Rob Samouce: Updating your association's governing documents can save lots attorney's fees

There are two types of community associations (whether they are condominium associations or homeowners' associations), those with updated governing documents and those with old, outdated documents.

For the most part, those associations with old, outdated documents spend a lot more each year on legal fees, and have much more legal problems than those with new, updated documents.

This is because, besides the fact that most old documents are poorly written with many ambiguities, both case law and statutory law change each year, and the old documents do not reflect these changes. So, what then happens is that the board of directors will follow what's contained in their old documents in carrying out their business with the belief that they are doing things correctly because what they are doing is what their documents say. However, the case law and statutory law concerning procedural and substantive issue have changed since the old documents were written; many of the ways the board of directors are doing their business are wrong and probably illegal.

For some communities, these wrong and illegal ways may go on many years because no one realizes what they are doing is wrong. All it takes, though, is one disgruntled owner who is mad at one or more directors or officers, for whatever reason, to start looking into what the board of directors have been doing and they will soon find the deficiencies or illegalities being conducted in the association's business. This can lead to lawsuits, complaints, mediation or arbitration claims being brought with The Department of Business and Professional Regulation, Division of Florida Land Sales, Condominium and Mobile Homes, Bureau of Condominiums. Defending these claims can become expensive in legal fees in a relatively short amount of time.

To try to avoid these claims, some associations with old documents will have to start to heavily use their attorney to make sure they start doing everything legal; they will have to ask for detailed opinion letters to try to make sense out of the ambiguous language in their document, or require the drafting of piecemeal amendments to cover each document problem as it arises.

Usually, the best way to get rid of these problems, and the expenses associated therewith, is for these first types of communities to become the second type of communities by fully updating their documents. This is accomplished by having a competent attorney draft a completely new set of governing documents tailored to your association's particular needs and fully in compliance with today's law. This rewrite process, if performed correctly, should not be rushed. It typically takes anywhere from three to nine month from the attorney's drafting of the first draft (which is usually done here in the summertime as there is more time for such things out of season) to the association obtaining membership approval of the new documents by a vote at a special members' meeting or your annual member's meeting in the beginning of the year.

Many times the board of directors of newly-turned-over associations from developer control cannot believe they have old outdated documents not conforming to the law because their home were just built and the documents are only a year or two old. However, what they don't understand is that many times their documents drafted by the developer's attorney are 20-year-old "boilerplate" documents that have never really been reviewed as to concurrence with current law because that is not important to the developer. The developer wants to just sell as many units as fast as possible and move on to the next project. The developer will not have to live with the problems created with the old documents; the new owners will. So, your brand new community may very well have old documents. Newly-turned-over communities from the developer should have an attorney review the developer documents to determine whether they should be updated or not.

The second type of communities with new, updated documents usually has much less need for calling their attorney and thus much less annual costs spent on attorney's fees. The board of directors of these communities can feel comfortable that when they do what their documents say to do, they are doing the right and legal thing. This is called the Maytag Repairman effect. There is, of course, an attorney fee cost associated with the document rewrite procedure. However, such cost usually pays for itself in short order because of all the future attorney fees that will be saved because they will never have to be spent.

Having new documents also shows that the community is probably being well run and can even have the effect of increasing the community's property values over those communities with old documents.

Rob Samouce, a principal attorney in the Naples law firm of Samouce, Murrell, & Gal, P.A. concentrates his practice in the areas of community associations including condominium, cooperative and homeowners' associations, real estate transactions and closings, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.

© 2005 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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