From condo to co-op: can owners avoid Florida's structural reserves law by changing labels?

Live in a home governed by a condominium, co-op or homeowner's association? Have questions about what they can and cannot do? Ryan Poliakoff, an attorney and author based in Boca Raton, has answers. 

Question: Can we convert to a co-op to avoid these onerous regulations? Signed, S.N.

Dear S.N.,

Your question doesn’t specify which “onerous regulations” you are referring to. You simply labeled your question “condominium laws.” What I can tell you, though, is that cooperatives are governed by Section 719, Fla. Stat. (the Cooperative Act), which is extremely similar to, and just as “onerous” as, the Condominium Act (Section 718, Fla. Stat.). Both feature things like records and inspection rights, mandatory reserves, the Structural Integrity Reserve Study, detailed election procedures, etc. You really wouldn’t gain anything — the restrictions are slightly different, but just as voluminous.

Even if this were not true, converting from a condominium to a cooperative would be extremely difficult.

You would need to terminate the condominium, which requires substantial owner approval, and then each owner would have to effectively sell their unit, and their share of the common elements, to a new entity which would need to incorporate as a cooperative and then lease the units back to those owners. It would be costly and time consuming, and a small minority of owners would be able to block the action entirely —you would need close to 100% buy-in to make it work. And, we’re not even considering things like mortgagee interests in the units. //

As a practical matter, it would be unlikely to happen except in the smallest of properties. And, you would arguably be downgrading your property rights, given that you would no longer be a property owner — you’d be a corporate shareholder.

More condo questions: Owner furious that condo's no smoking at home policy ignored. Can neighbor be stopped?

Question: We have a non-owner who shows up at our duly noticed HOA board meetings, blurting out comments and basically trying to involve herself in our meetings. She lives with her boyfriend, who is an owner in our community.

Does she have the right to attend meetings in his place (no legal documentation has been filed or provided to our property management firm), and also to speak out? Signed, S.H.

Dear S.H.,

Board meetings are required to be open to owners. You have no legal obligation to open them to anyone else, and you have no obligation to allow tenants, guests, owner relatives (even spouses frankly, if they are not on the deed) or others to attend.

The only exception to this would be if the person provided a properly drafted and executed power of attorney giving them the right to act in the place of the owner on all matters related to the property — in which event they could attend instead of the owner (as that owner would have assigned their rights to their “attorney.”)

More condo news: Family Church, Related Cos. plan new church school and two condo towers in West Palm Beach

Question: I received a fine from my HOA. I attempted to contact the HOA and the HOA attorney for three months to request a meeting and they were non-responsive to our requests. After the third violation letter, we received notice of a fining committee hearing. We attended the hearing but were not provided an opportunity to speak. The fine was posted to our account in January. We requested an independent hearing per the statute. Our request was denied as, according to the HOA president, the independent hearing we attended was the fining committee hearing.

I don’t understand how the committee that initiated and approved the fine can also be the appeals or “independent committee” that reviews the decision. Signed, P.M.

Dear P.M.,

The board of directors levies fines. Theoretically, the only way that a committee could be responsible for levying fines would be if the board had delegated to that committee all fining authority (and I don’t know if a procedure like this has ever been validated by a court). However, even if that was done, I do not think that same committee could also serve as the “committee of at least three members appointed by the board” who are charged with an independent review. If the HOA fining process worked as you described, I think it was flawed.

Further, while this is not expressly stated in the statute, I think it is implied that the owner’s right to attend the hearing includes the right to speak at the hearing — how would the committee hearing have any value otherwise?

If you have the means to do so, and based on what you’ve represented, I think the fine promulgated against you is subject to challenge. Of course, depending on the amount of the fine, it might not be worth the fight.

Ryan Poliakoff, a partner at Poliakoff Backer, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. Ryan Poliakoff and Gary Poliakoff are co-authors of "New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living." Email your questions to condocolumn@gmail.com. Please be sure to include your location.

This article originally appeared on Palm Beach Post: Florida's structural reserves law continues to frustrate condo owners