REMBAUM'S ASSOCIATION ROUNDUP | The Community Association Legal News You Can Use

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Age-Based Restrictions – Regulating the Use of Recreational Facilities by Children

The Fair Housing Act, Title VIII of the Civil Rights Act of 1968 (which has been amended and expanded over the years), prohibits discrimination in housing on the basis of race, color, national origin, religion, sex, familial status, and disability. There are also various state and local regulations that address housing discrimination. While most community associations are aware of and avoid discriminatory housing practices for most protected classes, some community associations struggle with balancing how to steer clear of discrimination on the basis of “familial status” while still addressing common concerns and issues that children can create in a community. The first part of this article addresses communities that are NOT Housing for Older Persons (meaning not 55 and older) communities while 55 years of age and older communities are addressed toward the end.

Discrimination on the basis of “familial status” includes discrimination against children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18. In addition to prohibiting familial status discrimination as to occupancy of a dwelling, the Fair Housing Act’s familial status discrimination prohibition extends to the use of the association’s recreational facilities, including for example, the community clubhouse, swimming pool, hot tub, and fitness center.

NOT 55 AND OVER COMMUNITIES

In United States of America v. Plaza Mobile Estates, et al., 273 F. Supp. 2d 1084 (U.S.D.C. 2003), the court held that several association rules which prohibited or restricted the use of recreational facilities, including the clubhouse, billiard room, tennis courts, laundry room, swimming pool, sauna, jacuzzi, and sun deck, by children were discriminatory and violated the Fair Housing Act because they treated children, and thus families with children, differently and less favorably than adult-only households. These rules included prohibiting residents under the age of 14 from using the recreation facilities without the accompaniment of an adult resident, prohibiting entry into the billiard room by anyone under the age of 18, requiring that anyone under 14 years of age riding a bicycle be accompanied by a responsible adult, and requiring guests under 18 years of age be accompanied by a responsible adult. A similar conclusion was reached by the court in Iniestra v. Cliff Warren Investments, Inc., 886 F.Supp.2d 1161 (C.D.Cal.2012), in which it found that the following four association policies were facially discriminatory: (i) prohibiting children under the age of 18 from being in the pool or pool area at any time unless accompanied by their parents or legal guardian; (ii) requiring children on the premises to be supervised by a responsible adult at all times; (iii) requiring children under seven to be supervised; and (iv) requiring adult supervision for children under 10 years old.

Therefore, it is clear that community associations should avoid adopting rules and regulations which unreasonably prohibit or restrict the use of their recreational facilities or other common areas on the basis of age. The above cases provide insight as to what may be considered unreasonable. However, these cases do not completely eviscerate the authority of a community association to adopt reasonable rules and regulations governing the use of its recreational facilities and other common areas. This merely requires the community association to alter its perspective on the rules and regulations being adopted. Instead of focusing only on the age of the individual, focus on the underlying activity that the community association would like to regulate or prohibit. For example, if the concern is the safety of children at the community swimming pool, the community association could consider adopting a rule requiring that anyone who is not a competent swimmer be supervised by a competent swimmer at all times while in the pool and pool area.

If the association is going to prohibit use of amenities and such based on age alone, consider including a mechanism for relief from the rule within the rule itself. For example, what if the association has a rule, “No children under the age of 12 may be in the pool without adult supervision”? What if an 11-year-old is already a proficient swimmer and is on a swim team? Therefore, consider adding to the rule that “if an exception to the rule is necessary, please make application to the board to do so.” In other words, do not make the rule inflexible, but rather provide exceptions to the rule under the right circumstances.

Although the Fair Housing Act prohibits discrimination in housing on the basis of familial status, there is an exception to this prohibition under the federal Housing for Older Persons Act adopted in 1995 (“HOPA”). Under the HOPA, 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 common exemption is housing intended and operated for occupancy by persons 55 years of age or older, which enables the association to prohibit persons under the age of 18 from being permanent residents.

55 AND OVER COMMUNITIES

To qualify as “housing for older persons” (often called “55+ housing”), a community association must meet the following criteria: (i) ensure that at least 80 percent  of the homes have at least one permanent resident who is 55 years of age or older; (ii) publish and adhere to policies and procedures that demonstrate an intent to provide housing for older persons (55+); and (iii) conduct a census/survey every two years to obtain reliable age documentation of the residents to verify the occupancy of the homes.

If a community association is properly maintained as “housing for older persons,” then the community association may adopt age-based restrictions concerning the use of its recreational facilities and other common areas because it is exempt from enforcement of familial status housing discrimination. For example, a community association that qualifies as housing for older persons may limit children’s use of the community swimming pool to certain days or times and may require an adult to accompany children while in the clubhouse or prohibit children from using the community fitness center. As a result of the HOPA exemption, a community association that qualifies as housing for older persons may adopt age-based restrictions which community associations for all ages are prohibited from promulgating. Of course, no community association is exempt from the laws that prohibit discrimination based on any other protected class, such as race, religion, national origin, disability, etc.

While community associations that qualify as housing for older persons are exempt from the Federal Fair Housing Act’s provisions regarding familial status, these community associations must also be mindful of local laws and ordinances that may also prohibit discrimination based on age before adopting age-based restrictions. For example, the fair housing laws of Palm Beach County provide that “[h]ousing for older persons may also maintain only those age restrictions necessary in order to be designated as housing for older persons.” Therefore, a community association should contact its attorney before establishing rules, regulations, or restrictions based on age.

Since When Should the HOA Clubhouse Not Come With Your Home Purchase?

Since When Should the HOA Clubhouse Not Come With Your Home Purchase?

The Florida Legislature Is Called Upon To Act To Put A Stop To Developers Who Require HOA Members To Purchase Their Community Clubhouse And/Or Clubhouse Operations After Turnover

Building property subject to a homeowners’ association (HOA) should not entitle a developer to be in a position to financially gouge the association’s members month after month by using the assessment regime to continually line its pockets. Essentially, that is what association member Gundel argued in court against his association’s developer, Avatar Properties, who built out the Solivita Homeowners’ Association. In this HOA the club facilities, including a spa and fitness center, dining venues, indoor and outdoor pools, parks, tennis courts, and more, were not subjected to the declaration, but rather remained under the exclusive ownership and control of Avatar, the developer, and therefore were not a part of the common areas. This means that as a part of the turnover process, the developer was not required to turn over the club facilities and operations to the now member-controlled HOA but rather retained ownership and control of those facilities. Can you imagine paying hundreds of thousands of dollars for a beautiful new home in a gorgeous community, which includes access to a sprawling clubhouse with dining rooms, spas, and all of the amenities and yet, even though those club amenities are in the middle of the community, they are  owned by a corporation not subject to Chapter 720, Florida Statutes, in any fashion, with the intent being that such club amenities will never be under the control of the HOA’s members?

In the case, Avatar Properties Inc. v. Gundel, Case no. 6D23-170, decided June 22, 2023, by Florida’s Sixth District Court of Appeal, the Court (which, in our opinion, was the correct decision) explained that within the Solivita Declaration, the developer included language for each association member to pay as a part of the annual assessment a sum of money unilaterally determined by the club operator for both club operations and what also was just pure profit as argued by owner Gundel.

The Court explained that the assessment imposed by Avatar (the developer) for the mandatory club membership had two components. One component was the amount required for club expenses to be shared proportionately by each resident. The second component was for a membership fee that represented, according to the Court, an annual profit charge to each owner that was due and payable to Avatar. In fact, if a member did not pay, then their home could even be subject to the lien and foreclosure process by the association.

In the trial court’s summary judgment hearing, the Court ruled in Gundel’s favor, finding that assessments for the club, which constituted profit, were improper because pursuant to Section 720.308 of the Florida Statutes, assessments cannot be levied for profits, but only for expenses.

In response to this case and possibly for other reasons, at least one developer designed a new HOA community with a big difference: it made the clubhouse building and the dirt upon which it was constructed to be a part of the common areas of the HOA. Then through a complicated process laid out in the declaration, the developer provided that the clubhouse operations were not owned by the HOA and that after turnover of control of the HOA to the members, the members must purchase the “operations” of the club at what many consider a grossly inflated price. Should the association members decide not to make the purchase, then the developer maintains the right to sell the club operations to a third party for which the assessment paying members will be at the financial mercy of the club operator forever. No doubt the association membership is already paying for the clubhouse operations through their monthly assessments, and in our opinion to now require the membership to spend millions of dollars to buy those clubhouse operations is just plain wrong!

Let’s break this alternate scheme down. Although previously disclosed in the declaration and its attached club plan, either i) the association membership agrees to purchase the club operations at an inflated price for millions of dollars (and for what—the right to operate their own clubhouse?);  or (ii)  the developer retains the right to sell the club operations to a third party who will then be entitled to charge members assessments to both fund the operations and, like any business, earn a profit for doing what should have been handed over to the membership as a part of the turnover process. After all, what clubhouse operator is going to operate at cost and not expect a profit? Either way, the members lose, lose, and lose.

This type of plan ultimately hurts owners as it will likely create a five figure per member assessment obligation either in the nature of paying back the loan necessary to purchase the clubhouse operations or to be forced to pay a new clubhouse operator. The only money a post-turnover association member should have to pay for their clubhouse operations is the actual money expended for operations (i.e., what it costs to provide the restaurant, spa and pool services, etc.). Common area facilities were never designed or even contemplated to be a continual profit center for a developer or developer-related entity.

Worse still, it appears that these types of schemes have no room for negotiation. The purchase price has been pre-determined by the developer years ago when it initially recorded the community’s governing documents. While the developer can argue it is all disclosed in the governing documents (and therefore proposed buyers/future members have notice of this issue), it takes a fairly sophisticated legal mind to understand how this process is going to work. In this author’s experience, the financial obligations associated with either having to buy the clubhouse and/or the clubhouse operations is often quite a surprise to the members.

In short, requiring the membership to purchase the clubhouse operations based on an unreasonable financial formula requires that the association borrow the millions of dollars necessary to pay the developer. In the end the obligation to pay the loan will be wrapped up in the assessment regime which means, once again just like in the Avatar case, the developer is improperly requiring the association to levy assessments for the developer’s (or third-party club operator’s) gross profit rather than only the legitimate expenses as contemplated by Section 720.308 of the Florida Statutes.

In our opinion, it is evident the Florida legislature needs to protect the citizens of the State of Florida by declaring such schemes unlawful. Clearly, the clubhouse operations should be turned over to the association membership as part of the turnover process, and the membership should not be charged for that which they should already own. If it is the clubhouse structure issue which needs to be purchased because it was not included in the overall purchase price of the houses within the community, then certainly the developer is entitled to recoup its legitimate expenses associated with the buildout; but post turnover the developer should not be entitled to profit at the expense of the association membership. If the developer wants to profit from the clubhouse in the clubhouse operations, then certainly the developer could have included those sums within the purchase price of each member’s home. Their decision not to do so and to artificially deflate the price of a home as a result thereof should not be allowed.

One cannot help but wonder if these types of clubhouse schemes could rise to the level of violating Florida’s Deceptive Trade and Practices Act as set out in Chapter 501, Fla. Stat. In fact section 501.24, Fla. Stat., provides in relevant part that unfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful. While the developer can argue that the clubhouse scheme is fully disclosed, it is our opinion the owners can certainly argue that this practice is, at best,  unfair and at worst unconscionable.

Board members and members who live in an association with these types of obligations are strongly urged to discuss their options with competent legal counsel so as to make informed decisions whether to buy the clubhouse and/or the clubhouse operations or consider filing a lawsuit against the association’s developer, arguing as Gundel did in the Avatar case, that this type of profit making activity is unlawful. Also, it must be noted that while the Sixth District Court of Appeal fully agreed with the outcome of the trial court, it certified a question to the Florida Supreme Court regarding the matter. However, the Florida Supreme Court declined review. Therefore, it appears the Gundel opinion remains valid. Nevertheless, it does not go far enough to protect association members from having to purchase their clubhouse and/or clubhouse operations after turnover. Therefore, the Florida legislature needs to do its job and protect the citizens of the state by outlawing this process altogether and requiring an HOA developer to turn over the HOA clubhouse and all of its operations to the association as a part of turnover process.

RE-OPENING AMENITIES IN TIMES OF UNCERTAINTY

The re-opening of amenities is anything but easy due to the local Orders being promulgated by Palm Beach, Broward and Miami-Dade Counties. Please be sure to review your County’s specific order(s) to ensure your association remains in compliance. These Orders have similarities but are also VERY different. A link to the recent re-opening Orders follows:

As to the Palm Beach County Order, take note that that staff and management are responsible to ensure compliance with the Order with respect to the tennis/racquet court facilities, and that one or more facility staff or management must be present at the pool to monitor and “ensure compliance with the restrictions of the Order.” However, it is not at all clear what measures must be taken to “ensure compliance with this Order.” We do not think it would be sufficient to only post a sign setting forth the CDC Guidelines and the additional restrictions in the Order. Although the tennis/racquet court facilities guidelines, unlike the community pool guidelines, do not require personnel to be present at the tennis/racquet courts to monitor and ensure compliance, in our opinion the board should consider some type of responsible monitoring.

With respect to a swimming pool in Palm Beach County, “facility staff or management” must be present at the pool whenever it is open to monitor and ensure compliance with the restrictions set out in the Order, including social distancing and pool bathroom sanitation. If that cannot be accomplished, then the pool and or bathrooms should remain closed.

When opening a swimming pool in Broward County, their Order provides that the pool may not operate at more than 50% capacity. In person supervision in addition to sanitizing gates, railings and showers is required if the pool deck furnishings are left in place. However, by removing the furnishings, the wording of the Order seems to indicate the need to sanitize gates, railings and showers has been eliminated.  If the decision by the Board is to reopen the pool, whether the furnishings remain or are removed a level of reasonable cleaning/sanitizing should be maintained, as necessary maintenance remains a continuing obligation of the association with regard to common elements/areas, which would require sanitizing the pool gates, handrails, doors, bathrooms and the like minimally as the association normally would,  but clearly should be performed more frequently during these times.

Residents of Miami-Dade County will have to wait a while longer to be able to use their association swimming pool because their Order does not yet address opening association swimming pools.

We have heard that certain county staff are giving their personal interpretations of the Order(s) in response to questions from board members. If you think that relying on these unofficial and unauthorized interpretations will shield your association from immunity, think again! It is far more likely that staff interpretations of the County Orders will not provide any protection whatsoever, most especially if a resident contracts Covid-19 and a lawsuit is brought against the association. Until local governments revise their Orders to provide missing clarity, the plain language, conservative interpretation of these Orders should be followed to help ensure your association is protected as much as possible under the circumstances. Remember, too, that an association can have stricter requirements than those set out in the orders, but cannot adopt less strict requirements.

It is also unclear from the Orders how governmental enforcement of the restrictions is to occur by the County or any municipality, as it seems very (very) unlikely that there will be patrols driving around to check on compliance. Even if such patrols did exist, they could not hope to keep up. The more likely scenario is that the self-reporting of violations could possibly lead to monetary or other penalties against the association. Clearly, if the Board is of the opinion that the requirements in their County’s Order cannot be met at this time, it or are removed is certainly within the reasonable business judgment of the Board to keep those amenities closed. However, that said, reasonable business judgment should not be used by a board to make a decision to open amenities where the board believes it lacks the ability to be fully compliant with their county’s local Orders.

We encourage board members to contact their association’s legal counsel for guidance regarding reopening any tennis/racquet courts and/or pool facility, and to continue to monitor the guidelines, directives and orders issued by the CDC and the applicable local authorities. Stay safe.