Q: Our association has a small restaurant and an owner recently dined at the restaurant and consumed too much alcohol. The owner insulted and yelled at the staff, broke a chair, and threw glasses on the ground, shattering glass everywhere. Do we have any recourse? P.E., Marco Island
A: Unfortunately, this question comes up a lot. The question is ultimately whether this activity violates a rule. Most governing documents include a covenant that owners may not create a disturbance or annoyance to other owners, and many communities have adopted a rule which prohibits this type of activity – particularly when the community has an on-site restaurant with alcohol. The first thing you would want to do is ask the staff and witnesses to provide written statements to analyze whether a violation occurred.
If it is a violation, then one remedy is a suspension of amenity privileges. If the owner caused a disturbance at the restaurant, many clients believe the appropriate remedy is to suspend the owner from coming to the restaurant for days, weeks or even months. In order to accomplish this, the association would follow the same protocol as a fine.
First, the board would meet to consider the incident, including witness statements and potential video. The board would vote whether or not to impose a suspension. Then, the association’s fine committee schedules a hearing with the owner and provides the owners with at least 14 days’ notice of an opportunity for a hearing before the fine committee. Note that some communities refer to this committee as a grievance committee, rules committee, covenants committee, or other similar name. The committee hearing is an opportunity for the owner to demonstrate why a suspension (or fine) is improper. The committee’s role is to vote in favor or against the suspension imposed by the board.
If the committee approves the suspension, the association should provide written notice to the owner with the results of the vote and the terms of the suspension. I should also note that you may be able to assess the costs of the chair and broken glass against the owner.
Finally, I should note that many governing documents include additional, self-imposed, procedural requirements. For example, some documents provide that you must give 30 days’ notice, or that you must give a warning before you impose penalties, and thus you should have your covenants and any policies reviewed by your legal counsel to determine the best and proper course of action based on the statutes and your governing documents.
Q: Our condominium Articles of Incorporation provide that directors serve from annual meeting to annual meeting. Our Bylaws provide that directors serve two-year staggered terms. I was elected in 2020. Do I have to run again in 2021? B.D., Naples
A: Most likely, yes, you do. The big three condominium documents are the Declaration of Condominium, Articles of Incorporation, and Bylaws. Those documents control in that specific order and if there is a conflict between the Articles of Incorporation and Bylaws, the Articles of Incorporation will control. Likewise, the Declaration of Condominium would control if there is a conflict between the Declaration and the Articles of Incorporation or Bylaws.
So, if the Articles say that directors serve for one year, then this term of office would control over the two-year terms included in the Bylaws. I would, however, recommend that you have both documents reviewed by legal counsel. Often, the documents will say that your term expires at the annual meeting at which your successor is to be elected. If this is the language in your Articles, then the Bylaws and Articles could be read together, and you could have two-year terms because the successor will not be elected every year.
Q: Our condominium has been running with an operating surplus for a few months. The surplus is because we have experienced fewer operating expenses for amenities that have been closed due to COVID-19. That being said, we also expect insurance increases in 2021. Can we apply the 2020 surplus to 2021? T.R., Naples
A: This is a common question lately because many associations have experienced lower operating expenses due to COVID-19, while others are actually running a shortfall because they significantly increased the cleaning schedules and normal expenses like insurance did not go away.
If you are operating a surplus, yes, you can roll this into the 2021 budget. If all other expenses stay the same, the result should be that unit owners benefit from the surplus through reduced assessments. The overall expenses may not change, but you would have income offsetting the amounts needed from the unit owners to fulfill the budgetary requirements.
If you have anticipated increases or new expenditures in 2021, you could also increase the 2021 budget accordingly with the anticipated cost increases. If the cost increases equal the surplus, then the unit owners do not experience any change in assessments while avoiding the sting of higher assessments for the year.
There are also potential tax implications for running a surplus. Depending on which tax return your community files, you may need to also have a vote of the owners to roll over the surplus to mitigate tax consequences on those funds. You should consult your accountant on which return you file and whether the vote is applicable.
Q: Our covenants say that owners may not park over the sidewalk. I do not see how the homeowners association can tell me how to park on my driveway. Is this legal? D.N., Bonita Springs
A: Yes, it is. Most homeowners do not completely understand where their property starts and stops. In most designed communities, there is a roadway tract that contains the street. Owners often do not realize that the platted roadway tract is often much wider than the paved street itself and almost always includes the sidewalk. Thus, the area between the paved street and the sidewalk, including the landscaping strip in between, is generally owned by the association. So, when the association dictates that you can’t park over the sidewalk, it is really a covenant governing the association’s property, and not your individual lot.
Attorney John C. Goede is a shareholder in the law firm of Goede, Adamczyk, DeBoest & Cross. Visit the website at www.gadclaw.com or ask questions about your issues for future columns by sending an inquiry to: [email protected]
The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.
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