HOA master board bypassing individual community docs

Started by FrederickD3 • 14 replies • 1842 views

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FrederickD3 (Florida)
Posts: 5

Posted:

My HOA has a master board and several neighborhood association boards. The neighborhood association docs does contain a superseding clause in favor of the master board. The master board deemed itself not subject to FL 720 (the governing statutes relating to HOA's), and has a procedure for amending docs that does not require a 60% unit owners vote but rather a master board vote only with each representative on the board casting a weighted average vote based on the number of unit owners the board member represents. My problem is that this process appears to be in violation of the filed and approved method in the neighborhood docs for their amendment.

The superseding clause was accepted by the neighborhood communities when the master board voluntarily operated in accordance FL 720 statutes. The master board changed their docs to the weighted average methodology in 2006 without a specific unit owner vote in violation of the 60% of unit owners approval which was at the time contained in the master association docs.

My question is: If the master board passes an amendment to their docs by using the weighted average method which establishes a new assessment or a new restriction on property use not contained in my neighborhood association docs how does my neighborhood association avoid violating FL 720? HELP!!

TimB4 (Tennessee)
Posts: 21,061

Posted:

Frederick,

It has been a few days since you posted this and there have been no responses.

This is something that you may need to run by an attorney.

There may or may not be a time frame in which an amendment to governing documents may be challenged (which is what would have to be done to address the superseding issue). For that answer, I would recommend contacting an attorney who would be able to have access to all of those documents.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By FrederickD3 on 09/17/2014 9:42 AM
My question is: If the master board passes an amendment to their docs by using the weighted average method which establishes a new assessment or a new restriction on property use not contained in my neighborhood association docs how does my neighborhood association avoid violating FL 720?

I think it would depend on how significant the change was in the overall scheme of things.

Representative voting (weighted average method) makes sense in situations where it would be too cumbersome and time consuming to get individual votes. The downside is that smaller villages might get shortchanged because the larger ones have more influence. The positive side is that in theory every homeowner is represented, even those who don't ordinarily vote. Also, it is more likely that the representative are better informed.

You might ask to see the legal opinion that the master association got on representative voting. If they got an opinion, it's part of the corporate records, and you should have access.

Also, you have a representative. You might want to ask her to get you the answers you seek.

Sikubali jukumu. Read all posts at your own risk.

FrederickD3 (Florida)
Posts: 5

Posted:

Understand your point of view, but the piece you missed was that the filed neighborhood documents are legally binding on the neighborhood boards. The master board, made up of the various communities elected representatives, does not have to file their documents or abide by Article 720. There was a superseding clause contained in the neighborhood documents in favor of the master board that was agreed to by neighborhood boards back when the master board voluntarily complied with 720. Now it does not comply. A change in the master docs is a change to the neighborhood docs and the notification and voting requirements of the neighborhood docs which the neighborhoods must observe are not being followed nor are they given enough time to follow them nor can they be binding on a neighborhood which does not vote in the change. In other words CHAOS.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By FrederickD3 on 09/20/2014 8:48 AM
Understand your point of view, but the piece you missed was that the filed neighborhood documents are legally binding on the neighborhood boards. The master board, made up of the various communities elected representatives, does not have to file their documents or abide by Article 720. There was a superseding clause contained in the neighborhood documents in favor of the master board that was agreed to by neighborhood boards back when the master board voluntarily complied with 720. Now it does not comply. A change in the master docs is a change to the neighborhood docs and the notification and voting requirements of the neighborhood docs which the neighborhoods must observe are not being followed nor are they given enough time to follow them nor can they be binding on a neighborhood which does not vote in the change. In other words CHAOS.

I didn't miss your perspective in your first post Frederick.

I am not familiar with FL HOA law and so I wouldn't want to comment on whether a master association must be bound by A720. My assumption was that, if you are large enough to need a master association, then a legal opinion was probably obtained before the changes were implemented. And IMO, you have a right to review that opinion. To me that was a great starting place for your inquiry.

Another point. Even if the master board is not following A720, those board members still have a fiduciary responsibility to you and to every other member. So I don't think that chaos will rule.

If you had described a particularly unfair change that the master association had tried to impose, I could respond. But IMO the decision not to follow A720 is not the end of the world in and of itself.

You can always fight the changes. My suggestions are that you learn a bit more about how things are actually set up before you invest in a fight that might be a loser if it ever got to court. These battles can be extremely expensive for everyone.

Sikubali jukumu. Read all posts at your own risk.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Frederick,

I would expect that for a master association to have enforceable deed restrictions, those restrictions would have to be recorded. However, I am not an attorney and I do not work in the legal profession. I also haven't fully researched the FL statutes.

My advice is to seek out a local attorney for an opinion.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Frederick

I am not nor do I play a lawyer.

My initial blush is the Master Association is trying an end run.

Actual votes versus weighing votes can be tricky.

Like two US Senators per state versus Congressman per population also the Electoral College Analogy.

ACTUAL VOTE

Association A. 100 members. 99 yes, 1 no.

Association B. 200 members. 1 yes, 199 no

Association C. 400 members. 201 yes, 199 no.

Total votes 700, 401 yes, 399 no

WEIGHTING VOTE

Association A. one vote, Yes

Association B. one vote, No

Association C. 4 votes, Yes

Total votes 5 Yes, 1 No.

I have had enough to drink that I am not going to play more with the numbers but I believe the actual tallied votes could say one thing and the weighted votes could say another. The US elected Bush over Gore based on this.

NpS (Pennsylvania)
Posts: 4,216

Posted:

John. I'll guess that the voting could go more like this:

Association A. 100 members. Representative for A votes No.
Association B. 200 members. Representative for B votes No.
Association C. 400 members. Representative for C votes Yes.

Whatever Representative for C votes carries the day. His 400 always represents a majority. And since representatives probably are not obligated to poll their constituency, Association C could in theory have 399 members who would vote No. Rep C is the sole decision maker on every question.

Clearly there are risks if this in fact is the setup. But without more specifics from the OP, it's all just conjecture.

Sikubali jukumu. Read all posts at your own risk.

FrederickD3 (Florida)
Posts: 5

Posted:

While the actual numbers vary from your example your conclusion is essentially correct.

The expressed purpose of the master board for using the weighted average method was to "make it easier to amend the docs without a lot of expense". No one would argue that a dictator or king is not an efficient method of government. It is just that a single authority is, on the whole, the least responsive to the will of the people being governed. Likewise amending the basic rules of government whether for a Constitution (like the US Constitution)or documents governing a community should not be changed at a whim and should require some effort to avoid abuse. The State of Florida recognizes this simple but fundamental fact and requires a procedure which needs more than 50% of the members to approve (this is the requirement that wording in filed docs contain a 60% approval clause for amendment). Expediency does not trump the property rights of the owners.

I would like to thank those that have commented on this issue and to those that are stimulated to thought after reading the opinions expressed I trust the wheels are turning to protect yourself.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By FrederickD3 on 09/21/2014 9:12 AM
While the actual numbers vary from your example your conclusion is essentially correct.

The numbers provided were mere hypothetical. Your response is that the numbers are different but the results are the same.

Not necessarily. Here's another hypothetical set of numbers.
Association A. 100 units.
Association B. 100 units.
Association C. 100 units.

In this scenario, there is virtually no risk of imbalance. Nothing can pass without 2 representatives being in agreement. No association has less than an equal footing.

Maybe you will favor us with some actual numbers Frederick so that we can move past the theory and on to the pragmatic realities.

Sikubali jukumu. Read all posts at your own risk.

FrederickD3 (Florida)
Posts: 5

Posted:

If your group thinks details would help, let me offer the following: 1014 homes consisting of 9 neighborhood associations each very close to the same size (110 units in all but in the oldest neighborhood which has 134).

If you had followed my narrative you would see that none of the neighborhood representatives could vote for a change of docs at the master board meeting regardless of the size of the community they represent since to do so would automatically change their docs if passed and thus be in violation of their filed docs. The theory on this seems pretty clear. The conflict we are facing is that if some representatives act to pass a change to the master docs that imposes a restriction on the use of private property (falls under 720) or represents a new assessment (falls under 720) they and our neighborhood would be in violation of our filed docs plain and simple. Passing changes in the Rules and Regulations which applies to all the neighborhoods is fine and can be delegated to the master board, but not those areas singled out in 720 as under the regulation of HOA's in Florida by Statute.

It is perhaps good to keep in mind that all law is theory until it is broken.

NpS (Pennsylvania)
Posts: 4,216

Posted:

So it looks like it's time for a new hypothetical. 9 villages of approximately the same size are part of a master association. The master association maintains the clubhouse. The individual villages maintain property that is separate and distinct from the clubhouse. Membership in an individual village establishes rights to use the clubhouse. However, the language in the master association's declaration actually states that the membership in the master association is held not by the unit owners but by the villages. Technically speaking, the master association only has 9 member entities (consisting of the 9 villages).

Some years ago, the master association came to the realization that nothing could pass under the old 60% rule. They got a legal opinion letter which stated that the vote of the individual unit owners was not necessary. That opinion letter cited the applicable laws and described how the master association could interpret those laws given the fact that there are technically only 9 members of the master association. The master association adopted the recommendations in the attorney's opinion letter.

You have asked for help. Recommendations have been made:
1. Demand a copy of the lawyer's opinion letter. You have a right to see it.
2. Review the detailed language of the master association docs. If deed restrictions were recorded, the master association is subject to 720. The devil is of course in the details.
3. Consult your own attorney. No one on this forum has the technical expertise you ultimately seek. We have merely conjectured and expressed personal opinions based on our limited knowledge.

It may be that your lawyer will say that the master association did not have the authority to abandon the 60% rule without a 60% vote. But I think that your lawyer would be better informed and it would be far less expensive for you if you first obtained a copy of the master association's legal opinion letter and shared it with counsel. At least your attorney would know what he is up against.

Sikubali jukumu. Read all posts at your own risk.

FrederickD3 (Florida)
Posts: 5

Posted:

Thank you for your opinion.

As it is becoming fashionable to use master boards to bypass inconvenient covenant restrictions, other neighborhood associations may have faced or is facing a problem similar to what we are experiencing. My hope was that someone who had gone through resolving this conundrum could share how best to handle it.

I have discussed this "catch 22" with three attorneys and have asked the attorney for the master board's opinion. The three independent attorneys came to the conclusion that we would be in violation of 720 if we tried to enforce a new assessment or restriction to the use of property (or change to any filed document involving an area regulated by Article 720 of the State Statute) without proper notification and 60% individual unit owner vote of approval as is required by our docs filed with and approved by the State of Florida. The master board's attorney stated that the master board is not obligated to follow 720 guidelines and any change to their docs can be made by what ever method agreed to by the master board. He/she did not comment on the legal position of the individual neighborhoods. We are pursuing a meeting with the master board and its attorney, but are looking for any examples of how this may be amicably resolved or failing this to an authority which can advise both parties how they should be operating to avoid a violation of State Statute.

Any help which can move this issue along would be greatly appreciated.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Hi Frederick

In the hypothetical I posed, I intentionally described the common property under the control of the master association as separate and distinct from the common property under the control of the individual villages. I also hypothesized that structurally the 9 villages, and not the individual owners, were the members of the master association. If these hypotheticals are in fact accurate, which I have no way of knowing, then I can see where master associations could obtain legal opinions that justify the voting changes you find objectionable.

The reason the legal opinion letter is so important is that there is probably language in the master association CC&Rs and/or the master association D&O insurance policy that protects the HOA and directors from liability in the event of challenge. In other words, the insurance company would defend and cover litigation costs. The master association directors would have been foolish to proceed without a legal opinion letter, but once again, I am merely hypothesizing.

I respect your concerns about potential abuses and your willingness to search for an amicable solution. The difficulty I have is twofold.

First, I have had to rely on conjecture. You thank me for my opinion, but don't confirm whether my guesses are accurate or inaccurate. Yet my opinion is specifically tied to the hypothetical. So I am left high and dry.

Second, you tell me what lawyers say. I am not about to rely on a second hand rendition of what a lawyer said no matter how well intentioned you may be. And I learned long ago to get things in writing from lawyers if I want to make sure that a statement is adequately researched and not just an off the cuff comment that, when later put in writing, may be subject to many qualifications not described in the initial conversation.

So back to the legal opinion letter once again. If the master association's attorney advised the board that they need not follow 720 and that they can change the voting requirements without a 60% vote, then support for that perspective should be clearly spelled out in the legal opinion letter on which the master association board relied.

And once again, you have a right to see that legal opinion letter. So ask for it. Get it. And proceed from there.

Perhaps others in FL have specific experience, but no one on this forum seems to have taken up your invitation to comment. It may be that you are on the forefront of a trend that will need to be settled in the FL courts if it is as pervasive as you think. But in the meantime, you should remember that you are not the master association attorney's client. He is not bound by anything he says to you.

Sikubali jukumu. Read all posts at your own risk.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By FrederickD3 on 09/21/2014 12:55 PM
It is perhaps good to keep in mind that all law is theory until it is broken.

I have no idea what this means Frederick.

I think a better statement might be "all law is theory until it is applied to a specific set of facts."

Sikubali jukumu. Read all posts at your own risk.

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