arc | Rembaum's Association Roundup

February 3, 2023February 3, 2023

Architectural Committees Formal Procedures, Published Standards, and Self Help

Formal Procedures

There are strict legal requirements that a homeowners’ association’s (HOA) architectural review committee (ARC) must follow, most especially if the ARC intends to deny an owner’s request. As this author has witnessed countless times, it is likely that many ARCs do not conduct their activities in conformity with Florida law such that an ARC denial may not withstand judicial scrutiny. If these legal requirements are not followed, and the ARC denies the owner’s architectural request, then it would be quite easy for the owner to challenge the ARC’s decision and prevail. Upon prevailing, the owner would be entitled to their prevailing party attorney’s fees and costs, as well. It is so easy to avoid this outcome, yet so few associations take the time to do it right.

Pursuant to §720.303(2), Florida Statutes, a meeting of the ARC is required to be open and noticed in the same manner as a meeting of the association’s board of directors. Notice of the ARC meeting must be posted in a conspicuous place in the community at least 48 hours in advance of the meeting, and the meeting must be open for all members to attend. Further, pursuant to §720.303(2)(c)(3), Florida Statutes, members of the ARC are not permitted to vote by proxy or secret ballot. Also, bare bone minutes should be taken to create a record of ARC decisions—especially denials.

We often hear from many HOAs that the ARC does not meet openly and does not notice their meetings. This leaves decisions made by the ARC vulnerable to challenge. If the ARC denies an application but fails to do so at a properly noticed board meeting, the owner can challenge the denial, claiming that it is not valid because the ARC did not follow proper procedure. In such cases, the ARC’s denial of an application is not valid because the ARC failed to comply with the procedural requirements for the meeting even if an application violates the declaration or other association-adopted architectural standards. However, by complying with the provisions of Chapter 720, Florida Statutes, your HOA can work to avoid this debacle.

Published Standards

Often a top priority for an HOA is ensuring that homes in the community maintain a harmonious architectural scheme in conformity with community standards and guidelines, and because the ARC is at the frontline of owners’ alterations and improvements to their homes, it is instrumental in ensuring that the community standards and guidelines are met. Pursuant to §720.3035(1), Florida Statutes, an HOA, or the ARC, “has the authority to review and approve plans and specifications only to the extent that the authority is specifically stated or reasonably inferred as to location, size, type, or appearance in the declaration or other published guidelines and standards.” But not every owner request is typically addressed in the declaration or other published guidelines and standards. If not, then the association may not be in a good position for proper denial. Therefore, the ARC is only as effective as the objective guidelines and standards (set forth in the declaration and other published guidelines and standards) are inclusive. So, what is the association to do when the ARC receives an owner’s application for an alteration to the home, but the association does not have any architectural guidelines or standards regulating the requested alteration?

While not court tested yet, a possible solution for this conundrum is to include a “catch-all” provision in the declaration to proactively address those ARC applications where a member may request a modification that is not directly addressed by the governing documents. Such a “catch-all” provision stands for the proposition that, if such a request is made, then the existing state of the community is the applicable standard by which the ARC application is to be judged. For example, imagine if an owner applies to the ARC to paint the owner’s house pink. If there are no architectural guidelines or standards that address what color a house must be, and there are no pink houses in the community, then the existing state of the community may provide a lawful basis for the ARC to deny the request because there are no existing pink houses in the community.

The Trouble With Self-Help Provisions

What if an owner refuses to maintain the owner’s property, such as pressure washing a dirty roof, despite the HOA sending demand letters, levying a fine, and perhaps even suspending the owner’s right to use the HOA’s recreational facilities? What is the HOA’s next step? Is it time to file a lawsuit to compel compliance? Well, Chapter 718 (governing condominiums), Chapter 719 (governing cooperatives), and Chapter 720 (governing HOAs) of the Florida Statutes authorize the association to bring an action at law or in equity to enforce the provisions of the declaration against the owner. Additionally, many declarations contain “self-help” language that authorizes the association to cure a violation on behalf of the owner and even, at times, assess the owner for the costs of doing so. These “self-help” provisions generally contain permissive language, meaning the association, may, but is not obligated to, cure the violation. Sadly, in this instance the word “may” means “shall,” and to find out why, read on.

There is a general legal principal that, if a claimant has a remedy at law (e.g., the ability to recover money damages under a contract), then it lacks the legal basis to pursue a remedy in equity (e.g., an action for injunctive relief). Remember, too, that an association’s declaration is a contract. In the context of an association, the legal remedy would be exercising the “self-help” authority granted in the declaration. An equitable remedy would be bringing an action seeking an injunction to compel an owner to take action to comply with the declaration. Generally, a court will only award an equitable remedy when the legal remedy is unavailable, insufficient, or inadequate.

Assume that the association’s declaration contains both the permissive “self-help” remedy and the right to seek an injunction from the court. Accordingly, it would appear the association has a decision to make—go to court to seek the injunction or enter onto the owner’s property, cure the violation, and assess the costs of same to the owner. However, recent Florida case law affirmed a complication to what should be a simple decision. In two cases decided ten years apart, Alorda v. Sutton Place Homeowners Association, Inc., 82 So.3d 1077 (Fla. 2nd DCA 2012) and Mauriello v. Property Owners Association of Lake Parker Estates, Inc., 337 So.3d 484 (Fla. 2nd DCA 2022), Florida’s Second District Court of Appeal decided that an association did not have the right to seek an injunction to compel an owner to comply with the declaration if the declaration provided the association the authority, but not the obligation, to engage in “self-help” to remedy the violation. Expressed simply, this is because the legal contractually based “self-help” remedy must be employed before one can rely upon equitable remedy of an injunction. Therefore, even though the declaration provided for an optional remedy of “self-help,” it must be used before seeking the equitable remedy of an injunction.

In Alorda, the owners failed to provide the association with proof of insurance required by the declaration. Although the declaration allowed the association to obtain the required insurance, the association filed a complaint against the owners seeking injunctive relief, asking the court to enter a permanent mandatory injunction requiring the owners to obtain the requested insurance. The owners successfully argued that even though they violated the declaration, the equitable remedy of an injunction was not available because the association already had an adequate legal remedy—the “self-help” option of purchasing the required insurance and assessing them for same. The Court agreed.

In Mauriello, the declaration contained similar language as in Alorda but involved the issue of the owners failing to keep their lawn and landscaping in good condition as required by the declaration. The association filed a complaint seeking a mandatory injunction ordering the owners to keep their lawn and landscaping in a neat condition. However, the facts were complicated by the sale of the home in the middle of the suit when the new owners voluntarily brought the home into compliance with the declaration. The parties continued to fight over who was entitled to prevailing party attorney’s fees with the association arguing it was entitled to same because the voluntary compliance was only obtained after the association was forced to commence legal action. The owners, citing Alorda, argued that the complaint should have been dismissed at the onset because the association sought an equitable remedy (injunction) when a legal remedy was already available—the exercise of its “self-help” authority. The Court considered the award of attorney’s fees after the dismissal of the association’s action for an injunction. Ultimately, the Court held that the owners were the prevailing party as the association could not seek the injunction because it already had an adequate remedy at law.

Accordingly, if your association’s declaration contains a “self-help” provision, and your association desires to seek an injunction against an owner rather than pursue “self-help,” the board should discuss the issue in greater detail with the association’s legal counsel prior to proceeding. Also, remember that if the association wants to enforce architectural standards, then they must be published to the membership; and always remember to notice ARC meetings and take minutes.

(Reprinted with permission from the February 2023 edition of the “Florida Community Association Journal”.)

January 4, 2023February 3, 2023

New Legislation Needed for Required Maintenance Affecting Condominium Building Structural Integrity and Safety

Material Alterations, Special Assessments, and Borrowing

As to the title of this article, anyone familiar with Senate Bill 4-D and the newly required milestone inspection reports and structural integrity reserve studies primarily applicable to condominium and cooperative buildings three stories and higher knows that material alterations, special assessments, and the authority to borrow funds are not mentioned in the legislation. So why write this article about those subjects? Because the milestone reports and structural integrity reserve studies will no doubt also lead to both expected and unexpected required repairs and replacements. In effectuating such repairs and replacements, an association’s board of directors needs i) the ability to approve material alterations under certain circumstances that sometimes arise in connection with such work, ii) the ability to levy special assessments to pay for the work, and iii) the authority to borrow money that is often needed to pay for such repairs and replacements so that the special assessment payments can be amortized over time, thereby lessening the financial strain on the owners.

In the event the needed repairs and replacements require material alterations to the condominium common elements or cooperative property, an important question that arises is, is the approval of the members required? The relied-upon definition of what constitutes a “material alteration” comes from Sterling Village Condominium Inc. v. Breitenbach, 251 So. 2d 685 (Fla. 4th DCA 1971). It means to “palpably or perceptively vary or change the form, shape, elements, or specifications of the common elements in such a manner as to appreciably affect or influence its function, use, or appearance.”

Let’s first examine the relevant legislation concerning material alterations. As to condominium associations, §718.113, Fla. Stat., provides, in relevant part, that

Maintenance of the common elements is the responsibility of the association… Except as otherwise provided in this section, there shall be no material alteration or substantial additions to the common elements or to real property, which is association property, except in a manner provided in the declaration as originally recorded or as amended under the procedures provided therein. If the declaration as originally recorded or as amended under the procedures provided therein does not specify the procedure for approval of material alterations or substantial additions, 75 percent of the total voting interests of the association must approve the alterations or additions before the material alterations or substantial additions are commenced….

As to cooperative associations, §719.1055, Fla. Stat., provides in relevant part that

unless a lower number is provided in the cooperative documents or unless such action is expressly prohibited by the articles of incorporation or bylaws of the cooperative, … material alterations or substantial additions to such property by the association shall not be deemed to constitute a material alteration or modification of the appurtenances to the unit if such action is approved by two-thirds of the total voting interests of the cooperative. [emphasis added]

With all of this in mind, what if the required repairs stemming from the milestone report or structural integrity reserve study include necessary (meaning not voluntary) material alterations? If the governing documents do not vest such decision making to the board of directors, which is relatively rare, is the vote of the membership required? The short answer is that it depends on the facts and circumstances at hand. It is patently clear that merely because the replacement product is less expensive than replacing the item with the same product, that does not justify obviating the membership vote when required. See George v. Beach Club Villas Condominium Assoc., 833 So. 2d 816 (Fla. 3rd DCA 2002). For example, replacing a cedar shake roof with asphalt shingles due to cost considerations is not a sufficient reason to not obtain membership approval when otherwise required.

However, under the right circumstances the board can rely on the “necessary maintenance exception,” which evolved from a series of cases further discussed below. Before explaining further, the board should always consult with the association’s legal counsel to ensure a concurrence of opinion before proceeding with the work based on this “necessary maintenance exception” legal theory. There is a balance in the analysis which must be undertaken in that the association is responsible for the maintenance of the common elements as compared against when such maintenance may require a vote of the membership due to a material alteration. Based on the “necessary maintenance exception,” when it is clear that the material alteration is needed to complete the required maintenance, the board likely has the authority to proceed with the work without membership approval. Therefore, in our view, it would be beneficial for the legislature to codify this extremely important “necessary maintenance exception” into the Florida Statutes.

Regarding material alterations, in Tiffany Plaza Condominium Association, Inc. v. Spencer, 416 So. 2d 823 (Fla. 2nd DCA 1982), without the required vote of the owners, the board of directors opted to construct a rock revetment wall in the sand between the condominium’s seawall and the mean high-tide line. The area in question was part of the association’s common elements. Owners who were unhappy with the decision of the board (including the assessment to fund this project) sued the association. The association defended itself on the basis that the rock revetment was not an alteration or improvement of a common element but rather was part of the required maintenance, repair, and replacement of a common element that the association had responsibility for under several provisions of the declaration, its bylaws, and statutes. While the trial court agreed with the plaintiff owners, the Second District Court of Appeal reversed the trial court decisions and held that

If, in the good business judgment of the association, such alteration or improvement is necessary or beneficial in the maintenance, repair, or replacement of the common elements, all unit owners should equally bear the costs as provided in the declaration, bylaws, and statutes.

Further, the court held that

from the cited provisions of the declaration, it is clear to us that the association could properly assess all unit owners for the replacement or repair of the beachfront common element if it was damaged by erosion or otherwise. Likewise, it seems to us that if, in the good business judgment of the association, alteration or improvement of the beachfront by addition of a rock revetment would protect the beach from damage and the necessity of subsequent repair or replacement then that cost should also be borne equally by all unit owners.

In Ralph v. Envoy Point Condominium Association, Inc., 455 So. 2d 454 (Fla. 2d DCA, 1984), condominium owners objected to an assessment passed by the board of directors for the purpose of constructing a vertical seawall extension. The court held that, in view of the competent evidence from which it could be determined that the vertical extension of the seawall was necessary to protect the common elements, the board of directors of the condominium association was authorized to construct the extension without the necessity of the vote of the condominium unit owners, which was required by the condominium documents for alterations or improvements.

Regarding special assessments, in yet another case, Cottrell v. Thornton, 449 So. 2d 1291 (Fla. 2d DCA, 1984), condominium owners brought suit against the president of a board of directors of a condominium association after the board assessed the members to pay for the cost of fixing problems with a canal system, roadway, and swimming pool. The court examined the authority of the board to make decisions when a vote of the members would otherwise be required. It is clear from reading this case that the court received evidence regarding the condition of the canals which were filling due to erosion, excess weed growth, and pollution from excess runoff; that lots were gradually crumbling away into the canals; that the swimming pool was built on soil which was not de-mucked prior to construction and then floated up; and there were cracks on the floor and side walls of the pool and its deck. In fact, the pool was closed to any type of pedestrian traffic due to the unsafe conditions. The roadways had large and severe potholes. There was testimony during the proceedings that the canal needed to be drained, scraped, de-mucked, and lined with sea bags to make the seawalls secure and that the roads needed to be resurfaced.

After the board put its plan into action and levied the assessment, the plaintiffs who sued claimed the repairs constituted material alterations of the common elements. The president of the board argued that only necessary repairs and replacements were authorized by the board. The issue presented on appeal was whether the proposed changes constituted substantial additions/alterations or were necessary repairs. Here, the appellate court relied on the findings of the trial court which found that

because necessary repairs were planned, not material alterations, the trial court found the board of directors was authorized to make assessments against the unit owners without holding a vote.

The trial court also held that the restoration was “necessary to prevent further damage to the common elements,” and, as such, the board had the authority to proceed without a vote of the owners. This ruling is in line with the “necessary maintenance” principle previously provided in the above-referenced cases.

It is extremely important when examining whether a vote of the membership is required to perform material alterations that each project be separated into its core constituent components so as to avoid an argument that a particular part of the project was in fact a material alteration requiring a vote of the membership. If part of a concrete restoration project included material alterations which were unavoidable under the circumstances, but a part of the project also included voluntary aesthetic changes, those aesthetic changes would likely require approval of the membership (subject, of course, to the provisions in the governing documents or relevant legislation) even though the other part of the project did not.

In Bailey v. Shelbourne Ocean Beach Hotel Condominium Association, Inc., et al., 307 So. 3d 74 (Fla. 3rd DCA 2020), the board of directors levied special assessments to the tune of 30 million dollars for two rounds of construction projects. The first round of construction included elevator modernization; exterior painting; repairs to the porte cochere, pool and lobby; installation of a sewage lift station; and installation of impact-resistant balcony doors. The second round of construction included window repairs, installation of safety railing, replacement of unit doors, pool paver repairs, hardening of the beach entrance, and reinforcement of the substructure beneath the townhomes. Several condominium unit owners argued, among other things, that the association violated Chapter 718 F.S. by its failure to secure unit owner approval for the construction projects that amounted to a material alteration of the common elements and that a prior vote of the membership regarding a material alteration is required. The court held that regarding two particular parts of the project, the board of directors violated the Statute when it assessed unit owners for the cost of material alterations based on 75 percent of unit owners ratifying the construction projects after completion because §718.113(2)(a), Fla. Stat., requires approval before beginning construction. The court further held that although the majority of items completed during construction constituted necessary maintenance, and thus were properly assessed by the board, there was a genuine issue of material fact as to whether pool pavers and reinforcement of substructure underneath the townhomes were necessary maintenance items.

As to a board’s authority to borrow money to fund necessary repairs or replacements, there is no Florida case law or other legal authority that directly stands for the proposition that a board of directors can borrow such funds when the governing documents would otherwise require a vote of the membership to do so. Therefore, this, too should be addressed in a future legislative bill.

A board should never consider relying on the theories of the aforementioned cases without first consulting with its legal counsel regarding the applicability of those cases to the facts at hand and to better understand the risks involved.

With all of this in mind, it would be extremely helpful for additional legislation to be adopted by the Florida legislature that clearly

1. permits the association through board action alone to authorize material alterations as part of any necessary repair or replacement project when similar like-kind items are no longer available or not recommended due to safety etc.; and
2. permits the association through board action alone to special assess the membership as part of any necessary repair or replacement project; and
3. permits the association through board action alone to borrow money in connection with any necessary repair or replacement project.

(Reprinted with permission from the January 2023 edition of the “Florida Community Association Journal”.)