Do HOA Decisions Need To Adhere To Any Specific Standards?
If you are talking about the decisions made by the board of directors or the HOA then the answer is clearly yes. Now, what standards do they have to live up to? There is really kind of a hierarchy. You have the Florida statutes that can take the highest precedence in most cases. Then you have the declaration of covenants or the declaration of condominiums, then you have the articles of incorporation which don’t come into play often in disputes between associations and members but it does happen occasionally. Then you have the bylaws of the association and then you have the rules and the regulations. So, not only do the members have to live up to those guidelines and those rules and restrictions that are set forth in those documents in the statute but the association does as well. Typically, the association acts at the behest of the board of directors, so the board of directors has to follow those rules as well.
There are also arbitration decisions, especially in condominiums that are kept on record with the state of Florida and while they are not necessarily buying into the scenario that can bind in certain circumstances, they are also persuasive so that’s kind of another authority that the associations can have to look to in order to make sure that they are making the right decisions. When I first started off, I said the Florida statutes are the highest hierarchy but the truth of the matter is that in almost every case that you deal with, that would involve a state and a federal matter, the federal laws are going to take precedence and although ADA or the Americans with Disability Act does not apply to associations because it is not open to the general public. The Fair Housing Act does apply, so sometimes you get the federal law which is going to trump the state statutes, it’s going to trump the declaration of covenants, the bylaws, the articles of incorporation and the rules and regulations. So there are a whole lot of authorities that the board of directors has to abide by or adhere to just like the members do.
What Is The Difference Between An Incorporated HOA and An Unincorporated HOA?
Unfortunately, unincorporated HOAs are few and far between. The difference is that most people don’t realize that community associations are regulated by statutes for the condominiums it’s Chapter 718 and for HOAs it’s Florida Statute 720. Those statutes define the associations as non-profit corporations. So even though it may seem like a strange thing because they are really, on their face, not considered to be businesses, under the statute, for the statute to apply, they are actually incorporated entities. They are not for profit but they are incorporated. Now, one of the nice things about incorporation whether they are for profit or not for profit is that you have some insulation from personal liability. So if you have an unincorporated HOA which is an informal gathering of this community which says okay, we are going to make up our own documents. First of all, if you record those documents, you may or may not have actual enforcement rights, where if they were under an incorporated HOA, they would be okay.
For the member himself, it’s a little bit of a dangerous proposition because you don’t know what rule may be enforced and what may not because you may look at the statute and go, I have a statutory right and the board is not acting correctly and I want to enforce it under the statute where you can because they are dealing with an incorporated one and so if it’s unincorporated, Florida statute 718 and 720 are going to apply. I think they are problematic. I would not advise any developer to make a development where there is no incorporation. We usually don’t have to advise them because they understand the rules of the game but in the ones that do exist, there are some unique problems and some unique issues that do arise but they are probably too rare to worry about unless of course, you meet another one and then it kind of depends on the individual question.
It depends on what kind of documents you have, it depends on what kind of board you have set up, it depends on what kind of regularity they meet with and if they act like they are incorporated and do everything that they are supposed to or saying things that are a lot greater than if they are not and if you are not going to be able to enforce those types of things, the question arises, why would you live in such a community. You could have common areas and you could share the expenses of those but whenever you share, you are going to have disputes among people and so it’s difficult when you talk about enforcement in unincorporated HOAs.
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