Crist Vetoes Architect Shield/Banning Deadbeat Owners From your Condo or HOA: Good Idea?

First, an update on a previous blog.  A few weeks ago I wrote about a terrible bill that had passed the Florida legislature, one that would have shielded architects, engineers and others from negligence lawsuits.  Happily, Governor Crist has listened to his constituents, and not the lobbyists, and he vetoed the bill.  Good for you Charlie!  To his credit, Crist has shown no fear when using his veto on bad legislation, and this was a good decision.  No professional group deserves complete immunity from lawsuits for unreasonably careless acts.  Congrats to those who successfully fought this law.

I wanted to dedicate the majority of today’s blog to another new change in Florida law, but one that has already been implemented in other states (and has applied to Florida’s HOAs for years).  It’s a new tool in the arsenal of dealing with owners who don’t pay their association maintenance–deadbeats.  If you recall from previous blogs, the main tool that shared ownership communities (SOCs–condos, co-ops and hoas) have against deadbeat owners is filing a lien on their property, and eventually foreclosing on that lien.  However, that is a fairly drastic step to take, and it can be costly–thousands of dollars in legal fees, depending on the complexity of the case.

The obvious question for owners is, if these deadbeats are not contributing to the common elements (such as the pool, tennis courts, and other recreational facilities), why should they be allowed to use those facilities?  Why can’t we ban them?  And this new law in Florida allows exactly that.  The text of the new law reads as follows:

718.303(3)–If a unit owner is delinquent for more than 90 days in paying a monetary obligation due to the association the declaration or bylaws so provide, the association may suspend the right of a unit owner or a unit’s occupant, licensee, or invitee to use common elements, common facilities, or any other association property until the monetary obligation is paid. This subsection does not apply to limited common elements intended to be used only by that unit, common elements that must be used to access the unit, utility services provided to the unit, parking spaces, or elevators.

OK, so there’s some interesting stuff hidden in there.  Just by the language itself, if a unit owner is behind on his or her maintenance for over 90 days, the association can block that owner or the occupant/renter of the unit from using the facilities of the condominium.  However, this restriction doesn’t apply to certain categories, such as utilities, parking spaces, elevators, etc.

The first obvious question for Floridians is, what about cable TV?  When this law was originally being discussed, one of the main abilities association boards were clamoring for was the power to shut off a deadbeat owner’s television.  In many associations, the cable television bill is a bulk contract paid by all owners as a common expense–so if your neighbor isn’t paying his bills, you’re paying for his television.  There’s a strong psychological issue with many people when it comes to television–the idea of deadbeats lounging on your dime is simply anethmatic.  So really, the most common request from board members and owners was for the legislature to specifically allow boards to cut off non-paying owners’ televisions.

Unfortunately, the law doesn’t seem to do that.  The language of the statute exempts “utilities,” and depending on who you ask, cable television does seem like a utility.  The law probably wasn’t intended that way, and even some of the architects of the law have said they have no idea if cable TV is included in the restrictions.  This is going to be one of those wait and see situations, where an aggressive association is going to test the issue in court, and allow a judge to clarify the statute (and fight over that clarification for a decade).

Also, it’s unclear from the law whether common services may be restricted, like valet or towel services.  The law does say that the association may suspend the use of common facilities and association property.  Valet parking spaces are always some form of common element or association property, as would be towels.  But it does also say that you can’t limit parking spaces–does that only apply to owner-assigned spaces, or valet as well?  Hard to tell, but I would argue that, until we hear otherwise, associations can restrict these services as well.

Note also that you explicitly cannot ban owners from using access points, like gates and elevators.  So you probably can’t turn off a deadbeat owner’s gate key or elevator fob, as much as you may want to do so.

In any event, now that we’ve established that you can ban deadbeats from the common elements, the real question becomes should you ban deadbeats–and if you do, how?

The entire concept of a law like this ultimately comes down to psychology and human nature.  On the one hand, paying owners get a psychological boost from the idea that there are no free rides.  It’s the old Little Red Hen analogy–you can’t eat the cake if you don’t help make the cake.  Among paying owners, you can bet there will be a clamor to ban deadbeat owners from using common facilities.  Still, we have to remember that the clamor does partly base itself on a feel-good philosophy–does it have actual utility?  We need to dig a bit deeper to find out.

As for the deadbeats themselves, and whether such a ban will influence there desire to contribute to the association, that’s probably going to depend on the particular deadbeat.  Some non-paying owners are absentee investors who may or may not have renters in their units.  They will only care about a ban of the common elements if it affects their renters, and that of course requires that the association be aggressive against renters of deadbeat units.  Other deadbeat owners may simply be so down on their luck that they are completely unable to pay  their maintenance (and usually their mortgages as well), and banning these owners from the common elements will again simply provide a psychological boost to paying owners–it’s unlikely to encourage them to pay money they don’t have.  The most likely owners to be affected by a deadbeat ban would be those who have the money to pay, and do live in the community, but simply choose not to pay for reasons of arrogance or a lack of commitment to the concept of shared ownership.  These owners may be impacted by an inability to use the common elements, and may be convinced to start contributing if such a ban is enacted.

Question 1–What does a ban accomplish?

So the first question for any community or board considering enacting a common element ban would be:  What does it accomplish?  If the ban doesn’t force a single non-paying owner to pay their maintenance, but it makes the paying owners feel better about their contribution, is that a sufficient reason to enact a ban?  It may very well be–there’s clearly a legitimate purpose in encouraging paying owners to continue to pay.  Or, you may decide that, without a likely affect on the deadbeats themselves, a ban simply creates a ton more work for the association with no real benefit.  And this gets to the second principle question every community and board needs to consider before enacitng a deadbeat ban:

Question 2–How do you enforce the ban?

Consider this for a moment–your condominium decides to ban deadbeats from all of the common elements, including the pool, the tennis court, the gym, and even from using valet.  How do you make sure the owner isn’t cheating?  This may not be too much of a problem in a condo with ten units, where every owner is easily identifiable–but what about condos with hundreds of owners?  Do you hand out photographs to the staff, relying on them to enforce the ban on recognition?  Do you hang police house style wanted posters around the common elements, stating that the owner pictured isn’t allowed to use the facilities?  And would such action violate the various federal privacy laws that protect debtors?  And what about if an owner or staff member does catch a deadbeat using the pool–how do you kick them out?  Does the owner enforce the ban themselves, or do you call security?  And what if the owner refuses to leave–call the police?  I really can’t answer such questions, because they’re discussions for every individual community to have–I’m simply trying to demonstrate that enacting a ban is not as simple as declaring that deadbeats can’t use the common elements.  Boards need to consider enforcement of these rules as well, if they are to have any impact.

Now, for some non-paying owners, the simple threat of expulsion (and a desire to avoid conflict) will be enough to keep them from using the facilities until their account is up to date.  And maybe that, combined with the feel-good nature of a ban for paying owners, is enough to enact such a ban in your community.  But as a board member of my own condominium, I have concerns about effecting policies that have no real “end game,” that may not be practically enforceable.  So before we enact such a ban in my community I’m going to insist that the board discuss our enforcement options and plan, and really know why we want a ban before we begin to enforce one.

To sum up, I don’t want it to be misconstrued that I am against deadbeat bans–I think, used properly, they can be a very effective tool for associations to encourage payment of maintenance.  I am simply illustrating that bans are more complex than people may realize, and it’s incumbent upon any responsible board of directors to consider all aspects of a ban before making it a part of their community’s way of life.

Til next time, thanks for reading, and I hope you find this discussion useful!

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