HOA Estoppel based on incorrect information

All. Firstly I am an owner, and not a member of the board or our ACC committee.

We built in our development in 1999. This is a Florida residence. There were bi-laws but the developer had not yet fully turned over control to the association and property management company, there were only 10 homes, out of some 900, today.

We applied for approval of a white PVC fence, through the property management company, the ACC and the board.

We provided the application including a site plan, the quote and a new survey. The fence was installed correctly based on lot lines, setbacks and other requirements. It was approved in installed in February of 2001, 23 years ago. A few years later, there were clearly defined types of fencing that were approved. Ours was a solid PVC fence and the only approved style was shadow box. We were then approached and told we had to tear down and replace or just go without a fence. The HOA board reviewed my approval and told me we were grandfathered, based on the existing approval. I have all of the documents in my possession including the approval letter.

We are planing to sell the home and list it this month. I was told confidentially that at the last board meeting, there were discussions about creating an estoppel stating I was not in compliance that that the fence must be removed or replaced upon sale of the property. When asked if out of courtesy, the ACC committee would give me a heads up, the answer was "no let him find out during title search and pre closing". I was told that there was no requirements in the HOA docs requiring notification to the owner.

This estoppel is predicated on an opinion that the Grandfather clause ends at the sale of the home and that there was an update to the CC&R to state that. The are moving forward with the process. This has come up a few times and I have been informed by neighbors. Last year I called our LCAM, and she verbally told me that there was no such amendment, and that as far as she knew, the grandfather clause stayed with the property and not the owner. She stated that unless it were clearly addressed in the CC&R, that legal had to adhere to the legal documents, and ACC members could not subjectively interpret the docs. It was a simple verbal conversation so nothing was documented. My fault.

I downloaded "all" of the documents and searched through every document to find that statement... and it does not exist.

What concerns me is that a member stated (hearsay) that even if I contested the estoppel, and won the review, the board has a legal right to delay a notification or response for up to 60 days. That would severely impact the sale of my home, causing me to lose a potential sale, lose a homeowner's exemption on our new property or this property by where I would either incur second home tax burden, or lose my homestead exemption in Florida and incur about a $80,000 Capital Gains tax burden. So this is a critical situation for me.

Below are what is written in the CC&Rs

My questions are:

1. If in fact they issued an estoppel and it is incorrect, am I legally able to circumvent the estoppel or have them issue a new correct one?

2. if this incorrect assertion, causes me to lose a sale of the home or delay 60 days, or if this delay causes me to incur capital gains tax burdens, or lose my homestead in the new home, do I have any legal recourse. Either litigation against ACC members who intentionally tried to interrupt my sale? Are there any legal recourse options for me to sue the board or HOA? Can they be held personally liable, predicated on their intent to do personal damage?

3. Are there any statue of limitations rulings applied, seeing as this has been in place and grandfathered for 23 years?

I am waiting on the HOA Counsel's response to my questions about Grandfathering. But in the even in event that she adheres to what it is written, then ACC members, as I understand it could still move forward with incorrect information?

This is from the CC&R:

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Existing alterations, additions or improvements to the exterior of dwellings and/or lots in which were properly approved by the developer and/or ACC or installed by the Developer will be permitted to remain in place provided that they are maintained. Fences must be brought into compliance when they need to be replaced. As specific cases are reviewed, homeowners will be notified by the Board through the property management company as to the future status of their fences.

Grandfathering is granted to any and all accessory structures as described in the above paragraph except as otherwise provided in this paragraph. County building codes set the percentage amount that initiates the rule for complete replacement of a building and, if 75% of the unit must be replaced, the community Guidelines and the building codes shall be followed in the rebuilding. Fences will require a total replacement of the entire fence when fifty (50%) percent or more requires replacement and that replacement must follow approved Guidelines. Any structure or improvement, including those grandfathered, which has been destroyed must meet current Guidelines for rebuilding. In the event a grandfathered in structure is destroyed or requires replacement, the non-conforming structure cannot be replaced, but must be brought into compliance.

THANK YOU... and yes any correspondence and conversations have been emotion free... Sorry.

This is upsetting for us, as one can imagine. Michigan allows for 2 homesteaded properties as long as one is actively for sale. Having said that, I have to formerly homestead the Michigan property by the end of may before taxes are due, to get the homestead exemption. Florida may or may not recognize dual homestead properties. The market and our neighborhood is very hot and homes are still selling in a few weeks. We already incurred a $40k capital gains tax on the recent sale of a michigan property so this is near and dear to my heart.

Your advice appears to be the best plan of action, as it is florida law and not subject to interpretation of the CC&R documents, and it is written in the covenants that updates can be made without a vote. So based on the history and crazy obsession over my particular fence, I would not put that past a few members

Thank you for your input... I will sleep much better tonight
Scott

Thank you DouglasK1. Appreciated. I was told the same, but I was told that a mention of holding ACC remembers personally liable, is likely something they will not want to hear or deal with...

I had an attorney review and he thinks they do not have a case based on the statutes and what he read in the CC&Rs

I think the bigger question is if the Grandfather clause transfers to the new owners at the sale of the property. I need to ask him, but there is nothing stating that in the covenants. The have the right to amend documents without a member vote. I would hate that to come back on a new owner after close. I am far from an attorney, but there is no stipulation in any of our published documents, so not sure

I did find this:

Legal Actions Against the HOA or Board Members

Alternatively, homeowners can pursue legal action against individual members of the board who are believed to have breached their fiduciary obligations. This can include claims for negligence, mismanagement of association funds, or other related misconduct.

Some observations, based in a lot of experience:

-- I feel that "grandfathered" is one of the most abused and mis-used terms in the HOA lexicon. It sounds like many at your HOA are tossing the word around as if it has an exact meaning. "Grandfathered" (or similar language) has an exact meaning only when an ACC approval or the CC&Rs state it has an exact meaning.

-- For amendments pertaining to architectural matters, only the owners can amend the CC&Rs. The board cannot amend the CC&Rs by itself.

-- If the CC&Rs give the board specific authority to set architectural rules pertaining to xyz, then the board may do so, but the courts say the boards have to be "reasonable" when doing so (or when exercising any discretionary authority the board has under the CC&Rs and bylaws).

-- Where the HOA approves architectural change xyz; the HOA's approval is silent about what happens when the home is sold; and xyz cost a lot of money; I think a court would tend to side with the owner. Why? Because the owner //relied// on the approval when he/she spent the money.

-- If the estoppel certificate lists no violations, and subsequently the HOA issues a violation notice for something the prior owner installed with HOA approval, the HOA would not be able to go after the new owner. Why? Because this is the whole point of an "estoppel certificate." Consider googling on the meaning of the latter phrase and the word "estoppel."

-- Having to lawyer up is often the price of agreeing to buy a home in a HOA. These HOAs have volunteer, not necessarily skilled people on the board. Many HOA boards are of the opinion that they can do whatever they want, because they are the board. Many directors would not know a covenant from a board-created rule from a fair housing violation.

-- I have questions, but mostly I think they would just tend to clarify what your chances are if push came to shove and this dispute landed in court. So far I think you need to "bare teeth" (as in a German Shepherd ready to go for the jugular) and indicate down the road that you will take the HOA to court over this.

Many HOAs carry something called Directors & Officers (D&O) insurance. Their CC&Rs may actually require it, and they may indemnify directors and officers for actions taken in the course of their duties. In addition to the HOA-specific stuff, volunteers are protected by the Volunteer Protection Act which states that a volunteer director or officer is not personally liable to the corporation or third parties for monetary damages from his or her negligent act or omission occurring within the scope of his or her duties as a director or officer, in good faith, in a manner the volunteer believes to be in best interests of the organization for which they are acting.

So it's unlikely that suing the board personally will work unless the volunteers acts are illegal, in which case you may be able to bring criminal charges. What you're talking about here are civil matters.

Thank you Ellen...

I am waiting on clarification from the HOA attorney. I know she has in the past, has publicly put ACC members in their place at board meetings. I suspect she will go by what is written, so I have a good shot at getting this resolved.

If everything comes back as I expect it, then I will get time on the next board meeting... and Teeth will come out!

Holding them personally liable wouldn't be necessary for board decisions about your fence.
The board may have a right to amend operating rules but amending the Declaration would need a vote of the membership.
I would have a discussion with my real estate agent about disclosing the situation to your buyer in writing.
I would think that unless your city/county has a zoning code requiring you to change a fence at time of sale, your board has no authority to require that.

At least their instructions/orders are not formal directives from the board. It's funny how members are always encouraged to treat directors as altruistic volunteers worthy of being treated with utmost respect; whereas, members who don't agree with directors are called vocational dissidents who shouldn't be spoken to except through an attorney. The attorney's way of controlling the association's bank account.

Just saying --

-- I believe best practices by ACC members and board members alike are //not// to have side conversations with owners. After all, no one ACC member and no one director can lawfully speak for either the ACC, the board or the HOA. These side conversations may tend to promote misunderstanding. When the stakes are high (like when a lawsuit seems more than possible), it is particularly important to avoid these side conversations.

-- The fact is these volunteers are often targeted by unreasonable hoa owners for harassment. Your complaint does appear to be reasonable. But for every reasonable objection an owner raises, from experience there is at least one completely unreasonable objection another owner raises. Toss in that many owner objections absolutely should be turned over to the HOA attorney very early in the dispute.

-- Maybe if you served on an ACC or HOA board you would not find this all so funny? I mean this with respect -- respect for you and for all volunteers who have the unfortunate but legally necessary task of serving HOAs on their boards or ACCs. Anyone wanting to scream about it should go after the legislators and developers who set up the HOA structure to save taxpayer dollars.

-- As for naming ACC members and HOA directors as defendants in a lawsuit: Yes, it is a legally "valid" harassment technique. On the other hand CathyA3 is right, of course, that legally, this is unlikely to ever result in a director's personal liability. By my reading it takes a director committing a bona fide violation of the state's criminal statutes for personal liability to result. Still no one likes to be named personally as a defendant in a lawsuit. It is embarrassing. Practically speaking, being a defendant can also affect one's eligibility for loans. On the third hand I do not see this dispute going to litigation. I expect your attorney and the HOA attorney will get this settled so that all approve. I deeply regret that you may have to "lawyer up." It is the worst of HOA life.

I agree with everything that you stated. And yes there are homeowners that are impossible to deal with, and ACC members learn quickly from those interactions. I am most reasonable, until it impacts a $600k sale... if I am wrong I will replace the fence. Two ACC members informed me of the conversations, as we are friends.

The challenge is that we have a FB page for the neighborhood and it appears that a former ACC member who has since moved from the community, stated that amendments were made in 2019, stating, grandfather approvals end with transfer of ownership. there was a heated argument, where another member stated, per the attorney at the time, that Grandfather stays with the property and not the owner. personalities at play... he was not well liked and the other member was...

so everyone keeps referring to an amendment made in 2019 that simply does not exist. That is why I am waiting on the HOA attorney response. we recently created an HOA portal and I downloaded every document.. and painfully read each one... I found no amendments stating such nor are there any updates in 2019. so this may very well be all predicated on a document that does not exist. we have several armchair legal analysts

I don' know what your above means, Scott: "Yes I reviewed the declarations, they reference the same requirements for the style of fence, the height and setback information - so it is the same in the Declarations and the CC&Rs." The "declaration" and the "CC&Rs" are the same document. Is there typos in your above?

there is a document called Rules and Regulations and there is a document called Declarations, which is titled CC&Rs in the document. Both state the same requirements for fencing, it is stated that the Rules and Regulations codify the Declarations and that document outlines grandfathering.

Another idea: your real estate broker should have an attorney for routine advice for situations like this. If you haven’t contracted with one yet, maybe consider that feature when hiring.

ScottT is the Seller. If a Buyer decides to sue the Seller after the transaction is complete, they are also going to sue the Seller’s broker who prepared the documents and represented the Seller and earned a commission. It’s possible the amount would qualify for small claims court but asking the broker’s attorney is a simple, inexpensive ounce of prevention. If no amendment can be found, problem solved.

Thank you TerriS6,

You are correct... I am concerned about the HOA attorney considering the HOA is her best interest.

Given that, there is so little written about grandfathering and the rest points to county building codes. So there is not much to interpret... that is a good thing! I think the statute of limitations is key... the fence hs been there for 23 years and well maintained, statute of limitations is 5 years.

This is all there is:

Existing alterations, additions or improvements to the exterior of dwellings and/or lots in which were properly approved by the developer and/or ACC or installed by the Developer will be permitted to remain in place provided that they are maintained. Fences must be brought into compliance when they need to be replaced. As specific cases are reviewed, homeowners will be notified by the Board through the property management company as to the future status of their fences.

Grandfathering is granted to any and all accessory structures as described in the above paragraph except as otherwise provided in this paragraph. County building codes set the percentage amount that initiates the rule for complete replacement of a building and, if 75% of the unit must be replaced, the community Guidelines and the building codes shall be followed in the rebuilding. Fences will require a total replacement of the entire fence when fifty (50%) percent or more requires replacement and that replacement must follow approved Guidelines. Any structure or improvement, including those grandfathered, which has been destroyed must meet current Guidelines for rebuilding. In the event a grandfathered in structure is destroyed or requires replacement, the non-conforming structure cannot be replaced, but must be brought into compliance.

Thanks for the clarification, Scott.

You also may want to look into the "doctrine of laches" for FL.

ScottT5, pretty good. But I think at least one major change is needed. Namely: Do not use the phrase "governing documents" in the first sentence. Why? Because the board-created rules and regs are part of the governing documents. At the moment it appears the board-created rules and regs say something about grandfathering terminating at sale. Here's my re-write:

Dear Board of Directors,

Regarding the HOA-approved fence installed on my property over 20 years ago:

The HOA's Declaration says nothing about the termination of any Grandfathering upon the sale of a property. Also my understanding is that Boards may not add a new restriction without amending the Declaration. Amendment of the Declaration would require a lawful vote of the owners. No such vote has occurred. Even if such a vote did occur, and the amendment passed with the required supermajority, I believe such an amendment would only be legally enforceable against future instances of grandfathering.

In addition the Board of Directors must comply with FS 95.11 (2). The latter contains the Florida statute of limitations for covenant enforcement. Since more than five years have passed, and pursuant to FS 95.11 (2), any estoppel certificate must not list covenant violations regarding the fence at xxxx Weeping Elm drive. As well after the sale of this property, if the HOA issues a violation notice, for something the prior owner installed with HOA approval, the HOA would not lawfully be able to issue a violation notice to the new owner. I understand this is because of Equitable Estoppel, a legal doctrine that prevents a person from making a claim or taking a position in court that contradicts previous actions or statements.

Please do not list a violation in the Estoppel Certificate for my home. If you intend to do otherwise, please let me know within ten days.

Sincerely,

In my experience: You want to give a direction to the board. You also want to give them a deadline to respond. These are key to having what is called a "demand letter" that will have some legal weight if push comes to shove and this goes to court.

I also advise humility in such letters. Even attorneys qualify their positions. A layperson should more than qualify his/her statements, using phrases like "I understand." Such language is also less threatening. The board is going to do what it is going to do. Your letter is factual. They can ignore it or not, but the letter makes clear that they do so at their own peril.