What is the difference, if any ?

Started by DanN3 • 17 replies • 1192 views

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DanN3 (Florida)
Posts: 91

Posted:

I have seen governing documents say 'The Association shall abide by all Florida statutes, as amended' and other governing documents saying same, except for 'as amended'. Mean the same or does it mean, where 'as amended' is not included, that the Association is not subject amendments to statute after the recording of the governing documents at the point where the Association was created?

PitA
Posts: 1,416

Posted:

ANY association IS required to abide by any local, county, state, federal statute/law UNLESS said statute specifically defers to the association.

Matters NOT the wording of the CCRs - public law overrides private contract - PERIOD.

(unless the public law SPECIFICALLY defers to the contract)

A main PROBLEM with HOAs is that many THINK they are above the law.

DanN3 (Florida)
Posts: 91

Posted:

So in the state of Florida, at least, in light of the contracts clause in the Florida constitution, depending on the nature of a Florida statutory change such change may not have an effect to the Association that does not have the 'as amended' feature. I do see the difference. I would also add that sometimes Florida case law, at the appeals level, may give greater clarity and has the same force of legislative acts. I cite Kaufman v. Shere 1977, as an example. So I agree with you in that as long as there is a legal basis of law, that is with higher authority, such governing document language standings do depend.

PitA
Posts: 1,416

Posted:

I gave TMI:

JeffT2 (Iowa)
Posts: 880

Posted:

Quote:

Posted By PitA on 08/20/2017 7:26 AM
I gave TMI:

ANY association IS required to abide by any local, county, state, federal statute/law UNLESS said statute specifically defers to the association.

Matters NOT the wording of the CCRs - public law overrides private contract - PERIOD.

Some new laws will have an opt-in clause or other provision where the wording of the CCRs does matter.

KerryL1 (California)
Posts: 14,550

Posted:

PiTa's reply is very clear!

JeffT2 (Iowa)
Posts: 880

Posted:

According to this article, "as amended" are magic words:

https://floridaassociationlawblog.com/tag/as-amended-from-time-to-time/

GwenG (Florida)
Posts: 669

Posted:

There are two aspects to the "as amended" phrase.

Insofar as Kaufman language (arising from Kaufman v Shere 1977), the clause must specifically be stated as "as amended FROM TIME TO TIME". It must be clear that the intention is to incorporate changes to the association acts for all the time into the future. This was confirmed by the 2011 case Cohn v The Grand Condominium Association Inc. Though the decision was specific to condos, it rocked the world as it could apply equally to all associations ie HOA, timeshare, coops.

The decision specifically requires the MAGIC LANGUAGE be present "As amended from time to time". Simply having the phrase "As amended" is not sufficient as it does not convey an intent to incorporate future amendments.

That being said, the association acts in Florida also state that it is not the legislative intention to impair the contractual rights of the public by enactment of laws. Thus, one must define the nature of legislative "changes" to Substantive and Procedural.

Procedural enactments trump governing documents because they are in the domain of Public Good, Fairness and are curative of faulty prior law.

Substantive enactments do not apply unless the governing documents have previously included them with the Kaufman language "as amended from time to time".

The trick is to sort out what enactments are procedural and substantive. That is above the pay grade of boards and management companies.

GenoS (Florida)
Posts: 4,276

Posted:

GwenG has it right. The so-called "Kaufman language" is very important in Florida. New laws do not automatically apply in Florida without that all-important "as amended from time to time" language in the CCRs. Florida is very big on contract rights and new laws cannot impair contract rights. There are exceptions, but many mistakenly believe that new laws automatically apply.

For instance, my HOA was formed in the late 1980s and turned over to the homeowners in 1994. Florida's HOA statute (FS 720) was not enacted until 2000. Therefore we are subject to the parts of FS 720 that previously existed in Florida's Not-For-Profit Corporation statute, but not all of FS 720. According to some long-time residents here, that is the reason why we do not handle our reserves in accordance with FS 720. We don't have the "as amended from time to time" language in any of our docs.

DanN3 (Florida)
Posts: 91

Posted:

Thanks for your argument conclusion and supportive details. Makes a lot of sense. Can governing documents be amended, that are 15 years old, so to include ', as amended from time to time' ? If so, what is the impact with respect to prior to the inclusion of this change and where the Association was in compliance, but would not be, if the amendment were adopted ? In other words does the amendment impact take effect only going forward from the date of recording or ?

In summary, the state always has it's way when it comes to procedural matters (changes), but not as to substantive enactments, if the governing documents do not have ', as amended from time to time'. Correct me if I am wrong.

DanN3 (Florida)
Posts: 91

Posted:

Geno,

Your input appears to be right in line with Gwen's opinion.

KerryL1 (California)
Posts: 14,550

Posted:

Your gov. docs probably can be amended to say "as amended from time to time," but I believe your HOA would be still be compelled to follow the amendment requirements in that particular document. Declarations/CC&Rs, for example, often require for approval a supermajority of owners or 75% or even 100% to amend.

Bylaws, on the other hand, may require only a simple majority of Owners approving. Some on this forum have said that their boards can amend bylaws

GenoS (Florida)
Posts: 4,276

Posted:

There's a blog page -> here <- on a Florida law firm's website that encourages associations to amend their governing documents to include the "as amended from time to time" language. It's definitely possible, subject to the same process any other amendment would require.

DanN3 (Florida)
Posts: 91

Posted:

Gino,

If an association elects to include 'as amended from time to time' what is the impact if in the past the association relied on the statute as it existed at the time the Association was established and would not then be in compliance with the include ?

GenoS (Florida)
Posts: 4,276

Posted:

Well, I'm not sure exactly, but I can give you an example "what if" since my HOA doesn't have that language. FS 720.303 has strict requirements for reserves. A past board, before my time here, obtained a legal opinion that said we do not have to abide by the statutory reserve requirements because they became law many years after the HOA was established and, thus, do not apply to us.

I think if we added the "as amended from time to time" language to our documents that we would have to immediately come into compliance with the mandated formulas for calculating annual reserve contributions. This would result in a huge jump in assessments since we regularly contribute much less than what the statute says is required. The ability to waive fully funding the reserves would still exist but the homeowners would have to formally vote, every year, on whether or not to do so. That's additional work no board here would ever want to do.

If there were other things going on that were not in compliance with the current statute then those things would also have to be brought into compliance.

DanN3 (Florida)
Posts: 91

Posted:

Quote:

Posted By GenoS on 08/20/2017 6:31 PM
Well, I'm not sure exactly, but I can give you an example "what if" since my HOA doesn't have that language. FS 720.303 has strict requirements for reserves. A past board, before my time here, obtained a legal opinion that said we do not have to abide by the statutory reserve requirements because they became law many years after the HOA was established and, thus, do not apply to us.

I think if we added the "as amended from time to time" language to our documents that we would have to immediately come into compliance with the mandated formulas for calculating annual reserve contributions. This would result in a huge jump in assessments since we regularly contribute much less than what the statute says is required. The ability to waive fully funding the reserves would still exist but the homeowners would have to formally vote, every year, on whether or not to do so. That's additional work no board here would ever want to do.

If there were other things going on that were not in compliance with the current statute then those things would also have to be brought into compliance.

So to amend or not goes into the category of 'Be careful what you wish for'. Thanks for your level of detail.

GwenG (Florida)
Posts: 669

Posted:

IMO, amending the Covenants by affirmation of 75% could be a tricky if legally challenged in the same manner as prohibiting the right to rent where there was no previous prohibition.

Knowledgeable buyers rely on the documents they sign at the time of sale and the statutes. If the statutes state that it is not the intent of the Legislature to impair contractual rights and then the Association subsequently attempts to curtail contractual rights via an amendment to the covenants, binding ALL members to current legislative law, the minority who do NOT wish to be subject to a new law imposed by the majority could possibly take the association to court.

So, this become a much more problematic question that just one issue with Reserves for an association. The admonition to be careful what you wish for is very true. Less may be more. Lawyers will always advocate for more and more laws to keep them in business and a wise group of directors will use careful reason before deciding to make such a major change to their documents.

Here's one of my favorite thoughts on the wider question of democratic tyranny of the majority:

"Measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority."
James Madison

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By DanN3 on 08/21/2017 4:11 AM
So to amend or not goes into the category of 'Be careful what you wish for'. Thanks for your level of detail.

In our case it does, although my preference would be to come into compliance with the statute "as amended from time to time". Boards here have been under-funding the reserves for a decade. The light at the end of the tunnel is a train and we have about 5 years to get our act together before special assessments become inevitable.

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