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Who may be consisdered a member of the association?

Started by RuthN • 34 replies • 5481 views

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RuthN (Florida)
Posts: 41
Posted:
Our homeowner's association documents stipulate that only members may run for the Board of Directors. Documents state that members are owners of lots. Owners are those who own in fee simple record title to lots. The home of one of our members is in her trust. Her husband is the beneficiary of her trust (I assume that he is the successor trustee). Both of their names are on the mortgage and they both reside in the property. Is the husband considered a member?
SusanW1 (Michigan)
Posts: 5,202
Posted:
We've had lots of discussions on this before. You can do a search (on the upper right hand corner) on members and see what pops up.

In a nutshell, your documents state that owners are members - and you could possibly have several owners of a single piece of property; therefore lots of members of your group. (And with the economy the way it is, you'd better get used to this)

This "Trust" set-up could cloud the issue.

P.S. Do not confuse this with voting power per lot.

JohnK3 (Pennsylvania)
Posts: 967
Posted:
We'd have to see the trust document and possibly the deed. It's possible the trust owns the property, or the wife does, or somebody else does. Then we'd need your proxy language, if any, to see what powers a Member can transfer, and to who.
GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
Ruth, check out this page for the previous discussion on the Board Eligibility issue from mid October:

http://www.hoatalk.com/Forum/tabid/55/view/topic/forumid/1/postid/59443/Default.aspx

and from June:

http://www.hoatalk.com/Forum/tabid/55/forumid/1/tpage/2/view/Topic/postid/46878/Default.aspx

You might also look to your association governing documents to see if there is language similar to this:
    Where an Owner consists of more than one person, or is a partnership, corporation, trust or other legal entity, then one of the persons constituting the multiple Owner or partner, officer or trustee, as the case may be, of the partnership, corporation, trust or other entity, shall be eligible to serve on the Board of Directors of the Association, except that no Lot may be represented on the Board of Directors by more than one person at a time.


Florida law probably has something to say about it.
RuthN (Florida)
Posts: 41
Posted:
My question deals specifically with the impact of the owner's trust. Her husband in the beneficiary (successor trustee) of her trust. The property is recorded in her trust. (She is very much alive and in control of her trust as the current trustee.) According to our documents and Florida 720 only owners are members. Does her husband as the beneficiary or successor trustee become a current owner and thus a member?
SusanW1 (Michigan)
Posts: 5,202
Posted:
Only after she dies.
GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
Quote:
Posted By RuthN on 11/19/2008 9:17 AM
My question deals specifically with the impact of the owner's trust. Her husband in the beneficiary (successor trustee) of her trust. The property is recorded in her trust. (She is very much alive and in control of her trust as the current trustee.) According to our documents and Florida 720 only owners are members. Does her husband as the beneficiary or successor trustee become a current owner and thus a member?
Ruth, if the unit is owned by a trust, then there must be at least one trustee (not the successor trustee). She could be the trustee of her own trust. If so, then she is most likely considered eligible to stand for election and to vote.

What is confusing here is the mortgage. If the home is in trust then the mortgagor is (most likely) the trust, with the woman as the trustee and her husband. She would (most likely) not be listed a a joint mortgagor.
GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
A further thought that, perhaps, gets closer to the gist of your question.

If your governing documents state that each person listed as an owner of unit is a member (but only one vote per unit), then the husband is not a member, since the unit is owned only by the trust. Only a current trustee (not successor trustee) would most likely be considered a member.

Most likely, he is ineligible to serve as a member of the board of directors. (There are some disadvantages to holding real estate in a trust.)

On the other hand, if the recorded owners of the unit are the trust and the husband then he is, most likely, a member and eligible to sit on the board of directors.

The names on the mortgage are not relevant.

You will also need to refer to Florida statutes on this question.

GlenL (Ohio)
Posts: 5,491
Posted:
A search of FL 720.301 Definitions, defines a "member" as:

(10) "Member" means a member of an association, and may include, but is not limited to, a parcel owner or an association representing parcel owners or a combination thereof, and includes any person or entity obligated by the governing documents to pay an assessment or amenity fee.

Since he is listed as a mortgage holder he would therefore be obligated to pay the assessment and would indeed qualify as a member. If in doubt you should consult the Association's council for a legal opinion.
Studies show that 5 out of 4 people have problems with fractions
GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
I am not sure. Thanks for posting the definition, though. The mortgage is not an association governing document. He is liable to the mortgagee for payment of fees, but not liable to the association for such payment.
RuthN (Florida)
Posts: 41
Posted:
Our documents do not speak to a mortgagee (or someone who pays the mortgage) as being an owner. Nor is there anything about a mortgagee paying assessments. The specific paragraph states:

"Each Owner, by acceptance of a deed or other conveyance of a Lot, whether or not it shall be so expressed in any such deed or other conveyance, covenants and agrees to pay the Association any and all general and special assessments or charges fixed, established or made from time to time."

The question really is still "Is the person (the husband) named in the trust as beneficiary (or successor trustee) an owner?" Again, the property is recorded in the name of the wife's trust. She is the very much alive and active trustee.
CarolF (Florida)
Posts: 435
Posted:
The 2008 Florida Statutes

Title XXXVI
BUSINESS ORGANIZATIONS

Chapter 617
CORPORATIONS NOT FOR PROFIT

617.0802 Qualifications of directors.--

(2) In the event that the eligibility to serve as a member of the board of directors of a condominium association, cooperative association, homeowners' association, or mobile home owners' association is restricted to membership in such association and membership is appurtenant to ownership of a unit, parcel, or mobile home, a grantor of a trust described in s. 733.707(3), or a beneficiary as defined in former s. 737.303(4)(b) of a trust which owns a unit, parcel, or mobile home shall be deemed a member of the association and eligible to serve as a director of the condominium association, cooperative association, homeowners' association, or mobile home owners' association, provided that said beneficiary occupies the unit, parcel, or mobile home.
CarolF (Florida)
Posts: 435
Posted:
Folks, we dealt with this issue in my community, which is why I copied and pasted the FL Statute in the above reply. You have to understand that FL has had condos/homeowners associations/trusts etc. for a long,long time and you'd be ruling out about half the people in FL if the position of some of the posters to this thread were taken.
RuthN (Florida)
Posts: 41
Posted:
Carol I have read the paragraph that you posted very carefully. Also read the statue on line. The problem, as I see it, is that the "beneficiary" in the trust in question is a future beneficiary. He is named in the trust but the owner of the trust (the trustee) is still very much among us. As I understand the term beneficiary, someone has to die for the "beneficiary" to benefit from what ever it is.
GeorgerwilliamsW (Indiana)
Posts: 975
Posted:
Quote:
Posted By RuthN on 11/19/2008 2:01 PM
Carol I have read the paragraph that you posted very carefully. Also read the statue on line. The problem, as I see it, is that the "beneficiary" in the trust in question is a future beneficiary. He is named in the trust but the owner of the trust (the trustee) is still very much among us. As I understand the term beneficiary, someone has to die for the "beneficiary" to benefit from what ever it is.
Ruth, I think the problem we are having here is a confusion of terminology.

The term "future beneficiary" really has no meaning, since all beneficiaries benefit at a time in the future. For "future beneficiary" to have any meaning, there would have to be a "present or past beneficiary." A beneficiary is simply a beneficiary.

And, to be absolutely clear, a successor trustee is not the same as a beneficiary.

Also, a trust is not "owned." A trust is directed, managed, and controlled by a trustee, but the trustee does not own it. (It is akin to a charitable foundation that has no owners, but is governed by a board of directors.)

And the "mortgagee" is the lender (e.g. the bank), not the person that pays off the loan. The person who puts up a house as collateral (i.e. the borrower) is called the "mortgagor."

Also, there is confusion over the use of "member" and "owner." You initially asked about the husband as a member: "Is the husband considered a member?"

You then restated your question, asking if the husband is an owner: "Is the person (the husband) named in the trust as beneficiary (or successor trustee) an owner?"

From the information you provided, the trust is the owner of the unit. Neither the wife or the husband is an owner. However, based on the statute Carol posted, as beneficiary of the trust, the husband, is deemed by statute to be a member of the association, even though he is not an owner.

The statute that Carol posted directly addresses your initial question, "Is the husband considered a member?" The answer appears to be, "Yes."

Thank you Carol.

I hope this helps to clarify terminology and directly answers your original question.
SusanW1 (Michigan)
Posts: 5,202
Posted:
From Ruth: "The question really is still "Is the person (the husband) named in the trust as beneficiary (or successor trustee) an owner?" Again, the property is recorded in the name of the wife's trust. She is the very much alive and active trustee"

I'm going to disagree - given your statement that it is HER trust, not THEIR trust (with rights of survivorship). (Is that right??)

The trust COULD even forward the unit to another relative's care.

So he is NOT an owner - yet. And if your document say that only owners are members, and members are eligible for the board, then, no, he can't run for the board.

RuthN (Florida)
Posts: 41
Posted:
Susan I guess that I have to agree with you. First, the wife's name is listed on the County property records as the trustee. (That is the way ownership is listed on our county when the property is in a person's trust.)

Second, See the paragraph below (that I just discovered) lifted from the recording of the sale to the wife as trustee. It certainly does appear that the husband, who we have been told is listed in the trust agreement as the beneficiary of the trust, is not an owner.

"The interest of the beneficiaries named in the trust agreement referred to above and of all persons claiming under them shall be only in the rents, avails and proceeds arising from the sale or other disposition of the property, as well as the right to occupy and reside upon said property as homestead as long as otherwise qualified under Florida law. Their interest is hereby declared to be personal property, and the beneficiaries shall not have any title or interest, legal or equitable, in or to the Property as such, but only in the rents, avails and proceeds of the Property."

Then, our documents state that owners are members and that only members may be elected to the Board of Directors.

Also, the reason that I included things about who is on the mortgage is because that issue had been raised by the husband.
JohnK3 (Pennsylvania)
Posts: 967
Posted:
>>>The term "future beneficiary" really has no meaning, since all beneficiaries benefit at a time in the future. For "future beneficiary" to have any meaning, there would have to be a "present or past beneficiary." A beneficiary is simply a beneficiary.<<<

I disagree. A trust could, for instance, be responsible for all of a B's living expenses or medical expenses. I'd consider that "present."

>>>From the information you provided, the trust is the owner of the unit.<<<

I disagree. OP suggests the unit is "in" a trust. That could mean a number of things, depending on the wording of the trust.
PatrickJ3 (Washington)
Posts: 3
Posted:
It is interesting that this question be posted. Our board was just asked this question about a month ago at our monthly open meeting by a homeowner who has two lots. He and his wife are both on the titles for both properties. Our Covenants state that when there is more than one person on the the title, a membership may be purchased by the other owner via paying a second assessment for that property. So, they will now have two votes since they have two memberships. It is only allowed that one person can have one membership, therefore, a person who owns multiple properties can only have one membership even though he/she has to pay assessments on each property. This is to prevent any one individual from having multiple votes. This is basically how it was explained to us by our attorney. Have a great day, Patrick
PatrickJ3 (Washington)
Posts: 3
Posted:
So yes, if they are both on the deed and they both pay a seperate assessment for membership then then he can be on the board. Patrick
RuthN (Florida)
Posts: 41
Posted:
The situation has been resolved. The husband was asked to clarify with the County (because that is where the ownership is registered - the deed that is) if they consider him an owner. He did not follow up on this. However, in the mean time we discovered the wording in the property transfer that was cited earlier that would certainly indicate that he is not an owner. And, thus not a member and therefore not able to be a Board member. Anyway, the husband has asked to be removed from the ballot and plans to serve the community as a committee volunteer.

Thanks to all for your thought.
GlenL (Ohio)
Posts: 5,491
Posted:
Ruth, glad you found your answer. Fortunately Ohio settled the matter, at least for COA's:

5311.08 Unit owners association.

(A)(1) Every condominium property shall be administered by a unit owners association . All power and authority of the unit owners association shall be exercised by a board of directors, which the unit owners shall elect from among the unit owners or the spouses of unit owners. If a unit owner is not an individual, that unit owner may nominate for the board of directors any principal, member of a limited liability company, partner, director, officer, or employee of that unit owner.

Studies show that 5 out of 4 people have problems with fractions
CarolF (Florida)
Posts: 435
Posted:
Ruth - If you solved this to your satisfaction then I hope everyone is happy. I do believe that the Florida
Statutes trump your declarations, however, and I think others might have a different take on what you are reading into this statute. I know that in our community it was provided by an attorney to a gentleman in the same situation, and it was taken to mean he could serve.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Ruth,

One important fact everyone seems to have neglected is who is, or are, the trustor's of the trust. The trustors are the actual owners, the trustees only manage the trust. A beneficiary only inherits certain assets contained in the trust at the death of the trustor(s). If this woman's husband is listed as the beneficiary I would guess he is not a trustor of the trust. If he were he would not be listed as a beneficiary, he would be the trustor and perhaps a trustee. If the home is in the trust then my guess would be he doesn't own the home. The FL statute, IMO, only applies after the trustor is deceased. BTW, grantor (as specified in the FL statute)is the same as trustor -- the owner of the trust.

The fact that the mortgage is in both names has nothing to do with who owns the home. The deed tells you who owns the home. If the home is in a trust, the trustors are the owners.
JoeD10 (California)
Posts: 1
Posted:
This is a problem that we have at our association. We have someone who is on the loan papers but not on title. Same situation??
GordonD1 (California)
Posts: 131
Posted:
Ruth:

It looks like this property was purchased under the name of a woman and her living trust. Not looking a the documents I am not sure if she bought the
property with her name only and later added the trust. Either way it sound like she is the owner. Now you mentioned that her husband is on the loan and also is
the beneficiary and successor. To me it sounds like he can only be the owner after she dies. Of course she can always add him as the present owner and
properly record the ownership.

Again, I am only guessing what I just said.

I suggest that you express your concerns to the management company and the board.

You had a good question.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Joe,

Yep, sounds the same to me! A person is only an owner of the property if their name is on the deed. Also, if the property is in a trust and the trust is only in the name of one spouse then I would think only that one spouse owns the property. Otherwise the trust would be in both names or the property would not be in the trust.
GlenL (Ohio)
Posts: 5,491
Posted:
Quote:
Posted By JoeD10 on 11/21/2008 9:31 AM
This is a problem that we have at our association. We have someone who is on the loan papers but not on title. Same situation??

Joe, welcome and according to http://www.davis-stirling.com the person not on the deed would be ineligible to serve on the BOD unless your documents allowed for non-owners to serve.

"MEMBER" DEFINED

Membership. A member is any person who holds a recorded ownership interest in real property subject to the association's CC&Rs. In other words, the person needs to be on a deed which has been recorded with the County Recorder's Office. Unless the association's governing documents provide otherwise, an unrecorded deed does not confer membership status.

Corporations. A corporation is defined in the law as a "legal person" and has all the rights of a natural person in an association. As such, a corporation may appoint a representative to attend meetings, vote and run for office.

Family Trusts. Trustees of a family trust, not beneficiaries, have the power to vote on behalf of the trust and serve on the board. Frequently, the person living in the association is the trustee. Sometimes, however, the resident is a beneficiary of the trust or a tenant authorized by the trust to reside at the property. In that case, the resident has the right to use the facilities, but not the right to vote or serve on the board (provided your bylaws require that directors be members). The deed to the property will normally identify the name of the trustee as the owner on behalf of the trust.

Spouses. Spouses who are not on title may use the association's recreational facilities but they do not qualify as members. If the bylaws require that only members may serve on the board, then non-member spouses may not serve on the board. However, if the bylaws are silent regarding director qualifications, then spouses may serve on the board, as may tenants, non-residents or any other person.

Updated by ADAMS KESSLER 8/21/2007
Studies show that 5 out of 4 people have problems with fractions
MaryA1 (Arizona)
Posts: 7,043
Posted:
Glen,

From the info you provided:

"Family Trusts. Trustees of a family trust, not beneficiaries, have the power to vote on behalf of the trust and serve on the board. Frequently, the person living in the association is the trustee. Sometimes, however, the resident is a beneficiary of the trust or a tenant authorized by the trust to reside at the property. In that case, the resident has the right to use the facilities, but not the right to vote or serve on the board (provided your bylaws require that directors be members). The deed to the property will normally identify the name of the trustee as the owner on behalf of the trust."

I'm not sure of the accuracy of this statement: "The deed to the property will normally identify the name of the trustee as the owner on behalf of the trust."

IMO, the deed will identify the names of the "trustors" as the owner of the trust. Trustees are often the owners of the trust but not in all instances. Oftentimes a bank or other financial institution is a trustee and not even a beneficiary. The trustees job is to administer the trust; the trustor(s) is the owner of the trust. IMO, only a trustor should have the ability to serve on the board. FL law (as posted earlier by Donna) allows the grantor (same as trustor) and the beneficiary to serve on the board. However, IMO, the beneficiary can only serve after the death of the trustor(s).
GordonD1 (California)
Posts: 131
Posted:
Glen:

Any person that is living in the property and is documented with the Association Management Company or with the board of directors has the right to use the facilities. (Of course in many
communities as long as all the monthly dues are paid).

To be able to vote you have to be the owner on record even if the property is under a living trust. The beneficiaries are not the owners of the property. They would be when the present owner
dies. The beneficiary does not have the right to vote even if he/she is on the loan/mortgage.

It is possible for a beneficiary or any one else to have the right vote if the to owner on record gives that person a power of attorney. This is only a possibility depending on the by-laws and
the state laws that the property is. The best way to clarify this is consulting with an attorney that specializes in Real Estate.
DonnaS (Tennessee)
Posts: 5,671
Posted:

Ruth,

I was looking for another item in the Fl. Statutes 617, which are our Articles Of Inc for Not for Profit Corps and found this part. It answers your question

617.0802 Qualifications of directors.--

(2) In the event that the eligibility to serve as a member of the board of directors of a condominium association, cooperative association, homeowners' association, or mobile home owners' association is restricted to membership in such association and membership is appurtenant to ownership of a unit, parcel, or mobile home, a grantor of a trust described in s. 733.707(3), or a beneficiary as defined in former s. 737.303(4)(b) of a trust which owns a unit, parcel, or mobile home shall be deemed a member of the association and eligible to serve as a director of the condominium association, cooperative association, homeowners' association, or mobile home owners' association,
It says--"provided that said beneficiary occupies the unit, parcel, or mobile home."

DonnaS (Tennessee)
Posts: 5,671
Posted:

It says "Shall be deemed" No where does it say anything about "unless the governing documents say". This is the governing Statute trumping any Articles of the Association.
MaryA1 (Arizona)
Posts: 7,043
Posted:
Donna,

I believe there's more to this statute than meets the eye. A beneficiary does not become an owner until the death of the trustor(s). How does s. 737.303(4)(b) define "beneficiary"? Also, who's to say the beneficiary will inherit the home? Another reason why I don't believe a beneficiary can qualify as a member of the assn.
GordonD1 (California)
Posts: 131
Posted:


I agree with you Mary. I believe an attorney would be able to help with the right answer. Reading the by-laws is very helpful. I will also contact the county assessor to learn more about ownership of
a property. A public library will also have many good books to do some searching.

Every State is different and every HOA has different by-laws.

GordonD1 (California)
Posts: 131
Posted:
Ruth:

You can contact the County Assessor's office to find out who is the owner on record. Living Trust would not prevent the County to identify the actual owner/owners of the property.

Good luck.

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