rembaumlaw | Rembaum's Association Roundup

March 3, 2024May 14, 2024

Revised | Corporate Transparency Act Found Unconstitutional

THE CORPORATE TRANSPARENCY ACT FOUND UNCONSTITUTIONAL

In the case titled, National Small Business United, d/b/a the National Small Business Association, et al v. Janet Yellen, in her official capacity as Secretary of the Treasury, et al., Case No. 5:22-cv-1448-LCB, United States District Court, Northern District of Alabama, Northeastern Division entered on March 1, 2024, the court found the CTA to be unconstitutional but, at least for the time being, for the Plaintiffs, only.

By way of background, in 2021, Congress passed the 1500-page National Defense Authorization Act (the “NDAA”) and included within it, the 21-page Corporate Transparency Act (the “CTA”). In brief, the CTA would have required just about every entity registered with the Secretary of State, in each state, which includes community associations, to provide certain information about its “beneficial owners.” In the case of community associations, the beneficial owners are the board members and officers (and possibly managers, too) would need to include the name, date of birth, current address, and an identification number from a driver’s license, state ID card, or passport, and a copy of such document. The purpose of the CTA was aimed to prevent financial crimes, money laundering, tax evasion, and even the funding of terrorism. While there are limited exemptions, community associations were not included in these exemptions, notwithstanding lobbying efforts of the Community Association Institute lobbyists. Failure to comply with the CTA can lead to expensive civil financial penalties and significant time in federal prison.

In finding the CTA unconstitutional, the Northern District of the Northeastern Division Alabama appellate court noted that “Congress sometimes enacts smart laws that violate the [United States] Constitution…this court’s job is to consider whether the CTA follows the [United States] Constitution, not whether it is good policy.” The wise court asks, “does Congress have authority under the Commerce Clause [of the United States Constitution] to regulate non-commercial, intrastate activity, when certain entities which have availed themselves of the state’s incorporation laws, use channels of commerce, and their anonymous operations substantially affect interstate and foreign commerce? The Supreme Court’s Commerce Clause decisions all point to the same conclusion: “No.”

The written opinion in this case makes for great reading most especially for those interested in Constitutional law analysis. At the end of the day, the drafters of the CTA and the lawyers for the Secretary of the Treasury defending the CTA failed to take into account that the CTA does not regulate economic or commercial activity on its face, which is generally required if one wants to rely on the Commerce Clause of the United States Constitution to justify the constitutionality of certain laws. The court even gently points out how the CTA could have been made constitutional through better drafting, rather than “inartful drafting” and even points out, relying on a prior Supreme Court case “that it is beyond this Court’s province to rescue Congress from its drafting errors, and to provide for what we might think is the preferred result.” Lamie v. U.S. Tr., 540 U.S. 526 (2004).

While this is just the beginning of the CTA appellate fight, and no doubt the government will appeal to the United States Court of Appeals for the Eleventh Circuit, which will most likely lead to the loser of that challenge appealing to the United States Supreme Court, at least for now the CTA’s registration requirements due by December 31, 2024, are dead on arrival but only as to the Plaintiffs in the aforesaid case, only. Whether the holding will be later broadened to include all other corporate entities is unknown at this time.

With all of this in mind, community associations remain caught up in the snare of the CTA and will need to comply with its registration requirements.

(Written by Jeffrey Rembaum (Kaye Bender Rebaum) and reprinted with permission from the January 2024 edition of the “Florida Community Association Journal“.)

February 6, 2024February 6, 2024

Civility in Community Associations | Does It Even Exist Anymore?

Civility in Community Associations: Does it Even Exist Anymore?

It seems the growing trend is that tempers flare so much faster than in days gone by. One of the more difficult situations to deal with is when a cantankerous member of the association goes out of their way to make life miserable for their neighbors and/or their board. The situation can often get out of hand, requiring legal assistance, which then requires the entire community to bear the financial burden of the problem. In large part, the ability of an association to curtail such behavior will depend upon the type of behavior exhibited by the member, along with which remedies are provided for in the association’s governing documents, inclusive of its rules and regulations.

Most declarations have a nuisance provision similar to the following:

No noxious or offensive activities or noise shall be carried on or allowed, in or upon the common elements or in any unit, nor shall anything be done therein either willfully or negligently which may be or become an annoyance or nuisance to the other residents in the community. Such determination shall be made by the board of directors, whose decision shall be final and non-appealable.

Indeed, such a provision can be useful when it is necessary to seek an injunction to curtail the disruptive activities of the cantankerous member. When seeking to prevent “nuisance” conduct, it is important to document and gather as much evidence as possible to demonstrate that the underlying behavior has significantly impacted the peaceful enjoyment of the property by the other residents. Such documentation can include incident reports, photographs, owner complaints, security footage, etc.

It is also important for the board to work with the association’s attorney in adopting reasonable rules and regulations governing owner behavior at board meetings, membership meetings, and in general. Having such rules in place can lead to various consequences for the unruly individual, such as use right suspension and fining. But, sometimes such consequences may only amp up the situation rather than remedy it, and the association may need to file for an injunction to enforce its covenants and rules and regulations against the unruly member. If you wait until you have an unruly member to adopt rules and regulations governing conduct, then you may be “late to the dance.”

Neighbor-to-neighbor disputes can indeed be difficult because both neighbors can end up complaining to the board about the other neighbor’s behavior. Absent discrimination or harassment, the board is not necessarily obligated to play the role of referee and formally mediate disputes that are solely between neighbors. However, it should be noted that in such circumstances the owners have just as much right to enforce the provisions of the governing documents against their neighbor as does the association itself. Specifically, the community association statutes (Chapters 718, 719, and 720 F.S.) all contain language authorizing an individual resident to file legal action directly against another resident if such party believes his or her legal rights under the governing documents are being violated by the neighbor.

There is also recently adopted Florida legislation pertaining to harassment, or intimidation, based on religious or ethnic heritage. More specifically, §784.0493, Fla. Stat., provides that a person may not willfully and maliciously harass or intimidate another person based on the person’s wearing or displaying of any indicia related to any religious or ethnic heritage. Punishments range from second-degree misdemeanor through a third-degree felony if in the course of committing a violation the violator makes a credible threat to the person who is the subject of the harassment or intimidation. The law is also clear that a violation of this law is considered a “hate crime.”

Sometimes the harassing behavior does not take place in a physical setting, but rather online through social media. Such was addressed in a 2018 court case, Fox v. Hamptons at Metrowest Condo. Ass’n, Inc., Case No. 6:18-cv-1457-Orl-40GJK (M.D. Fla. Sep. 25, 2018). In this case, the owner (“Fox”) and the association had entered into a settlement agreement, and the association sought to have the terms of the settlement agreement enforced by the court. During the litigation the court not only found Fox in civil contempt but also further prohibited him from starting any new blogs, websites, or social media websites related to the association; and he was ordered to stop posting, circulating, and publishing any pictures or personal information about current or future residents, board members, management, employees, or personnel of the management company on any website, blog, or social media. It is crucial to understand that these restrictions were not part of the settlement agreement between the parties, but rather were imposed by the court on its own. Fox appealed on the basis that these broad prohibitions imposed by the trial court trampled on his First Amendment rights.

As an aside and by way of overgeneralization, in order for any of the constitutional protections to apply within a community association, there needs to be a nexus to the government. In this case, the nexus is relatively easy to discern because it was the judge, a government employee, who imposed the restriction on Fox’s speech, which then gave Fox the ability to challenge the court’s order using the First Amendment.

The appellate court confirmed that the trial court’s imposition of such permanent conditions constituted an unconditional prior restraint on free speech. The appellate court pointed out that,

…freedom of speech does not extend to obscenity, defamation, fraud, incitement, true threats, and speech integral to criminal conduct.

Fox’s use of social media to air his grievances did not fall into any of the exceptions, so therefore the court’s prohibitions on Fox were found to be in violation of the First Amendment. The appellate court noted that the trial court did not err when it enforced the agreed-upon terms of the previously executed settlement agreement between Fox and the association, and therefore upheld the trial court’s contempt order in that respect. At the end of the day, this case teaches us that a court-imposed, full-blown restriction on use of social media went too far. The question remains as to whether a court can curtail a member’s right to post on social media for a lesser period of time, and in regard to specific matters rather than the outright prohibition? Additionally, at times community associations adopt reasonable rules and regulations governing what can be posted on social media as related to their association, but enforcement of such provisions can be extremely difficult.

Sadly, in today’s world it is not a matter of “if” but rather “when” an association board will have to deal with owner hostility. All the above is a good reminder that if you wait until there is a problem to review the remedies available in the governing documents for curtailing cantankerous behavior, then it is far too late. By having a strongly worded nuisance provision in the declaration, along with rules governing civility at board and membership meetings, etc., an association can get in front of these situations and have the necessary tools at hand to deal with them effectively. When is the last time you asked your association’s attorney for recommendations to amend the declaration and adopt or revise rules and regulations governing civility?

(Written by Jeffrey Rembaum (Kaye Bender Rebaum) and reprinted with permission from the February 2024 edition of the “Florida Community Association Journal“.)

January 4, 2024January 4, 2024

The Transparency Act and Community Associations

THE FEDERAL CORPORATE TRANSPARENCY ACT REQUIREMENTS AFFECTING ALL COMMUNITY ASSOCIATIONS

What Every Board Member and Manager Must Know

In January 2021 the Corporate Transparency Act (CTA) was enacted by Congress. In 2024 its far-reaching requirements are planned to go into effect. The CTA was adopted by Congress to provide additional transparency in entity structures and ownership in an effort to combat tax fraud, money, laundering, and other illicit activities. It is designed to capture more information about the ownership of specific entities operating in or accessing the United States marketplace. A recent Small Business Administration reports over 27 million small businesses that are considered non-employer firms and thus have no employees. Learning of the beneficial ownership of these entities, Congress hopes to crack down on their misuse. The CTA is particularly targeted to these types of small businesses operating as so called “shell companies.”

By the time you are finished reading this article, each reader should be familiar with some new terms, such as, “FinCen,” and “beneficial owner,” to name just a couple. While the practical enforcement procedures of the CTA are currently unknown, the reason why you must be familiar with the registration and continuing reporting requirements of the CTA is because failure to comply with requirements of the CTA can lead to fines from $500–$10,000 per violation and jail time of up to two years.

While there is little doubt that community associations do not pose a threat for terrorist activity, tax evasion, money laundering, and other illegal activity that is the target of the CTA, sadly, community associations are not currently exempt from the initial registration and continual updating requirements of the CTA. While the CTA requirements for compliance are not particularly difficult, they are onerous and will reveal certain personal information about board members and possibly managers, too. Also, at the present time there does not appear to be any type of exemption from the requirements of the CTA for law enforcement personnel and others who may have gone to extra lengths to keep certain personal information private. However, the CTA does require that this information remains confidential and only used for its intended purposes.

The CTA, amongst its other requirements, requires domestic reporting companies such as corporations, limited liability partnerships, and any other entity, created by the filing of a document with the secretary of state, or any similar office under the laws of the state, to comply with its reporting requirements. This includes community associations as they are organized as a business entity (i.e., a not-for-profit corporation). In addition to providing the information regarding the entity (meaning the association), the CTA requires certain information regarding the association’s “beneficial owners.” A “beneficial owner” is defined, in part, as a person who exercises substantial control of the reporting entity.

Therefore, minimally, according to the CTA, the president and vice president are deemed to “exercise substantial control over the entity” thereby seemingly requiring certain personal information to be provided to the federal “Financial Crimes Enforcement Network” or “FinCen” for short. These beneficial owners must report their name, date of birth, address, unique identifier number, such as a Social Security number, possibly a driver’s license number or passport number, and a photocopy of the non-expired document that evidences such information, too. Whether other officers and directors will be required to similarly provide personal information remains to be seen but it is likely.

Those filing the requisite documents to assist an entity with its compliance with the CTA must provide similar information too. Those qualified to file such documents for corporate entities with FinCen are as follows either:

i) the individual who directly files the document that creates the entity (this could be the attorney that files the articles of incorporation with the state to create the community association corporation); or,

ii) the individual who is primarily responsible for directing or controlling the filing of the relevant document by another (this prong could refer to the authorized individual as directed by the board of directors, such as the attorney, accountant, or management company personnel to file the necessary documentation with FinCen to comply with the CTA).

In addition to the initial compliance requirements, which must be accomplished within 2024 for already existing corporations, reports must also be updated within 30 days of a change to the beneficial ownership, or within 30 days after becoming aware of or having reason to know of inaccurate information previously filed. Under a strict reading of these provisions, this means that every time there is a change in board members and officers, a report of the change must be made to FinCen within 30 days of the event. As mentioned above, failure to comply with requirements of the CTA can lead to fines from $500–$10,000 per violation and jail time of up to two years.

There are procedures set out in the CTA for information sharing among the federal governmental agencies when in relation to terrorist activity and money laundering as well as requirements for compliance with FinCen when it seeks additional information in regard to such matters. The Internal Revenue Service, the Customs and Border Protection agency, and FinCen can all issue summons for purposes of civil enforcement of the CTA. There are even rewards for persons who report on another that lead to recovery of a criminal fine, civil penalty, or forfeiture that exceeds $50,000 where the payment of the reward is limited to 25 percent of the net amount of the fine or $150,000, whichever is less.

Federal community association lobbyists are seeking an amendment to the CTA so that community associations are expressly made exempt and not caught in its web. But, unless that happens, compliance with the CTA is required for Florida’s community associations. Whether such compliance will be performed by the community association‘s attorney, accountant, or manager remains to be seen, and hopefully additional guidance will be provided by the appropriate federal government agencies in the near future. Should you have the opportunity, please reach out to your federal legislators in regard to the need for an exception for community association compliance with the requirements of the CTA.

For those that would like to read up on the CTA, the starting point for the Act itself can be found at 31 U.S.C 5336. This is the CTA-enabling legislation passed by the United States Congress and signed into law by the President that provides lawful authority to executive departments and agencies of the federal government to both adopt and enact, after public notice and hearings, their own laws that have the same force and effect, as if our Congress enacted them. (As an aside in case you ever wondered how our country ended up with so many laws, it is because of this particular process.) Once 31 U.S.C 5336 was enacted into law, the requisite executive departments and agencies of the federal government went to work adopting all sorts of laws to carry out the intent of the enabling legislation. These laws are published in the Code of Federal Regulations (CFR). The CTA is set out in section 1010 FCR 380 and is actually called “Reports of Beneficial Ownership Information;” however, its nickname is the “Corporate Transparency Act,” which has a better ring to it. The CTA can be cited to more fully as Part 1010 of the Code of Federal Regulations (CFR) Subpart C, section 380. It is a sub-part of CFR Title 31 titled “Money and Finance,” Subtitle B “Regulations Relating to Finance and Money,” Chapter X “Financial Crimes Enforcement Network Department of the Treasury.”

Due to the far reaching aspects of the CTA and its many nuances that could lead to many traps for the unwary, consultation with the association’s attorney and certified public accounting firm should be considered regarding any questions you may have in regard to the CTA, along with its registration and compliance requirements, too.

(Written by Jeffrey Rembaum (Kaye Bender Rebaum) and reprinted with permission from the January 2024 edition of the “Florida Community Association Journal“.)

December 22, 2023December 28, 2023

Florida Legislature to Pass Law Prohibiting Associations From Charging Estoppel Fees

YOUR ASSESSMENTS ARE ABOUT TO GO UP AGAIN

Act Now Before It IS Too Late!

Of all the subjects I never would have thought I would be writing to you about, it is this: the Florida Legislature is dangerously close to passing legislation that prohibits a Florida community association from charging a fee for the preparation and delivery of an estoppel certificate!!! The text of Senate Bill 278, along with its companion House Bill 979, fully prohibits condominium and homeowners’ associations from being able to charge the requesting party a fee for the preparation of the estoppel certificate. But, however, the professional who assists the association prepare and issue the estoppel, such as the management company and attorney, will now charge the association and not the party who requested the estoppel. This year’s legislative session starts very early, on January 9th. Your legislators need to hear from you that you do not want them to support these bills because they will cause financial harm to your association.

Why should community associations be stuck with the bill for the estoppel? This bill will fully shift the financial responsibility for the estoppel from the buyer or seller right on over to the association. In other words, the association still has to pay its agents, be it the management company or attorney, etc., to prepare the estoppel. At times it takes a lot of work, coordination and effort to timely issue the estoppel, let alone all of the liability that comes along with its issuance.

Since when in the United States of America can the legislature require any of us work for free? Well, it may sound like that because the buyer or seller will not have to pay for the estoppel but we all know in reality, nothing is free. This draconian fee shifting legislation could in a great many cases, if not all, act to increase every homeowner and condominium unit owner’s assessments who live in the community. Preparing estoppels can take significant time, most, especially, if there is a long history of nonpayment associated with the account. Also, existing violations must be taken into account in the estoppel certificate, etc., If the math is wrong, the issuer of the estoppel could end being financially responsible for the shortage, and they could be subject to, amongst others, Federal Fair Debt Collection Practice Act claims due to a mistake. Therefore, there is significant time involved in gathering all of this information, ensuring it is correct, and then issuing the estoppel within the required 10-day business day legislative timeframe. To make a long story short, management companies will have to increase their fees charged to the associations to offset their inability to charge the fee to the requesting party for the estoppel, and thus, every member of your association will have to pay more.

As to any rumors of rare abuse by those charging excessive estoppel fees, there are already safeguards built into the existing legislation which provide for summary legal proceedings that can be brought to compel compliance with the existing estoppel legislation and its financial cap. It even provides for prevailing party attorneys fees.

If you hear that objections to this legislation from management companies and attorneys are because they do not want to lose revenue such is not the case at all. It’s really quite simple: This legislation will fully shift the responsibility for the estoppel fees, from that of the requesting party, to all the owners that already live in the association’s community and who have nothing to do with the transaction at all.

As this is holiday season, if this passes into law, what a horrible gift that would be. To prevent this legislation from becoming law, please reach out to your legislators and let them know that you object to Senate Bill 278 and House bill 979.

HERE is a link to the SB 278.

Act Now Before It’s Too Late

December 4, 2023December 4, 2023

Political Yard Signs & Political Events

Political Yard Signs and Political Events

PROBHIBITING POLITICAL YARD SIGNS

Unless you share similar political views, your neighbor’s front yard sign supporting a favorite political candidate may be upsetting. Can a Florida community association demand the sign’s removal? A well-crafted and properly adopted board rule prohibiting all signs, as compared to just prohibiting political signs, is likely enforceable with this caveat.

Section 720.304 of the Florida Homeowners’ Association Act provides that any parcel owner may display a sign of reasonable size provided by a contractor for security services within 10 feet of any entrance to the home. In examining an association’s “no-sign” rule, let us first address the argument heard most often, “This is America! The First Amendment protects the right of all homeowners to display political signs in their front yard!”

This is simply not true, and wishing this to be true will not help. In fact, the First Amendment concepts of freedom of speech and freedom of expression certainly apply to governmental settings. But the First Amendment protections generally do not apply where there is no nexus to the federal or state government, and community associations do not have such a nexus.

In 1987 the Florida Supreme Court held, in Quail Creek POA v. Hunter, 538 So. 2d 1288 (Fla. 2d DCA 1989), that neither a homeowners association’s recording of its covenants in the public records, nor the enforcement of its covenants in state court, created a sufficient nexus to evidence “state action” such that the First and Fourteenth Amendment would apply. In 2014 the United States District Court, in Murphree v. The Tides Condominium at Sweetwater, 2014 WL 1293863 (U.S.D.C. MD, Florida, 2014), and citing to Quail Creek POA, held that homeowners’ associations existing under the laws of the State of Florida are not state actors. With that in mind, any homeowner would be hard pressed to argue otherwise.

The 1987 case of Brock v. The Watergate Mobile Home Park Association, Inc., 502 So.2d 1380 (4th DCA 1987) provides the necessary guidance to determine whether there is a sufficient nexus to the government such that the First Amendment would apply. There are two primary tests: the public function test and the state involvement test.

Under the public function test, state action will be found where the functions of a private individual or group are so impregnated with a governmental character as to appear municipal in nature… under the state involvement test, there must be a sufficiently close nexus between the state and the challenged activity such that the activity may be fairly treated as that of the state itself.

Should an association adopt a rule prohibiting one type of sign but allowing other types of signs, then notwithstanding the arguments that the First Amendment does not apply to community associations, this could create an argument that the association is regulating the type and manner of speech, and thus, might inadvertently be leaving room for a First Amendment-type argument to be used against the association.

Courts have long since held that owners give up certain liberties when living in a community association. In 2002 the Florida Supreme Court held in Woodside Village v. Jahren, 806 So. 2d 452 (Fla. 2002), that certain individual rights must be compromised when one chooses to live in an association. With that as our backdrop, any “no-sign” rule should be artfully drafted to help ensure enforceability. There is no margin for error. The dispositive court cases regarding rule enforceability make clear that a sign restriction must be “clear and unambiguous” to be enforceable against an owner. Remember, a basic principle of contract interpretation is that ambiguous terms are held against the drafting party. As a practical matter, in plain English this means that in the event the rule is even slightly confusing, the homeowner will receive the benefit of the doubt. Also, any covenant or rule must be applied fairly to avoid selective enforcement rebuttals; so, if Dorothy the Democrat is told to remove her lawn sign, so, too, must Roger the Republican be similarly told. Remember, too, that as a general rule, courts favor covenants adopted by the membership over rules adopted by the board; meaning, the former serves to increase the association’s chances of prevailing in the event of an owner’s legal challenge.

That rules prohibiting signs must be artfully drafted was a point made very clear to the homeowners’ association in Shields v. Andros Isle Property Owners Association, Inc., 872 So. 2d 1003 (Fla. 4th DCA 2004), in which the Fourth District Court of Appeal of Florida decided in favor of the homeowner who displayed a sign in her car window despite the association’s sign prohibition. The association’s rules prohibited the display of signs “on any lot,” except a “for sale” sign of a certain size, and prohibited signs on a vehicle. The Court, using the definition of a “lot” in the association’s declaration, interpreted these rules to mean that no sign, except a “for sale” sign, may be on the land or on the exterior of a vehicle. However, there was no prohibition for signs displayed from within a vehicle. When ambiguity exists, courts will rule in favor of the non-drafting party. In this instance the association is deemed the drafter of the rule, so therefore the ambiguity was held against the association, which worked to the owner’s benefit.

Consider, too, election season is short. By the time a lawsuit for an injunction to enforce the “no-sign” covenant is fully resolved, it might be time to consider the next presidential candidate! Also, it is important to take into account the holdings and principles that result from Alorda v. Sutton Place Homeowners Association, Inc., 82 So. 3d 1077 (Fla. 2d DCA 2012) and Mauriello v. The Property Owners Association of Lake Parker Estates, Inc., Case No. 2D21-500 (Fla. 2d DCA 2022) where it becomes quite clear that, if the association has a permissive right to self-help, that such self-help must be exercised, or at least attempted to be exercised, prior to seeking an injunction from the court. This is because all legal remedies must be exhausted before seeking an equitable remedy. Recall that the declaration of covenants is a legally binding contract. The fact that it includes language such as, “the association may, but is not obligated to enter an owner’s lot to cure a violation” is interpreted by the courts to mean that the association must exercise its self-help option before seeking an injunction. Please be sure to consult with your association’s attorney when considering enforcing rules and regulations.

Prohibiting Use of Common Areas and Clubhouse for Political Events

Can a Florida community association adopt rules prohibiting the use of the common areas and clubhouse for political events? Generally speaking, the board can adopt such a rule; but there are statutory exceptions which provide for the right of the members to peaceably assemble, and which allow for the invitation of public officers and candidates for public office to speak in common areas. More specifically, Section 720.304(1), Florida Statutes (i.e., the Florida Homeowners’ Association Act), provides the following:

All common areas and recreational facilities serving any homeowners’ association shall be available to parcel owners in the homeowners’ association served thereby and their invited guests for the use intended for such common areas and recreational facilities. The entity or entities responsible for the operation of the common areas and recreational facilities may adopt reasonable rules and regulations pertaining to the use of such common areas and recreational facilities. No entity or entities shall unreasonably restrict any parcel owner’s right to peaceably assemble or right to invite public officers or candidates for public office to appear and speak in common areas and recreational facilities.

(Note that similar provisions exist in both the Condominium and Cooperative Acts in §718.123 and §719.109, Fla. Stat., respectively.)

With these statutory rights in mind, should an association member invite a candidate for political office to speak, the association must allow use of the clubhouse or other common area for the candidate to address the members. If members peaceably assemble and discuss today’s political events, that, too, seems to be a statutory protected right. However, if a political group requests use of the clubhouse to host an event in support of a candidate or political party, then it likely could be prohibited except that the candidate would still be permitted to speak, and every association member would be allowed to attend, even those who may desire to protest.

If a rule adopted by the association prohibits the use of the clubhouse for political events and if legally challenged by an upset member, while it is difficult to predict the outcome, the court will need to balance the reasonableness of the board’s adopted rule as compared against the statutory protection. It should also be kept in mind that if your association was created prior to the legislation protecting a political candidate’s right to speak, and the declaration does not contain a provision adopting the legislation through “Kaufman”-type language (meaning it’s as if the legislation was adopted into the declaration), then such an association has an argument that such substantive legislation does not apply. (These rights came into existence on the following dates: October 1, 1977, for condominiums and cooperatives and April 1, 1992, for homeowners’ associations.) When crafting such rules, consultation with the association’s legal counsel is strongly recommended.

(Written by Jeffrey Rembaum (Kaye Bender Rebaum) and reprinted with permission from the December 2023 edition of the “Florida Community Association Journal“.)

November 3, 2023November 11, 2023

Is It Time to Consider Removing an Association’s Right of Self-Help to Cure an Owner’s Violation from the Declaration?

Through the years Florida’s community associations have relied upon the court decisions that had routinely agreed that the provisions of Florida Statutes that expressly authorize an association to entitlement to an injunction (i.e., a judicial order requiring a person to take action) superseded the common law standard of the requirement that there be no adequate remedy at law before a party could seek an injunction. In other words, an association could pursue injunctive relief and seek a court order to force an owner to wash their dirty roof even if the governing documents also permitted the association to enter upon the lot and cure the maintenance violation by cleaning the roof (this remedy is often called “self-help”).

However, due to rulings from both the 2nd District Court of Appeals in April 2022 and now the 6th District Court of Appeals in August 2023, that may no longer be the case. As you may recall, the April 2022 appellate case requiring a community association to first exhaust its permissive right to use “self-help” and cure an owner violation of the covenants before seeking an injunction was addressed in the May 2023 edition of the Florida Community Association Journal and can be found online at www.KBRlegal.com within Rembaum’s Association Roundup’s past articles.

This second appellate case, in August 2023, was decided in favor of the homeowner who failed to maintain their property, leading the association to seek an injunction from the court in an effort to compel the homeowner to comply with the provisions of the declaration. In this case, the declaration provided the board of directors the choice of i) “self-help” for the association to enter upon the lot to cure the maintenance violation, or ii) seeking an injunction from the court to compel the owner to maintain their property. Considering this particular litigation went on for 10 years, the attorney fees and costs likely to be assessed against the association could end up costing significantly more than if the association had fixed up the property in the first place. However, historically courts would grant injunctions in favor of associations to compel property owners to comply with the terms of the declaration when the clear language of the covenants provided the board a choice, to self-help or to seek an injunction. Therefore, it is critical for every board member and manager to understand why this is so.

There is a long-standing, legal common law principle that stands for the proposition that when a party has an adequate remedy at law, it must be fully and completely exhausted before such party can seek an equitable remedy, such as an injunction. In the recent appellate case from August 2023 (McConico v. Morgans Mill Property Owners Association, Inc., Case no., 6D23–1213) the association sought an injunction against the homeowner because the homeowner failed to maintain her property in a neat and attractive manner. The declaration even had the following provisions:

The owner of each lot shall maintain the exterior of the residence in the lot at all times and maintain it in a neat and attractive manner and as provided elsewhere herein. Upon the owner’s failure to do so, the association may have its option, after giving the owner written notice for a period of 30 days, to… perform such reasonable maintenance and make such repairs, as may be required and deemed necessary to restore the neat and attractive appearance of the lot and the exterior of the residence located thereon. The cost of any of the work performed by the association upon the owner’s failure to do so shall be immediately due and owing from the owner of the lot and shall constitute an individual assessment against the lot on which of the work was performed, collectible in a lump sum, and secured by the lien against the lot as herein provided.

Rather than take advantage of the “self-help” remedy contained in the declaration and thus assume the initial cost and expense, the board instead relied on section 720.305, Fla. Stat., which authorizes at law or an equity, or both, an association to bring an action in court (once the pre-suit mediation process has been utilized) to address the alleged failure by an owner to comply with the requirements of chapter 720 F.S. or the governing documents of the association. In fact the trial court agreed with the association, and in the final judgment found that the owner “failed to maintain her lawn and landscaping, exterior of the home and her driveway as required by the declaration…” Based on such finding, the trial court ordered the homeowner to clean, maintain, and repair the various aspects of her property.

However, the appellate court strongly disagreed with the trial court decision and applied the following long-standing principal:

…in order to establish entitlement to a mandatory injunction, there must be a clear legal right which has been violated, irreparable harm must be threatened, and there must be lack of an adequate remedy at law….

The appellate court determined that because the owner correctly argued that since the declaration provided the association the option of using “self-help” and performing the necessary maintenance and repairs at the association’s initial expense, the association had an adequate remedy at law, which needed to be exhausted before seeking an injunction.

It is interesting to note that, in the dicta of this case (which is not binding, but just a persuasive authority), the appellate court makes mention that had the association attempted to perform such a maintenance and the owner acted to prevent the association from entering the property, then seeking the injunction may have been proper. But that is not what happened, and therefore the appellate court ordered that “…it was error for the trial court to resort to equity and enter a mandatory injunction…”.

Based on this appellate ruling, the important question is, what is an association to do when it has a permissive but not mandatory ability to remedy a homeowner’s non-compliance by using “self-help” to enter upon the lot and cure the owner’s violation? In this instance the association will need to strongly consider an attempt to fix the problem first before seeking the injunction, or perhaps the better answer is to consider completely removing the “self-help” provision from the declaration.

Please be sure to discuss these extremely important cases with legal counsel familiar with community association law before seeking an injunction to compel an owner to maintain their property, most especially when your association‘s declaration provides for any type of “self-help” remedy. If not, then the association could end up spending significant fees in an effort to seek an injunction only to be stymied in such effort, which could also result in the association being responsible for the attorney’s fees and costs incurred by the owner if such owner is the prevailing party in the legal action.

(Written by Jeffrey Rembaum (Kaye Bender Rebaum) and reprinted with permission from the November 2023 edition of the “Florida Community Association Journal“.)

October 3, 2023October 3, 2023

Board Member Certification

Board Member Certification: Should It Be Just The Beginning?

The Florida legislature requires board members to be “certified” in order to be properly qualified to serve on the board of a residential community association. By now you might think that the requirements are exactly the same for condominium boards as compared against homeowner associations’ boards, but they differ with regard to how long the association is obligated to keep the proof of director certification.

The Florida Condominium Act, more specifically §718.112(2)(d)4.b., Florida Statutes, and the Florida Homeowners’ Association Act, more specifically §720.3033(1)(a), Florida Statutes, require the following:

Within 90 days after being elected or appointed to the board of an association of a residential condominium, each newly elected or appointed director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members.
In lieu of this written certification, within 90 days after being elected or appointed to the board, the newly elected or appointed director may submit a certificate of having satisfactorily completed the educational curriculum administered by a division-approved condominium education provider within one year before, or 90 days after the date of election or appointment.
The written certification or educational certificate is valid and does not have to be resubmitted as long as the director serves on the board without interruption.
A director of an association who fails to timely file the written certification or educational certificate is suspended from service on the board until he or she complies with this sub-subparagraph. The board may temporarily fill the vacancy during the period of suspension.
Failure to have such written certification or educational certificate on file does not affect the validity of any board action.
The Condominium Act requires that the secretary shall cause the association to retain a director’s written certification or educational certificate for inspection by the members for five years after a director’s election or the duration of the director’s uninterrupted tenure, whichever is longer, while the Homeowners’ Association Act requires that the association retain each director’s written certification or educational certificate for inspection by the members for five years after the director’s election.

While requiring certification is a good start in regard to providing board members the necessary tools to do their job, there are issues which need to be addressed, such as the following:

The ability of a board member to be certified simply by signing an 8 ½ x 11 piece of paper that they read the governing documents, will uphold the governing documents, and will faithfully discharge their duty should be eliminated. How many board members actually read their respective governing documents; and even if they do, what did they learn about corporate governance and the ever-growing body of statutory law, judicial decisions, and intricacies of ensuring that their fiduciary responsibility is being met?
The ability to be certified simply by watching a pre-recorded webinar should also be modified or, better still, fully eliminated. Not only do attendees benefit from the one-on-one instruction in a live classroom or webinar setting, but when viewers have the ability to watch from home, well, did they really do so? At present the Department of Business and Professional Regulation (DBPR) does not regulate or police the pre-recorded board certification webinar. These pre-recorded certification courses allow the viewer to cheat the system by simply fast forwarding to the end to make it appear as though the viewer watched the entire presentation, but in reality, they did not! Most importantly, the laws governing community associations are in a constant state of flux. The legislature is continually revising and adding new laws, and appellate courts continually author new opinions affecting community associations. Only by attending a live class, be it in person or by webinar, will a board member have the best opportunity to be fully updated.
The information covered in the certification class is primarily of a legal nature emanating from the Florida Statutes and relevant case law. Therefore, only lawyers who are board-certified specialists in this body of law and other lawyers with a sufficient number of years of daily experience in community association law matters should be permitted to teach the initial board certification classes.
Continuing education for those board members serving multiple years should be strongly considered, even if it is only one or two hours per year. The continuing education component courses could be led by board-certified specialists in this body of law, or by other lawyers with a sufficient number of years of daily experience in community association law matters, or perhaps even experienced, licensed managers demonstrating sufficient knowledge in the field, regarding a variety of subjects. Also, during the typical initial board member certification course, the variety of subjects needing discussion can only be summarized. Therefore, in-depth analysis of the myriad of issues and subjects discussed is practically impossible given the time constraints, which could be addressed by requiring continuing education. Potential subjects include the following:

- - Contract pitfalls
  - Budgets and reserves
  - Internal controls
  - Elections
  - Conflicts of interest
  - Approval and screening requirements
  - Fair housing laws
  - Covenant enforcement
  - How to run a board meeting
  - Conflict resolution and de-escalation techniques for angry homeowners.

Requiring an initial board certification was a really good start. However, the process of education must continue. In our opinion, a one-time board certification course is simply not sufficient! Since the law already contemplates that board members will serve multiple years, the law should also contemplate continuing education requirements.

(Written by Jeffrey Rembaum (Kaye Bender Rebaum) and reprinted with permission from the October 2023 edition of the “Florida Community Association Journal“.)

September 2, 2023September 2, 2023

Fiduciary Duty: What It Means to Your Association

FIDUCIARY DUTY: What it Means to Your Community Association

What duty does a community association board member owe to their association? What happens if that duty is breached? During the 2023 legislative session, legislation was proposed that would have made directors criminally liable for failure to timely respond to official record requests, among other provisions. The legislation in House Bill 919 was proposed by Representative Porras in response to the alleged $3.4 million dollar embezzlement scheme that took place at the Hammocks Community Association, located in Miami-Dade County. Parts of this proposed bill were well-intentioned; however, several provisions were commonly viewed as too broad and expansive.

On November 15, 2022, the Miami-Dade State Attorney’s Office announced charges related to the Hammocks’ criminal case, including racketeering, organized scheme to defraud, money laundering, grand theft, and fabricating physical evidence against five board members. These board members have been accused of the following:

i) running a scheme in which they used HOA checks and HOA credit cards from 55 bank accounts to pay for “no-show” work by shell companies or vendors, who would funnel money back to the directors for their personal use;

ii) withholding official records from members; and,

iii) failure to hold valid elections, among other bad acts.

If found guilty these board members overtly breached their fiduciary duty to their association.

During the 2023 legislative session, House Bill 919 initially contained significant criminal penalties to punish board members who failed to provide official records when they otherwise should have, criminal penalties for kickbacks, and criminal penalties for improper election interference, among other provisions. Such laws, while well intended, went overboard as evidenced by the creation of criminal penalties for failure to provide official records, as such severe criminal penalties for operational matters would likely only deter good people from running for the board. Recognizing this potential issue, parts of HB 919 were tempered a bit prior to it becoming law. That said, in the opinion of this author, new laws with new criminal penalties are not the answer. Bad people do bad things, and no amount of laws will likely significantly change that. So, what is the answer?

One answer is to shore up the educational and certification requirements for board members. At present, there are two ways to be certified as a board member. One method is to take a State-approved class, which provides an overview of the voluminous information board members need to know in order to perform their duties. The other method is to sign a piece of paper that the board member has read the governing documents, will abide by them, and will faithfully discharge their duties. This second method should be eliminated as there is no method to confirm compliance, and this method does not have any educational component. In addition, continuing education requirements should be required for any board member serving consecutive years.

During a board certification class, time should be spent discussing the term “fiduciary duty.” While the term is repeatedly used in Chapters 718 and 720 of the Florida Statutes, it is not expressly defined in these statutes. Section 718.111, Florida Statutes, makes reference to Section 617.0830, Florida Statutes, which provides for general standards for directors of not-for-profit corporations, such as community associations.

Section 617.0830, Florida Statutes, provides the following:

1. 1. A director shall discharge his or her duties as a director, including his or her duties as a member of a committee i) in good faith; ii) with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and iii) in a manner he or she reasonably believes to be in the best interests of the corporation.
  2. In discharging his or her duties, a director may rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by: i) One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented; ii) legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the persons’ professional or expert competence; or iii) a committee of the board of directors of which he or she is not a member if the director reasonably believes the committee merits confidence.
  3. A director is not acting in good faith if he or she has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (2) unwarranted.
  4. A director is not liable for any action taken as a director, or any failure to take any action, if he or she performed the duties of his or her office in compliance with this section.

Still, though, there is no express definition of the term “fiduciary duty.” The purpose of studying fiduciary relationships is to identify the areas where it exists and gain an insight into the duties of a fiduciary. After all, every board member is a fiduciary for their community association. Common definitions of the term “fiduciary” include:

- - A fiduciary relationship is a relation between two parties wherein one party (fiduciary) has the duty to act in the best interest of the other party (beneficiary or principal).
  - A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties. Typically, a fiduciary prudently takes care of money or other assets for another person.
  - A fiduciary duty is a relationship in which one party places special trust, confidence, and reliance in and is influenced by another who has a fiduciary duty to act for the benefit of the party.
  - Most importantly, and germane to this discussion, a fiduciary is a person or organization that acts on behalf of another person or persons, putting their clients’ interests ahead of their own, with a duty to preserve good faith and trust.

In other words, a good community association board member puts the interest of their association above their own personal interests. Thus, while we may not be able to stop bad people from doing bad things, through continuing education we can help good people do better.

To recap, there are three things that can be readily accomplished that would make a positive difference for Florida’s community associations.

1. 1. Remove the ability of a board member to be “certified” by signature alone.
  2. Require continuing education for board members serving continuous years.
  3. Amend Florida Statutes, Chapters 718 and 720, to include express definitions of fiduciary duty so that it is made patently clear that every board member must put their community association above and ahead of their own personal interests.

(Written by Jeffrey Rembaum (Kaye Bender Rebaum) and reprinted with permission from the September 2023 edition of the “Florida Community Association Journal“.)

June 19, 2023June 19, 2023

Guns in the Clubhouse: What Can a Community Association Do?

The right of the people to carry and bear arms without governmental infringement is a right which stems from both the United States Constitution and the Constitution of the State of Florida. The State of Florida recently adopted new gun legislation, effective July 1, 2023, which allows the everyday citizen to carry a concealed weapon without first obtaining a concealed weapons permit. This raises interesting questions for community associations such as, is the right to carry a concealed weapon absolute? Can a community association adopt a rule that prohibits the carrying of concealed weapons in the clubhouse or other common area facilities?

Before we get too far in our analysis, it is important to point out that the intent of this article is not to advocate for gun control or the right to carry. Rather, the intent of this article is to examine the rulemaking authority of a board of directors of a community association to prohibit concealed weapons in the clubhouse and other common areas. In short, is it possible for a community association to adopt such a rule? Yes, subject to the cautions and explanations explained below. Is the adoption of such a rule risk free? No!

As the starting point, in order for a board-made rule of this nature to have validity, we must examine whether it violates either the United States Constitution or the Constitution of the State of Florida. As to when constitutional protections apply within a community association, this is an interesting question. In prior cases, courts have found that recorded covenants restricting home ownership based on race will subject the covenants to a constitutional examination, and in the end, such covenants were deemed to violate the equal protection clause of the Fourteenth Amendment to the United States Constitution.

Another method by which courts may find application of constitutional protections to community associations is if there is significant governmental action associated with the community association. For example, an argument would exist that if a community association were built with federal monies, the covenants of such a community association would be subject to all the protections afforded by both the United States Constitution and the Constitution of the State of Florida. Often, multiple community associations that exist within a sprawling master association are built in community development districts (CDD). The CDD is a quasi-governmental entity established to govern and control what would otherwise be the common areas of the master association. The creation of the CDD allows many of the hard costs associated with the community’s build-out, such as the roads and drainage systems, to be immediately passed on to the first-time home buyers. By utilizing a CDD, long-term bonds can be issued, which are paid back through ad valorem tax obligations allowing the costs to spread out over a significantly longer period of time. As quasi-governmental entities, constitutional protections which limit powers of government would likely apply to CDDs. Therefore, should a CDD adopt rules to prohibit concealed weapons in the common areas, such a rule would likely be found to violate constitutional protections. However, the same analysis is not applicable if the community association itself adopted such a rule.

It should be remembered that courts have long held that owners give up certain individual rights and liberties when living in a community controlled by a community association. In 2002 the Florida Supreme Court held, in Woodside Village v. Jahren, 806 So. 2d 452 (Fla. 2002), that certain individual rights must be compromised when one chooses to live in a condominium association (and by analogy, in a homeowners’ association, too). But, on occasion courts have found that certain constitutional protections apply within a community association; however, such application is somewhat rare.

Thankfully, we do have some limited guidance. In 1989 the Florida Supreme Court held, in Quail Creek POA v. Hunter, 538 So. 2d 1288 (Fla. 2d DCA 1989), that neither a homeowners’ association’s recording of its covenants in the public records, nor the enforcement of its covenants in state court, created a sufficient nexus to evidence “state action” such that the First Amendment and the Fourteenth Amendment of the United States Constitution would apply. By analogy, such logic could be applied to defending the right of a community association to adopt a rule prohibiting concealed weapons in the clubhouse. Thus, there is no reason to believe that such arguments would not also apply to the application of the Second Amendment of the United States Constitution within community associations. That said, it would not at all be surprising for an owner to challenge such a rule; so, any association that adopts such a rule should be prepared to be a possible test case, which could have national implications associated with it.

Let us assume that the board understands and accepts such a risk and is ready to move forward to adopt a rule prohibiting the carry of concealed weapons in the clubhouse. Certainly, we recommend that counsel for the association be consulted prior to adopting these types of rules. For the purposes of our analysis, let us also assume that the community association at issue does not have a sufficient nexus to the federal or state governments that would, in and of itself, render such a rule unconstitutional. Under these circumstances, the analysis can then shift to the ordinary rulemaking criteria necessary to withstand judicial challenge, as follows:

1. 1. Does the board have the necessary rulemaking authority set out in the governing documents or by statute to adopt such a rule?
  2. Does the rule conflict with any rights afforded by governing documents of higher priority, whether they are considered express or implied rights?
  3. Is the rule reasonable? Reasonableness is difficult to define, but case law provides that the rule must be rationally related to a legitimate association objective. The rule cannot be arbitrary or capricious.
  4. Does the rule contravene existing laws or compelling public policies?
  5. Was the rule adopted in a procedurally correct manner that is provided by both the governing documents and existing law?

Of course, even if the association adopts such a rule, enforceability is an entirely different issue. Assuming the association is not using some type of full body scanner, then so long as the possessor of the concealed weapon does not brandish the weapon, and thus it remains fully concealed, no one will be the wiser. In addition, such a rule would not apply to certain individuals who have an absolute right to carry a concealed weapon, subject to very few limitations, such as an off-duty police officer.

As an aside, just because a person may not need to have a concealed weapon permit to carry a concealed weapon, this does not mean that the still-available concealed weapon permit does not have value. It certainly does when it comes to traveling outside the State of Florida to one of the many states, over 26, that have reciprocity with Florida, meaning that the other states recognize Florida’s concealed weapons permit. With that in mind, obtaining a concealed weapons permit may still make sense.

While a properly drafted rule prohibiting guns in the clubhouse stands a decent chance of validity, remember that even if your association

i) fully analyzes whether it has any type of federal governmental nexus which would provide for clear application of constitutional protections and such analysis is answered in the negative, ii) meets the rule adoption criteria listed above, and iii) consults with the association’s lawyer who helps draft such a rule, the association could still find itself as a defendant in a lawsuit seeking to have such a rule invalidated by the court.

(Written by Jeffrey Rembaum and reprinted with permission from the June 2023 edition of the “Florida Community Association Journal”.)

June 5, 2023August 31, 2023

Sunshine With a Chance of Screaming Children? Not in My Community

Sunshine with a Chance of Screaming Children? Not in My Community! “55+” Communities Under the Housing for Older Persons Act

Florida’s “55+” communities are no longer required to be registered with the Florida Commission on Human Relations, an agency created by the Florida Legislature in 1969 to enforce the Florida Civil Rights Act, which includes Florida’s Fair Housing Laws. However, a community association qualifying as housing for persons 55 years of age or older must still have and follow procedures to determine the occupancy of the homes within the community every two years to maintain the community’s status as a “55+” community.

With Florida’s sunshine, sandy beaches, and countless activities, it is easy to understand why the Sunshine State attracts seniors from colder climates and why Florida residents approaching retirement continue to live here. For those who prefer to be surrounded by their generational peers, there are many communities to choose from that prohibit or restrict occupancy of the homes within the community by children, and more and more are being created every day. If you are an avid reader of this publication, you are already familiar with the Fair Housing Act, and may be asking yourself, “How is this possible when the Fair Housing Act prohibits discrimination in housing against families with minor children?” The answer is, there is an exception for that.

Under the Housing for Older Persons Act, housing providers, including community associations, are exempt from liability for familial status discrimination so long as certain requirements are met and maintained. Although there are three types of housing for older persons exemptions, the most prevalent exemption is for housing intended and operated for occupancy by persons 55 years of age or older. As such, “55+” communities are the focus of this article.

In order for a community to qualify as a “55+” community, the community must comply with the following requirements:

1. At least 80% of the occupied homes must be occupied by at least one person who is 55 years of age or older; and
2. The community must publish and adhere to policies and procedures which demonstrate the community’s intent to be a provider of housing for persons 55 years of age or older; and
3. The community must comply with rules established by the U.S. Department of Housing and Urban Development (“HUD”) for age verification of the community’s residents.

As provided above, a housing provider must publish and adhere to policies and procedures that demonstrate its intent to operate as a “55+” community. For community associations, these policies and procedures are best placed in the homeowners’ association’s declaration of covenants or the condominium association’s declaration of condominium. The Housing for Older Persons Act sets out the following nonexclusive factors that demonstrate a housing provider’s intent to operate as an older persons’ community:

The following factors, among others, are considered relevant in determining whether the housing facility or community has complied with this [demonstration of intent to operate as an older persons’ community] requirement:

1. 1. The manner in which the housing facility or community is described to prospective residents;
  2. Any advertising designed to attract prospective residents;
  3. Lease provisions;
  4. Written rules, regulations, covenants, deed or other restrictions;
  5. The maintenance and consistent application of relevant procedures;
  6. Actual practices of the housing facility or community; and
  7. Public posting in common areas of statements describing the facility or community as housing for persons 55 years of age or older.

The community association must be able to produce, in response to a complaint filed under the Fair Housing Act, verification of compliance with the 80% occupancy requirement, discussed above, through reliable surveys and affidavits. A community association’s failure to survey its list of occupants in accordance with its age verification procedures does not demonstrate intent to be housing for older persons and could jeopardize the community’s status as a “55+” community.

In performing the required occupancy survey, any of the following documents are considered reliable documentation of the age of the occupants of the homes within the community to ensure that at least one occupant of at least 80% of the homes within the community is 55 years of age or older:

1. 1. Driver’s license;
  2. Birth certificate;
  3. Passport;
  4. Immigration card;
  5. Military identification;
  6. Any other state, local national, or international official documents containing a birth date of comparable reliability; or
  7. A certification in a lease, application, affidavit, or other document signed by any member of the household age 18 or older asserting that at least one person in the unit is 55 years of age or older.

Now that we know the survey must be done every two years to ensure that at least one occupant of at least 80% of the homes within the community is 55 years of age or older, what about the remaining 20% of the homes? The remaining 20% of the homes may be occupied by persons under the age of 55, and the community may still qualify as a “55+” community. Notwithstanding this 20% allowance, a community association may require that 100% of the homes be occupied by at least one person 55 years of age or older, or that 80% of the homes be occupied exclusively by persons 55 years of age or older. Although up to 20% of the homes within a “55+” community may be occupied exclusively by persons under the age of 55, a community association allowing this occupancy needs to plan with care any attempt to permit the entire 20%, or a large portion of the 20%, of the remaining homes to be occupied exclusively by persons under the age of 55 because doing so could endanger the community’s housing discrimination exemption, particularly in the event a qualifying occupant who is over the age of 55 dies when all the remaining occupants of the home are under 55 years of age.

Community associations should also be aware that local laws may provide for additional protected classes against which housing discrimination is prohibited, including, for example, discrimination based upon age, sexual orientation, marital status, and gender identity or expression. Therefore, a community association should contact its attorney before establishing policies and procedures restricting occupancy based on age or affecting survivors’ rights to property.

Similarly, although the Housing for Older Persons Act provides an exemption from liability for familial status discrimination for those communities that comply with its requirements, the Housing from Older Persons Act does not protect housing providers from liability for housing discrimination because of race, color, religion, sex, disability, or national origin under the Fair Housing Act.