The Differences Between Homeowners Association and Condominium Association Law in Florida – Part I: Board Operations
Reading Time: 9 minutes
Under Florida’s association laws, each type of community association differs from each other type of community association primarily in the manner in which each association and the association’s members own real property within the community. For example, with Condominiums, a member owns in fee simple a “unit” for the member’s exclusive use. This unit is usually a residence, but may be a commercial space, dock, storage space, stable, or other type. The unit consists of the area for the exclusive use of the member, whether it is a residence, commercial space, or something else, as well as an undivided interest in the common elements. All members jointly and severally own proportional interests in the “common elements.” Typically, the common elements consist of the building structure, recreational facilities, parking areas, and internal roadways serving the condominium units. Ownership of the common elements is not severable from unit ownership. Generally, the condominium association itself does not own any real property. For a home that is typically subject to a Homeowner’s Association (“HOA”), each member owns in fee simple a plot of land, typically improved with a residence, and generally defined in the governing documents as a parcel within a residential subdivision. The homeowners’ association itself, and not individual members, owns the land used for recreational facilities, common roadways, common parking areas, and other common facilities. As the types of ownership differs and the governing documents of those community association differs, there is statutory and case law that differs in the way those ownership interests are governed.
Unlike most states, Florida has not adopted a “uniform” law to regulate community associations within that state. Instead, there are limited differences between the laws applicable to condominium and homeowners’ associations in Florida. For example, there are differences in the area of consumer protection as the Condominium Act provides warranties for new construction, while the Homeowners Association Act does not. Government regulation is also different because condominiums are subject to direct oversight by a state agency with enforcement and penalty authority, while homeowners’ associations are not. The most significant differences, however, revolve around the procedural aspects of the two laws.
This 3 part series of Blog posts seeks to summarize some of the more important procedural differences:
i. Board elections
Condominium association elections are conducted through a two notice/two envelope secret ballot process that permits any unit owner or other qualified person to submit his/her name for nomination at least forty days in advance of the annual meeting. Conversely, homeowners’ association elections are governed by the bylaws of the association and generally permit owners to vote in person or by proxy. However, based upon the 2010 amendments to Chapter 720, there appears to be a movement to “condominiumize” elections in homeowners’ associations.
In condominiums, the process for conducting elections is crafted to encourage elections by eliminating the quorum requirement and requiring that only twenty percent of the members cast ballots to have a valid election. There is no separate quorum requirement for elections for homeowners’ associations.
ii. Board meeting requirements
Generally, condominium board meeting notices must specifically identify agenda items and be posted conspicuously on condominium property at least 48 continuous hours preceding the meeting except in an emergency. Fla. Stat. § 718.112(2)(c). Further, written notice of any board meeting at which non-emergency special assessments, amendment to rules regarding unit use, the association budget or insurance deductibles will be considered must be mailed, delivered, or electronically transmitted to the unit owners, and posted conspicuously on the condominium property not less than 14 days prior to the meeting. See Id. Some By-Laws may even prescribe more stringent notice requirements for these meetings and some notices, like those for meetings at which assessments will be considered, have additional notice requirements. Id.
No regular or special assessment may be levied at a condominium association board meeting unless the notice of the meeting includes a statement that assessments will be considered and the nature, estimated costs, and description of the purposes for such assessments. Fla. Stat. § 718.112. If there is no condominium property upon which notices can be posted, notices of all board meetings shall be mailed, delivered, or electronically transmitted at least 14 days before the meeting to the owner of each unit. Id. In lieu of or in addition to the physical posting of notice of any meeting of the board, the association may, by reasonable rule, adopt a procedure for conspicuously posting and repeatedly broadcasting the notice and the agenda on a closed-circuit cable television system serving the condominium association. Id.
Section 720.303(2)(c), Florida Statutes, applicable to HOAs, likewise provides that notices of all board meetings must be posted in a conspicuous place in the community at least 48 hours in advance of a meeting, except in an emergency. Unlike the law for condominiums, there is no requirement that an agenda be included in the notice. As an alternative to posting, notice of board meetings can be mailed or delivered to each member at least 7 days before the meeting. Id. For communities with more than 100 members, the bylaws may provide for a reasonable alternative to posting or mailing of notice for each board meeting, including publication of notice, provision of a schedule of board meetings, or the conspicuous posting and repeated broadcasting of the notice on a closed-circuit cable television system serving the homeowners’ association. Id.
No assessments may be levied at a homeowners’ association board meeting unless the notice of meeting includes a statement that assessments will be considered and the nature of the assessments. Id. Written notice of any meeting at which special assessments will be considered or at which amendments to rules regarding parcel use will be considered must be mailed, delivered, or electronically transmitted to the members and parcel owners and posted conspicuously on the property or broadcast on closed-circuit cable television not less than 14 days before the meeting. Id. Generally speaking, both COA’s and HOA’s are required to notice most of their board meetings in the community at least 48 hours before the meeting. Both statutes also require that if assessments are to be considered, or if rules regarding use of the units or parcels (as opposed to common element or common area rules) are to be considered, notice must be mailed, delivered or electronically transmitted and posted conspicuously on the property at least 14 days before the meeting. Additionally, certain rules must be followed in both condos and HOAs when television notice is used in lieu of posted notice.
How and where notices are posted is often a confusing and complicated issue. The Florida condominium law requires the board to adopt a rule stating where official notice may be posted. Fla. Stat. § 718.112. The board may specify more than one official location, but there must at least be one location in a conspicuous place on the condominium property or association property where the notices must be posted. Id. The notices can also be posted in other locations. Id. If the association does not have a location where notices can be physically posted, notices must be mailed to the owner of each unit at least fourteen days before a board meeting. Id.
For homeowners’ associations, the law simply states that the notices must be posted “in a conspicuous place” in the community. Fla. Stat. § 720.303. To address this issue, the HOA board should adopt a rule and consistently enforce the rule regarding a posting location. Also, in lieu of posting notice of regular or special board meetings, the HOA can mail out the notices seven days in advance, which is slightly more generous than the condominium notice requirement.
The Condominium Act requires the budget meeting to be noticed 14-days in advance, with the notice and a copy of the proposed budget mailed or delivered to all owners. There are no special notice requirements for the budget meeting in a homeowners’ association. In a homeowners’ association, the board may meet privately to discuss personnel issues. A condominium association does not have the same authority.
iii. Owner participation rights
Section 718.112(2)(c) of the Florida Condominium Act provides that meetings of the board shall be open to owners, and that the right to attend such meetings includes the right to speak with reference to designated agenda items. Unit owners may tape record or videotape the meetings. Id. A condominium association may adopt written reasonable rules governing owner statements, particularly regarding the frequency, duration and manner of the statements. Id. Fla. Stat. §720.303 has very similar rules for member participation. An odd nuance in this regard is that while the members of the HOA are permitted to speak on designated agenda items only, there is no requirement in Chapter 720 for an agenda. As a practical matter, unit owner statements should be taken either at the beginning of the meeting, or at a set time in connection with a specific agenda item. Allowing owners to speak after the board has voted does not fulfill the requirement allowing participation by members.
For both HOAs and Condominiums, if 20 percent of the total voting interests petition the board to address an item of business, the board at its next regular board meeting or at a special meeting of the board, but not later than 60 days after the receipt of the petition, shall place the petitioned item on an agenda. Other than addressing the petitioned item at the meeting, the board is not obligated to take any other action requested by the petition. See Fla. Stat. § 718.112 and Fla. Stat. § 720.303. There is no requirement in Florida law that the board act favorably on the requested item, only that it be appropriately considered. These provisions are the mechanisms employed by the property owners of the association in requiring the board to address an issue.
It should be noted that Florida law gives great deference to the board in establishing meeting rules. Both condominium and HOA laws permit a board to establish reasonable regulations regarding the procedures for speaking at meetings of the board. Example being a requirement of all those wishing to speak to complete a form indicating which agenda item they would like to speak on. Another example being a time restriction for speaking that is reasonable (10 minutes or less).
Our next post, the second of a three part series, seeks to discuss the differences between HOA and COA law pertaining to records inspections and alterations to property.