Richard White: Developer fails to build final units

Q. We have a 50-unit condominium association with 42 units built. The first developer promised but failed to build the remaining eight units that were in the master plan. They then sold the property to a new developer. The new developer has also failed to build our eight units to complete our association. The developer has placed the remaining property into a corporation which has no other assets. The developer now refuses to pay the association fees and has failed to pay taxes due on the property. Our association fees will have to go up to make up the shortfall in our budget. The developerð# attorney has indicated that the corporation has no intention of building upon the property and that it has no money with which to pay assessments and has offered to deed the property over to our association. What recourse does our board have? We do not want to accept the deed offer to obtain a tax liability and we do not have the money to build and market and sell an eight-unit building. Can we sue the developer for not completing our project per our master plan and or force the developer to continue to pay association assessments and taxes due? ðÐB.V., Homestead

A. I would first seek legal guidance to help with your situation. Yes, you can sue the owner but what will the results be? You will be paying expensive legal fees. You must look into the decision that will result in fewer expenses because you have a bad situation. In other words, cut your losses. With the limited information, my suggestion is to first seek legal council and with his/her guidance accept the deed to the property. I am not suggesting that you develop the property in the future but seek someone to develop and build the additional units. Someday after the current real estate depressed market, developers will be seeking property to build. Then you can control who buys the property and the association will make a profit on the sale.

Q. At our annual meeting earlier this year, the budget that included fully funding our reserves was adopted because there were not enough votes received to under-fund our reserves. As a result, at that time, our quarterly dues were increased to cover the cost to fully fund our reserves. We have just received notification from the condominium board that they are calling a special meeting to conduct another vote (in mid-year) in an attempt to overturn our vote and under-fund our reserves. It was our understanding that this decision could only be made on an annual basis. We are very concerned about the precedence of this course of action. It seems like the board has decided that if they donð$ like the results of a vote, they can just keep redoing it until they get the desired outcome. Should the condo board be doing this? If not, what are our options as unit owners? ðÐR.H., Heathrow

A. My first thoughts were that the association can vote to alter the reserves at anytime. After reading FS 718.112, it says that if the reserves are not reduced at a properly called members meeting, the reserves remain as approved by the board. To reduce the reserves more than 50 percent of the members of the association must approve the change. Not a majority of the quorum present at a properly called members meeting. I am confused why the board would want to call a meeting to vote again on reserves. The board has the responsibility to establish proper reserves. It may be that some members petition the board to call a special meeting to vote on the reserves. In that situation, if more than 50 percent of the members vote to reduce or eliminate the reserves, the membersðÐmajority vote would be correct.

Q. Our association was formed 30 years ago and never recorded by the builder or association officers at the time. Now, our association is somewhat active but as we understand it, we have no legality to enforce bylaws, restrictions or the rules and regulations. Everything is strictly voluntary on the part of the residents. Do you think there is a way to become legal without 100 percent sign-up from the residents or would a majority suffice? Or, could the association only apply to those who would sign it? Say 90 percent of the homeowners and the other 10 percent would be exempt from compliance. ðÐR.E., Sebring

A. Association documents and restrictions are an encumbrance on the title of property. It would almost be impossible to record your unrecorded restriction now unless all of the owners agreed. It would be possible to have fewer owners agree to the new title requirements but the restrictions would only apply to them. Since the question has serious title problems, I would seek guidance from an attorney. If you have violators who cause concerns, try talking to the county code enforcement. Maybe you can enforce some violations by using local governments.

Q. I wanted to make sure I understood your reply correctly: so no matter if the discussion is of money, the homeownersðÐboard still must conduct the meetings as open to members? The main reason I ask is a resident has sued the board. I understand the suit is alleging the board does not enforce our covenants and restrictions consistently and firmly and most of the owners agree. But when we attended last weekð# meeting to learn more about it, we were asked to leave the clubhouse so that the board could discuss it in private. It is our money that funds the budget that pays the insurance/bond that protects the members of the board, so why cannot we know how itð# spent? ðÐH.S., Orlando

A. This answer addressed HOA but condominiums have the same answer (FS 720.303 and FS 718.112). All meetings of the board of directors, where a quorum of directors are present, must be open to the members except when the board is meeting with the attorney to discuss pending litigation. If the associationð# attorney was not present at the closed meeting they did not comply with the statutes.

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Richard White is a licensed community association manager in Florida. Questions should be mailed to him at 6039 Cypress Gardens Blvd. # 201, Winter Haven, Fl. 33884-4415; e-mail CAMquestion@cfl.rr.com. To be considered, questions and comments should include the authorð# name and city. Questions should be about association operations, not legal matters.