Association Developments

First Quarter Volume XI 

1998


a service provided by Clayton & McCulloh

ASSOCIATION IMPOSED FINES

Clayton & McCulloh generally does not recommend Associations utilize fines as the method to compel owners to comply with the governing documents. Understand this recommendation stands even in those instances where the Association clearly has the ability, authority and right to fine.

More specifically, Clayton & McCulloh believes the risks associated with an Association levying fines outweigh the benefits. While levying fines certainly may be an inexpensive way of attempting to compel owners (and/or tenants, guests or invitees) to abide by the governing documents, unfortunately the Association must comply with:

1. Any fine requirements set forth in the governing documents; and

2. The requirements of the Florida Statutes.

For a homeowners association, these requirements include, but are not limited to:

1. The governing documents authorizing the Association to fine;

2. Limiting the fine to $100.00 per violation;

3. Fourteen (14) days notice to the person to be fined;

4. An opportunity for a hearing on the alleged violation;

5. Having the hearing before a committee, not the Board of Directors;

6. The committee having at least three (3) members; and

7. The committee members not being officers, directors, or employees of the Association, nor the spouse, parent, child, brother or sister of an officer, director or employee.

For a condominium association, these requirements include, but are not limited to:

1. The Declaration or Bylaws authorizing the Association to fine;

2. The fines must be reasonable;

3. The fine is levied against the unit owner for non-compliance of the Declaration, Bylaws, or Rules and Regulations;

4. No lien can be filed based on a fine;

5. Limiting the fine to $100.00 per violation (or for each day of a continuing violation);

6. Reasonable notice to the owners and to applicable licensee and/or invitee to be fined;

7. An opportunity for a hearing before a committee of other unit owners; and

8. No fine being levied against unoccupied units.

As you can see, the requirements are significant and can be easily overlooked and therefore violated. Understand while Clayton & McCulloh can set up a proper fine authorized. What if one or more of the above requirements were not met?

1. Is the fine valid? (Arguably not);

2. Is the Association liable for improperly slandering an owner's property? (Possibly);

3. Can the Association be sued? (Definitely);

4. Will the Association recover its attorney's fees? (Doubtful, i.e., probably only if the Association wins in court and probably only if the governing documents provide for the Association's recovery of attorney fees); and

5. Will the owner recover his fees? (Possibly, however, he too should have to obtain a judgment, etc.).

The risks associated with fining are too great in our opinion given the legislative requirements and the potential liability.

WELCOME TO THE COMMUNITY: TIPS FOR CREATING A WELCOMING COMMITTEE

The Welcoming Committee is one of the most important committees you can establish within your community. The Welcoming Committee may very well be the very first person to establish contact with new owners. They can make or break the new owner's relationship with the association.

Once the committee learns of a sale of a residence, you should call the Realtor and ask for the new owner's name. Contact the owner and set up an appointment to come by and visit for fifteen to thirty-minutes.

The association should adopt a Welcoming Package which could consist of the following types of items:

• The association's governing documents (Declaration, Articles of Incorporations, Bylaws, and Rules & Regulations, and any amendments to the documents). This is the most important information that your association wants them to have and be familiar with. (More often today, buyers are receiving this documentation when they sign a contract to purchase the home.)
 
• A Membership Directory of the community's residents.

See WELCOMING, pg 2

Volume XI                      Page Two                 Clayton & McCulloh

WELCOMING (from pg 1)

• A listing of the local schools, churches, utilities, the Board of Directors, etc. You may also want to check with local merchants and see if they wish to include coupons for their services as a way of advertising their services. You may even want to include the teen-agers within the community who baby-sit. Do any of your owners sell AVON, Mary Kay, or Amway? They might be interested in providing a coupon for a discounted item. Don't forget the boy down the street who mows lawns on the weekend. These are types of businesses that your new owners will find of interest.

• If your committee people desire, they can make a batch of homemade muffins or cookies and give them to the owner. Or perhaps, one of the committee people is an avid gardener and wouldn't mind giving the new owner a bouquet of flowers or vegetables from their garden. However, do not use association funds to purchase door prizes or pay for refreshments. This would expose you and your Board to criticism as to the propriety and possibly the legality of, by some, for expending association funds for improper social purposes. Another avenue is to solicit the AVON, Mary Kay, or Amway representative for a small gift (such as bubble bath) to place in the package.



• Copies of your association's newsletter.



• Notices of any upcoming association meetings or board meetings.



• Invite them to serve on a committee. This is the perfect time to start involving the new owner.

After the Welcoming Committee has visited with the new owners, follow up with the committee person to see what transpired. Perhaps the owner wanted to become involved with the association, and you could contact them.

procedure for our Associations, and while the fine process may work well for a while, what concerns us is the ability of the future Boards and future committee members to comply. While we can properly train the Board of Directors and committee personnel to properly deal with the fine requirements, what happens when new Board members are elected and committee members resign, etc.?

Clayton & McCulloh recommends long term risk avoidance. Therefore, we prefer Associations utilize alternative covenant enforcement procedures including: demand letters, declaratory judgment suits, mandatory injunction suits and/or arbitration, if necessary.

Without the ability to lien for fines, Clayton & McCulloh really questions its effectiveness. In fact, if an Association does not lien when it fines, it ostensibly is left with a choice:

1. Sue to enforce the fine (in which case the Association may have been better off if it had originally proceeded with a declaratory statement or mandatory injunction action); or

2. Do nothing (which ostensibly would appear to undermine the Association's credibility).

Understand, if its governing documents so authorize, a homeowner association arguably may be able to lien for fines. However, Clayton & McCulloh believes a potentially significant risk exists when an Association liens for fines even when it may have the authority under the governing documents. Understand, condominium associations (as opposed to homeowners associations) are prohibited from liening for a fine. While no express statute appears to definitively preclude homeowner associations from liening (if its governing documents expressly provide for this right), Clayton & McCulloh would not advocate such a proceeding especially in view of how similar a condominium association is to a homeowners' association).

see WELCOMING, pg 3

SHIELDS BRINGS ANOTHER PERSPECTIVE TO C&M

We are pleased to announce that David Shields has joined the firm as an attorney with eleven years legal experience. As an experienced attorney in the firm, David has handled a wide variety of matters, including contract drafting, the Uniform Commercial Code, construction and statutory liens, bankruptcy, corporations, intellectual property, banking law and regulation, and collections.

David brings a very unique perspective to firm as he is the past president of his homeowners' association in Seminole County. He is also the Chairman of the Altamonte Springs Board of Zoning Appeals.

ARLENE RING ELECTED PRESIDENT OF LOCAL CHAPTER OF CAI

Our Association Coordinator, Arlene-Frances Ring, began her term as President of the Mid Florida Chapter of Community Associations Institute (CAI) in January 1998. Besides serving on the Board of Directors of the Mid Florida Chapter of CAI, Arlene has been featured as a guest speaker and has served as Membership Chairperson for the past few years. She has also been a guest speaker for such organizations as the Orange County Neighborhood Partnership Program and Space Coast Condominium Associations. CAI is a national organization consisting of homeowner and condominium associations, attorneys, managers, owners, and vendors servicing community association.

Volume XI                         Page Three                   Clayton & McCulloh

WELCOMING (from pg 2)

Moreover, a lien is in the nature of a slander of title. Therefore, an Association's rights to file the lien ostensibly is dependent on the lien being totally proper and Make the association's first contact with a new member a positive one. Some associations unfortunately get off on the wrong foot by having their first contact with new members be one of a confrontational nature (i.e., a covenant violation). If there is a breach of the association's documents, follow up with the new members on that issue after the Welcoming Committee has made their visit. Don't ask the Welcoming Committee to be the "bad guys." You always want the door to be opened wide for them.

First impressions count! We all know this. So, make the association's first impression with the new member a positive one by establishing a friendly and informative Welcoming Committee.

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