is quite likely that your association can act much more quickly to amend the community’s declaration or bylaws, than the Florida legislature can to amend the Florida Statutes. With that in mind, the board can sponsor and the association membership can adopt an amendment to the declaration or bylaws that clarifies that the emergency powers set out in the Florida Statutes (with specific reference) apply to all states of emergency declared by the Governor to the extent the safety and welfare of the members and/or the property is at issue. In addition, or as an alternative, specific emergency powers can be drafted in the declaration or bylaws, too.
A few suggestions for consideration include:
- During any emergency the Board may hold meetings with notice given only to those Directors with whom it is practicable to communicate, and the notice may be given in any practicable manner. The Director, or Directors, in attendance at such a meeting shall constitute a quorum.
- The Board may cancel, reschedule and/or postpone Board and member meetings, including the annual meeting, if necessary to protect the health and welfare of the members.
- Corporate action taken in good faith during an emergency under this section to further the ordinary affairs of the association shall bind the Association; and shall have the rebuttable presumption of being reasonable and necessary.
- The Board may use reserve funds to meet Association needs and may use reserve funds as collateral for Association loans. The Board may adopt emergency assessments with such notice deemed practicable by the Board.
- The Board may adopt emergency Rules and Regulations governing the use and occupancy of the Units, Common Elements, Limited Common Elements, and Association Property, with notice given only to those Directors with whom it is practicable to communicate.
- Any Officer, Director, or employee of the Association acting with a reasonable belief that his actions are lawful in accordance with these emergency Bylaws shall incur no liability for doing so, except in the case of willful misconduct.
- The Board shall act to keep all members informed of all Board actions taken pursuant to these emergency powers by U.S. Mail, closed circuit tv, social media, or email, etc. as may be practicable under the circumstances.
If your association is interested in adopting such an amendment to your association’s governing documents, please be certain to seek out competent legal counsel that has the requisite expertise in the area of community association law.
(Reprinted with permission from the July 2020 edition of the Florida Community Association Journal and as written by attorney Jeffrey Rembaum)