YOUR ASSOCIATION DOCUMENTS--SHOULD THEY BE REVISED?

Many community association Board members wish to rewrite the association's documents. Board members or residents may feel the documents are outdated and do not meet the needs of the community. Some items for consideration when redrafting documents are contained in this article.

The association's documents include the Declaration of Restrictions or Declaration of Condominium or ground lease, the Articles of Incorporation, by-laws, and rules and regulations. Homeowner associations utilize the declaration of restrictions; condominiums the declaration of condominium; and cooperatives the ground lease.

In addition to the association documents, community associations are controlled by a number of different Florida statutes, portions of the Florida Administrative Code, and by judicial and administrative decisions.

The association's documents have been compared to "the constitution" for a community. The documents govern most aspects of community living, including use restrictions, assessments, voting rights, and use of the common facilities.

Many documents of communities, established 15 or 20 years ago, contain provisions which may not be relevant to current operations of the association.

Communities change over the years. The resident mix may change from a "snowbird" or a "retiree" community, to a community with a majority of working residents, some with children and/or possibly a significant number of lessees.

As the residents change, a revision of the association's by-laws and/or rules regulating use of the common areas should be undertaken. In some cases, it may be allowable to adopt rules controlling leasing, guest and occupancy restrictions, age limitations, parking and unauthorized vehicles, towing, and pet restrictions. The documents may be changed to reflect the wishes of the community, based upon the amendment requirements of the individual documents.

Homeowner association "deed restrictions" and Declarations of Condominium generally require a significant percentage of the owners to approve amendments. Many association's By-Laws may be amended by approval of a lesser percentage of owners, or in some cases, by the Board of Directors of the association. In most instances, rules and regulations are established by the Board of Directors of the association and can be changed by the Board with appropriate notice to the owners.

Many association's documents also refer to the "developer". Documents are originally drafted by the developer's attorney and may reflect an outlook that is favorable to the developer's sale and operation of the community. After the developer has completed sale of the properties, certain provisions relating to the developer may not be relevant.

It is not always worth the time and money to revise that portion of the documents which refer to the developer. An example is a multiple class of stock provision in homeowner association declarations, which allow a developer to retain control of an association during a prolonged buildout. After he has "sold out", the class A/class B stock provision is ineffective and has no bearing on the associations operations. Even though the provision is no longer effective, it may be useful to incorporate a deletion of such provisions when trying to "sell" a general revision of the documents to the residents.

Significant changes have been made to the statutes and administrative rules which control community associations.

Almost all community associations have a not-for-profit corporation, as the operating entity. This corporation is governed by Chapter 617, the Not-For-Profit Corporation Act, of the Florida Statutes. In recent years, this Act has been significantly amended. The Act specifically defines allowable corporate powers, emergency powers, the standard of care, or legal duty of directors, and addresses indemnification and liability of officers, directors, employees and agents. Corporate records are defined and inspection of the records by members is also addressed.

The provisions of Chapter 607, the Florida Business Corporation Act, do not apply to any not-for-profit corporations. Many older, not-for-profit corporations were established when Chapter 607 also controlled not-for-profit corporations. The documents of the older not-for-profit corporations should be reviewed for compliance with Chapter 617.

Chapter 720 addresses Homeowner Associations. The Chapter contains certain rights of owners and voting and election procedures. This act may see significant changes in the future.

The Florida Condominium Act, Chapter 718 of the Florida Statutes, has been a favorite of the Florida Legislature when it comes to annual revisions. Some of the changes effect the operation of the association and override conflicting documents. Some new statutory provisions require the association to promulgate certain documents, and if adopted create additional rights for the association.

The following rights and authority must be contained in the Declaration of Condominium or by-laws to be utilized by the association. These provisions should be reviewed due to the new statutory requirements: association insurance coverage; association fidelity bonding; indemnification provisions for officers and directors; association rule making authority; fining authority and procedures; procedures for late fees or delinquent assessments; and association rule making authority.

A condominium association is required to adopt a Question and Answer Sheet, a hurricane shutter rule, rules pertaining to owner participation at board meetings and members' meetings, rules relating to posting notice for board and unit owner meetings, rules pertaining to inspection and copying of association records, and notice to owners concerning insurance requirements.

Cooperatives are governed by chapter 719 of the Florida Statutes, which also has been significantly changed in recent years. New requirements effect board meetings, voting, notice of share holder meetings, the election process, and the keeping of reserves, among other issues.

Active associations should appoint a committee to review and revise the association's documents, with the advice of legal counsel. Revisions may be necessary due to changes in the community and the relevant statutes. The community association is a multi-million dollar business. Real estate of significant value and substantial budgets are controlled by the association. The association, through the Board of Directors, is legally responsible to operate and maintain the community pursuant the documents and the law. Up to date, relevant documents allow the association members and the board of directors to understand and fully carry out the obligations of the association. A well-run association, with informed residents, enhances property values and creates a more congenial lifestyle.

This article is general in nature and is not intended to render specific legal advice. I recommend you contact an attorney who concentrates in community association law to determine if your association's documents need a legal "tune-up".

By: Joseph R. Cianfrone, Esq.