Facts to Amending Your Condominium Documents

I. Introduction:

There are over 1 million condominium units in Florida. A condominium, in Florida, is created by the filing and recording of a Declaration of Condominium. The Declaration is the statutorily declared document of creation. The Declaration is more than a mere contract spelling out the rights and obligations of the parties. It sets forth the extent and limits of the enjoyment and use of real property and the individuals use interest therein. The “Condominium Documents” which generally refer to the Declaration of Condominium, Bylaws, Rules and Regulations, and other important documents govern a Florida Condominium. The “Condominium Documents” are created at the time the property is submitted to the condominium form of ownership. In addition to the “Condominium Documents”, applicable Florida law governs the Florida Condominium. Specifically, Chapter 718 of the Florida Statutes provides for the operation and governance of the Condominium.

Since many condominiums in Florida were created 20 or more years ago and Florida condominium law has been constantly evolving many “Condominium Documents” are now out of date. That is, they do not include many of the limitations and powers provided in Chapter 718 of the Florida Statutes. As such, many Associations have become interested in amending their “Condominium Documents” or at least analyzing the benefits of amending the Documents.
II. Amending the Declaration of Condominium
A. General Method of Amendment

The Declaration of Condominium may provide a method for its own amendment. Thus, it is extremely important that the Declaration is carefully reviewed to determine if a method of amendment is set forth in the Declaration. If it does not, Section 718.111 of the Florida Statutes provides that the owners of not less than two-thirds of the units may approve an amendment to the Declaration.
B. Text Requirements for Amendment. i.e. underline and hyphen usage

Section 718.111 of the Florida Statutes provides that no provision of the declaration may be revised or amended by reference to a title or number of a provision. Instead, proposals to amend existing provisions of the Declaration must contain the full text of the provision to be amended; new words shall be inserted in the text and underlined; and words to be deleted shall be lined through with hyphens. However, if the proposed change is so extensive that this procedure would hinder the understanding of the proposed amendment than a notation immediately proceeding the proposed amendment may be used instead. The notation shall use substantially the following language: “Substantial rewording of declaration. See provision for present text.”

C. Certificate of Amendment

Amendments must be evidenced by a certificate executed with the formalities of a deed, and shall include the recording data identifying the Declaration, and the certificate shall be signed and acknowledged by the Association responsible for the operation of the condominium. The amendment shall become effective when it is recorded in the public records of the county where the declaration is recorded.

D. Enforceability of Amendments

In determining the enforceability of an amendment to a declaration, the test is one of reasonableness. That is, the power to amend must be exercised in a reasonable manner so as not to destroy the general plan of development. Absent irregularities, the courts will generally not involve themselves in the amendment process.

E. Prohibited Amendments

Unless explicitly provided for otherwise in the originally recorded declaration, no amendment may change the configuration or size of any condominium unit in any material way, nor may it materially change the appurtenances to the unit, or the percentage of each owner’s share of the common expenses and common surplus.

F. Correction of Errors and/or Omissions

In addition to the foregoing amendment procedure, if there is an omission or error in a declaration of condominium or in other documents required by law to establish the condominium, the Association may correct the error or omission by an amendment to the declaration or other document required to create the condominium, in the manner provided in the declaration, or if none is provided, then by a vote of a majority of the unit owners. This procedure for amendment, which is set forth in Section 718.110 (9) of the Florida Statutes, cannot be used if such an amendment would materially or adversely affect property rights of unit owners. This section authorizes a simple process of amendment requiring a lesser vote for the purpose of curing defects, errors, or omissions when the property rights of unit owners are not materially or adversely affected. In addition, pursuant to Section 718,110 (10), if there is an omission or error in a declaration of condominium, or other document required to establish the condominium, that would effect the valid existence of the condominium and that may not be corrected by amendment, then the Circuit Courts have jurisdiction to entertain petitions of one or more unit owners, or the association, to correct the error or admission.

III. Amending the Bylaws
A. General Method of Amendment

The operation of an association is governed by the articles of incorporation if the association is incorporated and the bylaws of the association, which must be included as exhibits to the recorded declaration. No amendment to the bylaws is valid unless recorded with identification on the first page of the book and page of the public records where the declaration of condominium is recorded. The Bylaws may provide a method for its own amendment. Thus, it is extremely important that the Bylaws are carefully reviewed to determine if a method of amendment is set forth therein. If it does not, Section 718.112 of the Florida Statutes provides that Bylaws may be amended if the amendment is approved by the owners of not less than two-thirds of the voting interests.

B. Text Requirements for Amendment. i.e. underline and hyphen usage

Section 718.112 of the Florida Statutes provides that no provision of the Bylaws may be revised or amended by reference to a title or number of a provision. Instead, proposals to amend existing provisions of the Bylaws must contain the full text of the provision to be amended; new words shall be inserted in the text and underlined; and words to be deleted shall be lined through with hyphens. However, if the proposed change is so extensive that this procedure would hinder the understanding of the proposed amendment than a notation immediately proceeding the proposed amendment may be used instead. The notation shall use substantially the following language: “Substantial rewording of declaration.
See provision ___ for present text.”

C. Required Provisions and Draft or be Bound Options

Section 718.112 of the Florida Statutes provides that the Bylaws shall contain certain provisions and, if they do not, shall be deemed to include those provisions. In addition, several of the required provisions permit the Bylaws to alter and or modify the requirements of those provisions. The full text of these required provisions can be found at Section 718.112 of the Florida Statutes. The following are some examples of required text:

1. Officers. The bylaws must describe the form of administration of the association. The title of the officers and the board, as well as the powers, duties, manner of selection, and removal, must be indicated. If no such provision is included, there must be a five-member board of administration with a president, secretary, and treasurer who serve without compensation and at the pleasure of the board. The board may, unless otherwise specified in the Bylaws, appoint other officers and grant them duties it deems appropriate. The Condominium Act does not require individual board members to be members of the association although the Bylaws generally specify such a requirement. No one may serve on the board who has been convicted of a felony unless his or her rights have been restored. The Bylaws may not restrict a unit owner, even a nonresident unit owner, from being a candidate for the board. The Bylaws may provide that board members will be compensated, but they must serve without compensation unless the Bylaws provide otherwise.

2. Minimum Voting Requirement for Elections. At least twenty percent of eligible voters must cast a ballot in order to have a valid election. If an insufficient number of voters participate, the board members may remain in office until a successor is qualified and elected. Elections for Board Members must be by secret ballot. Section 718.112 (d) (3) of the Florida Statues specifically states that there shall be no quorum requirement regarding the election of members of a condominium board of directors. Additionally, in computing votes, proxies shall not be used in electing members of the Board of Directors.

3. Quorum Requirements. The percentage of voting interests required to constitute a quorum at a meeting of the members is a simple majority unless there is a Bylaw designating a lower percentage for quorums. A simple majority is 50% plus one vote. Decisions may be made by the owners of a majority of the voting interests represented at a members meeting with a quorum, unless otherwise provided in Chapter 718 of the Florida Statutes, the Declaration, Bylaws, or Articles of Incorporation.

4. Proxies. Except as specifically set forth in Section 718.112 (2) (b) 2, unit owners may not vote by general proxy, but may vote by limited proxies. Limited and General Proxies may both be used to establish a quorum. Limited proxies are to be used for: (a) votes taken to waive or reduce reserves; (b) votes taken to waive financial statement requirements; (c) votes taken to amend the declaration; (d) votes taken to amend the Bylaws or Articles of Incorporation; (e) Votes taken on any other matter for which 718 requires or permits a vote of the unit owners and for which proxies are not prohibited.

5. Annual Meeting. The law requires the association to have an annual meeting and to post conspicuous notice of it fourteen days before the meeting. The notice of meeting must be sent by mail to each unit owners, unless a unit owner waives in writing the requirement.

6. Requirements for Board Meetings. The Bylaws must include the following provisions regarding meetings of the Board of Directors : (a) board meetings and committee meeting at which a quorum is present must be open to all owners; (b) owners must be allowed to tape-record and/or videotape meeting of the board; (c) owners must be allowed to speak at meetings on all designated agenda items, but associations may adopt reasonable rules governing frequency, duration, and manner of owner statements; (d) notices of meeting must specifically incorporate an identification of agenda items; (e) for meetings at which non-emergency special assessments or amendments to rules regarding unit use will be proposed, discussed, or approved, notice must be mailed or delivered to unit owners and posted conspicuously on the condominium property not less than 14 days prior to the meeting.

7. Transfer Fees. Associations may wish to charge a transfer fee for the sale, lease, sublease, mortgage, and/or transfer of a condominium unit. The Association may only charge a transfer fee if the fee for approval is set forth in the declaration, articles, or bylaws of the condominium and the association is required to approve of the transfer under the applicable Condominium Documents. If so provided in the documents, the fee may be preset, but may not exceed $100.00 per applicant. (A husband and wife or parent and dependant child are considered one applicant). No fee may be collected if the lease or sublease is a renewal with the same lessee or sublessee.

8. Optional Provisions. The Bylaws may also provide for (a) a method for adopting and/or amending rules and regulations; (b) restrictions on and requirements for the use, maintenance, and appearance of the unites and/or common elements; (c) other provisions not inconsistent with 718 of the Florida Statutes or the declaration.

IV. Commonly Requested Amendments
A. Fines

Many Florida Condominium Associations, particularly older Associations, do not have the ability to fine unit owners for their failure to comply with the Condominium Documents. This has become a problem for may Associations who have learned that the only real way, absent a fining provision, to enforce the regulations set forth in the Condominium Documents is to engage in lengthy and expensive litigation. However, amending the Condominium Documents to provide for a fining provision can rectify this problem. Specifically, Section 718.303 of the Florida Statutes provides that if the declaration or bylaws so provide, the association may levy reasonable fines against a unit for failure of the unit owner, occupant, licensee, or invitee to comply with any provision of the declaration, bylaws, or reasonable rules and regulations of the association. 718.303 of the Florida Statutes provides the rules for the imposition of fines which should be included within the condominium documents if an amendment is undertaken. Specifically, no fine shall become a lien against the unit and no fine may exceed $100.00 per violation. However, a fine may be levied on the basis of each day a violation continues with a single notice and opportunity for hearing, provided the fine does not exceed the aggregate of $1000.00. Additionally, this section provides that no lien may be levied except after giving reasonable notice and an opportunity for hearing to the unit owner. The hearing must be held before a committee of other unit owners. If the committee does not agree with the fine, the fine shall not be imposed.

B. Lease Restrictions.

Amendments regarding lease restrictions have become very popular as many Condominium Documents are either silent or provide very limited regulation over leasing. Generally speaking the Courts will permit reasonable restrictions on leases so long as the restriction is not unlimited or an absolute restraints on alienation. The following are several examples of issues, which many associations incorporate in any amendment regarding leasing:

1. Time limitations on leasing by new owners. An Association may prohibit the rental or leasing of a Unit prior to the expiration of specified period of time from the date of Acquisition of said property.

2. Limitations on long term and/or short term leases. The Condominium may limit the length of a rental. For example the Documents may provide that a lease must be for a term of not less than nor greater than one year.

3. Prohibitions and or restrictions on Rentals. Given the unique problems of condominium living in general and the special problems endemic to a tourist oriented community in South Florida in particular the Courts have held that an association may prohibit the leasing of Units so long as a hardship provision is included. The Courts determined that this was a reasonable restriction which inhibits transiency and to impart a certain degree of continuity of residence and a residential character to their community. For example, the Court in Seagate Condominium Ass’n v. Duffy, 330 So.2d 484 (4th DCA 1976) approved the following Declaration language:

. . . the owner of each unit of Seagate Towers Condominium shall occupy and use such unit as a private dwelling for himself and his immediate family, and for no other purpose including business purposes. Therefore, the leasing of units to others as a regular practice for business, speculative, investment or other similar purposes is not permitted.

To meet special situations and to avoid undue hardship or practical difficulties the Board of Directors may grant permission to an owner to lease his unit to a specified lessee for a period of not less than four consecutive month’s nor more than twelve consecutive months.

In approving the above language, the Court reasoned that the language prohibited only a specific form of ownership under general but not unlimited circumstances and that the prohibition could be suspended upon a showing of undue hardship.

Additionally, the Courts have upheld restrictions on rentals which prohibit an owner from renting a unit more than once during the period of ownership. See Kroop v. Caravell Condominium, Inc., 323 So.2d 307 (3rd DCA 1975).

4. Approval of lease agreement by Association. An Association may require that all lease be approved by the Association. A sample provision is as follows:

“All leases or rental agreements must be in writing. All leases, addendums, and lease renewals shall be on forms approved by Association and shall provide that Association shall have the right to terminate the lease upon default by the tenant or other occupant of the demised Unit in observing any of the provisions of this declaration, the Articles and By-Laws of Association, applicable rules and regulations or other applicable provisions of any agreement, document or instrument governing the Association or administered by Association. Leasing of Units shall be subject to the prior written approval of Association. Any and all proposed Lessees, including room-mates of the demised Unit are subject to the prior written approval of the Association, in its sole discretion, and shall be subject to an application and screening process which may include, but is not limited to, credit, employment, and personal reference investigations. No lease or rental agreement shall be for a term of less than 12 months. No Owner may enter into more than one lease during any 12-month period of time irrespective of whether a tenant voluntarily vacated the Unit, has been removed through eviction proceedings or otherwise without the prior written approval of the Board in its sole discretion. Any and all lease renewals must be approved by the Association prior to the anniversary of the lease.”

5. Transfer and approval fees. As stated previously, the Association may only charge a transfer fee if the fee for approval is set forth in the declaration, articles, or bylaws of the condominium and the association is required to approve of the transfer under the applicable Condominium Documents. If so provided in the documents, the fee may be preset, but may not exceed $100.00 per applicant. (A husband and wife or parent and dependant child are considered one applicant). No fee may be collected if the lease or sublease is a renewal with the same lessee or sublessee.

6. Maximum lease percentages. An association may provide in the Condominium Documents that the number of leased Units shall not exceed a certain percentage of the total number of Units subject to its Declaration. Again, as stated above, this provision must be reasonable and can not constitute a complete restrain on alienation.

7. Eviction of tenants. The Association may provide in the Declaration that all leases shall provide that Association shall have the right to terminate the lease upon default by the tenant or other occupant of the demised Unit in observing any of the provisions of this declaration, the Articles and By-Laws of Association, applicable rules and regulations or other applicable provisions of any agreement, document or instrument governing the Association or administered by Association.

C. Other Restrictions
Associations have wide latitude in what type of reasonable restriction should be placed in their community. The following are several examples:

1. Restrictions on transfer other than by lease. These amendments can include such provisions as a right of first refusal, prohibiting the corporate form of ownership, and requiring the approval of any transfer by the association.

2. Occupancy restrictions. Associations sometimes find that units within the association are overcrowded and/or occupied by several individuals not related. This tends to detract from the community atmosphere which associations are attempting to maintain. This can be corrected by amending the documents to incorporate certain occupancy restrictions such as prohibiting more than one family reside in a Unit at one time, setting forth the maximum number of occupants including guests, and setting forth the maximum number of individuals per bedroom.

3. Late Fees. The association may levy a reasonable late fee in accordance with it Condominium Documents. Section 718.116(3) specifically authorizes late fees not to exceed the greater of $25.00 or five percent of each installment of the assessment for each delinquent installment that the payment is late only if said the declaration or the bylaws so provide.
Source : Stevens & Goldwyn, P.A.

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