Lawyer's Opinion For Converting Voluntary to Mandatory...

As you may have read from my previous posts regarding the HOAs I have dealt with, one association had asserted for nearly 5 years that they had the authority to convert from voluntary to voluntary (with mandatory maintenance assessments for all). Well, something new has come to light from the court case against the HOA and their attorney - a letter from ten years ago that talks about the legality of the proposed changes the HOA wanted to make (enforcing mandatory assessments on every homeowner, even non-members). I thought the letter was interesting because of the advice the lawyer gave to the HOA and the course of action they had taken. I was curious as to the actions or opinions the experienced board members on this site would have taken.

The letter reads as follows (emphasis added):

I have now had the opportunity to thoroughly review all of the recorded covenants and restrictions for XXXXXXXXXX as provided to me by the Board of Directors. This includes Declaration of Covenants and Restrictions for Sections 2, 3, 4, 5, 6, 7, 7A, 8, 9, 10, 10A, and 11 of XXXXXXXXXXXXXX. The the extent that there may be additional, recorded, covenants and restrictions or amendments of which I am unaware, this opinion could change.

The last time we met, I explained the state of the law in Florida relating to the conversion of a voluntary paying Association to a mandatory pay system. Specifically, I discussed the fact that the law in Florida is still somewhat unclear as to the extant by which we can amend the governing documents to create mandatory fees or assessments and the fact that a court could hold any such amendments invalid. The only way to guarantee the enforceability of any such amendments would be for the Association to have the amendments approved by 100% of all of the affected homeowners within XXXXXXXXXX, joined by the mortgage companies. Obviously, for practical reasons, this would be impossible. Therefore, our goal is to amend each of these Declarations for each section with a majority approval as required for all other amendments pursuant to the language in your covenants and restrictions. Though the current state of the law does not allow us to guarantee such amendments with less than 100%, it is my opinion that we would have a very strong arguments to support their validity. I am particularly pleased to see numerous references to a homeowners association in each of your Declarations which, in my opinion gives us even stronger arguments in favor of a mandatory pay amendment compared to those of your surrounding communities.

Understanding the legal difficulties and "gray" areas of the law involved in this matter, the Board, unfortunately must make some difficult decisions relating to the extent by which you wish to test the waters with an amendment.

Two things. One, the original covenants and restrictions of each of the sections have brief mention of homeowners associations, only urging lot owners "to form a homeowners association" and if they choose to do so require a certain percentage of homeowners in that particular section to annually agree to the existence of a HOA through a membership roll. Each section would have had to meet these separate requirements since each section had its own covenants and restrictions.

Secondly, there are provisions in the original covenants and restrictions that grants sole authority to modify the covenants and restrictions to a local philanthropic foundation. Any alteration to the governing documents would require their consent.

Concerning both of those points, membership rolls were not kept in accordance with the C&Rs and the philanthropic foundation did not give their consent to the changes and felt they were invalid, but were not going to waste their time in court because it did not directly affect them.

Also, consider that after this letter, the HOA and their lawyer insisted that they were not converting the association to mandatory - just mandatory pay - and that they were completely in the right to do so with the law backing them up. When the conversion was first trying to be enforced my family sent a letter to both the HOA and their attorney asking what law they based their new C&Rs on. Their lawyer cited a county collections case in a neighboring community as proof we needed to pay and told us that if we didn't they would take us to court and force us to pay all legal fees.

Knowing this, what are some thoughts on this lawyer's opinion?

The letter was posted on a website and was most likely obtained through discovery, although I cannot say for certain.

I understand the HOA made a gamble, but I would be hesitant if my attorney stated that it was a "gray" area of the law and that the law would typically require 100% but because they felt it was untested they were going to go ahead with a simple majority. I also think that reference of the requirements from the original C&Rs to be interesting since the attorney obviously decided to ignore them - in the trial where the HOA's attorney argued the amended C&R's validity, he reluctantly told the judge he had no documentation for the last 20+ years meeting the membership roll requirement and that he wasn't there to argue paperwork but intent and insisted his majority homeowners who signed the joinders to their properties trumped a membership roll.

It just seemed like a steep gamble. This same attorney had also told another HOA that the proposed changes are a "gray" area and that they would stick if no one bucks the system and files a lawsuit. That HOA decided to decline his legal advice. I would think that if there was more in support of an argument other then simple wording in a covenant and untested laws then the HOA would have had a better chance - especially a HOA that had virtually no money to fight a protracted legal battle.

I guess the payoff seemed worth it. If the association was to successfully pull off their conversion and amended every section's documents, they would have seen their revenue increase from 300%. They had typically saw around 250-300 voluntary payments but that amount would have increased to over 900.

The lawyer would have also seen an increase in business - his potential customer count would have increased exponentially from zero with a voluntary association. This is partially why I think the lawyer was involved in many of the conversions in the area - money. The case he cited from a close by neighborhood involved a homeowner not paying after the conversion eventually backed down when the attorney them to collections. I felt that the attorney took a heavy-handed approach to keep his methodology safe. He probably didn't expect a homeowner in one of the neighborhoods he converted to have the resources to fight this thing for several years.

My opinion was that the board was blinded by their own greed and aspirations (same goes for the lawyer). T

What is sad is that since the court ruling, voluntary payments to the association have hit an all-time low, but the board is still fighting. Now, their only hope is to have their amended covenants upheld.

Kevin posted "My opinion was that the board was blinded by their own greed and aspirations (same goes for the lawyer)." I agree.

However, we have been involved procedures which allow effectively amending the Declaration of CC&Rs to achieve going from voluntary HOA dues to manditory property assessments. It does not affect current owners but does involved any future buyer of a property after properly amending and filing of the amendment of the Covenants.

That is human nature. If I want confirmation of my reasoning, I'll keep asking different people until I get it.
It won't matter that 100 people disagreed, human nature will hang buddy up with the one who agreed and then, if things go wrong - blame the one who agreed with them (instead of taking the blame themselves for making a poor decision).

Hopefully, those individuals who volunteer and are elected to the Board will rise above their human nature and weigh each decision on legality, benefits and risk. Common Sense would be helpful here as well.

Kevin,

You mentioned that the letter from the lawyer is ten years old. In the not-so-recent past someone -- and I think it was you -- had a link to a site with a discussion of Florida HOA law. What little of if that I remember is that in the past few years there were a number of amendments to Florida statutes. I do not recall the specifics but I cannot help but wonder if any of those amendments would have changed the association's actions from questionable ten years ago to completely legal today?

Kevin,

The site I was referring to was a 2005 article in the Florida State Bar Journal. The website is
http://www.floridabar.org/divcom/jn/jnjournal01.nsf/Author/A8A8DA7514A6718885256FF10060DF88

I do not know how much of this might apply to your situation but it does confirm that there has been at least one major amendment to Florida statutes regarding reviving old associations since the lawyer wrote his letter.

Okay. I have read this site before and I don't think that this would apply to the situation because the details regarding this HOA didn't involve reinstating and renewing covenants but trying to get a new set published and whether or not they had the authority to do so. I attended the court hearing and the HOA's case was based on circumstantial evidence, intent, and for some reason, the HOA attorney kept referencing court cases for condos and trailer parks - not HOAs. The plaintiff's attorney stuck to the letter of the law and provided documentation and histories for everything.