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JimB37 (Florida)
Posts: 76
Posted:
I've spent part of the afternoon researching this question in topics and not found anything relevant. If I have missed it, my apologies for the duplication and point me in the right direction.

Master association is responsible for maintaining records for both Master (homes) and sub (condos) associations relative to owner and tenant information. This requirement is stated in documents. The sub must submit documents every 30/180/365 days depending upon the nature of the rental. The master association is not receiving cooperation from sub association in that the sub is not providing the required documentation to the master, nor is the sub taking action against owners who are cycling through tenants on a regular basis without the required documents. (Based upon neighbor accounts.)

A conversation with the attorney is forthcoming, but I would like hear from anyone willing to offer their opinion on this as I would like to know if my head is in the right place on this beforehand.

First, I believe this to be a violation of the sub's fiduciary responsibility in that they are not abiding by the documents and are therefore not acting in the best interests of either of the associations. Unfortunately, from what little I know of Florida law, there aren't likely to be any sanctions for this unless there is some evidence of fraud or self enrichment.

Another aspect of this is what to do about the director who sits on both boards who is responsible for the sub's conduct, but is unwilling to do much to resolve the issue which is an obvious violation of the rules. Our documents and statutes provide guidance when such actions are committed by an owner, but apparently, the writers didn't anticipate this sort of conduct from a Director - or the sub association for that matter.

Just how does one go about sanctioning a sub association???

I've not discovered any material that covers these questions and I'm not even certain there is any mechanism for doing so outside of the usual membership votes.

Thanks to all in advance who take the time to offer their insights.
MichaelT21 (Arkansas)
Posts: 501
Posted:
JimB, please meet AdamL1 of Idaho!
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By JimB37 on 05/27/2022 5:03 PM
First, I believe this to be a violation of the sub's fiduciary responsibility in that they are not abiding by the documents and are therefore not acting in the best interests of either of the associations.
Respectfully: Skip the 'fiduciary duty' and 'best interests' palaver. If the covenants or bylaws say what you claim, then the sub-HOA is violating the covenants. Seeking injunctive relief in a court of law is appropriate. Or the mere threat of the latter will get the sub-HOA to clean up its act.

Quote:
Another aspect of this is what to do about the director who sits on both boards who is responsible for the sub's conduct, but is unwilling to do much to resolve the issue which is an obvious violation of the rules.
If the director is outvoted by the sub-hoa's board, then the problem is not his fault. Else I do not understand why you think a single director on the Sub-Association board is responsible here.
Quote:
Our documents and statutes provide guidance when such actions are committed by an owner, but apparently, the writers didn't anticipate this sort of conduct from a Director - or the sub association for that matter.
I doubt this. A violation of the covenants/bylaws is occurring. The Master Board should enforce the covenants/bylaws. Master associations do sue sub associations at times to enforce the covenants. For example, see

https://law.justia.com/cases/florida/fifth-district-court-of-appeal/2015/5d15-86.html

For a handful of other examples, google as follows:

"master association" "sub association" site:https://law.justia.com/cases/

I am curious: Is the master association one corporation while the sub association is another corporation?

All of the above is preparation for meeting with an attorney.
JimB37 (Florida)
Posts: 76
Posted:
Thank you for the references and the advice.

The two entities are indeed separate corporations.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By JimB37 on 05/28/2022 5:43 AM
The two entities are indeed separate corporations.
Great. I am not sure this is always so with Master and Sub associations. But when the Master and sub are each a corporation, I think this makes suing the Sub to enforce the Master's covenants more clear.
SteveH35 (Washington)
Posts: 339
Posted:
Quote:
Posted By AugustinD on 05/28/2022 7:12 AM
Posted By JimB37 on 05/28/2022 5:43 AM
The two entities are indeed separate corporations.
Great. I am not sure this is always so with Master and Sub associations. But when the Master and sub are each a corporation, I think this makes suing the Sub to enforce the Master's covenants more clear.

I'd like to emphasize that filing a lawsuit should always be a last resort. Mediation and binding arbitration are generally two superior alternatives due to considerations such as cost and time. You might even be able to use your CAI chapter's ADR mediation for under $1,000 total, split between both parties.

Regards,
Steve

JimB37 (Florida)
Posts: 76
Posted:
I completely agree. Lawsuits are a tool of last resort, and a much bigger stick than is presently called for. (Although, it's always nice to know that you have some big ammo in your pack.)

Until now, the problem was looked upon as being the sub President as just being uncooperative and making administering the community even more difficult than it already is. It was not regarded for what it really is at its core, which is a simple rule violation. If this was an owner doing it, no one would have blinked an eye about the usual warning letter and perhaps even a fine. Since it was the President of the sub, however, no one could think of anything to do other than to yell at him at the Board meetings and nothing would happen. That is about to change. My guess is that faced with some hefty fines (these go back a year and there are multiple instances), the sub President will finally get his paperwork in order. If he still balks, then the attorney will be consulted for alternatives such as arbitration, but at least we finally have a roadmap for resolution.

Thank you all for your wisdom!
LoriM15 (Florida)
Posts: 1,009
Posted:
Sort of an unrelated question- do your documents require a seat on the master board for your sub-association president? Or was he just elected to both? The reason I ask is that our documents don’t require or prohibit a director being on both boards. We had a president who was on both and it was a terrible mistake. He tried to get the master to pay for all kinds of condo only stuff and could not be objective. Luckily he finally resigned when he figured out the rest of the board was not going along. We have considered changing our documents to prohibit it happening again. We want the subs to be represented so they feel part of the master but ther are just so many conflicts of interest.

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