STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES

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1 STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR BINDING ARBITRATION - HOA Townhomes Neighborhood, Patio Homes Neighborhood, Villas Neighborhood, Single Families Neighborhood and Zero Lot-Line Homes Neighborhood Committees of Northtree Community Association, Inc., Petitioners, v. Case No Homeowners Voting for Recall, Respondent. / SUMMARY FINAL ORDER The association filed its petition for recall arbitration in this matter on May 1, The homeowners in favor of recall filed their answer on May 23, A conference call was held in the case on July 10, 2006, during which the merits of the issues presented were discussed. The arbitrator indicated at that time that a summary final order would be issued in favor of the petitioner. The community involved in the recall is comprised of five separate neighborhoods governed by a single association. The five neighborhoods under the documents are given the option of formally incorporating as a separate association, but none of them have done so. The various neighborhoods are required to conduct periodic elections to choose their committees. The committees are composed of 3-5 members depending on the particular neighborhood involved. The homeowners living 1

2 within a neighborhood elect the members of their committee, and the various committees in turn select a representative to sit on the board of directors of the community association that is responsible for the operation of the entire community. Unwittingly, the homeowners voted to recall various board members on the community association without regard to whether the particular board member sought to be recalled was voted onto the board by his particular neighborhood, such that, for example, homeowners residing in the Townhomes Neighborhood or Patio Homes Neighborhood may have voted to recall board members on the community association that were selected by the committees elected by the homeowners in the Single Family Homes or Zero Lot-Line Neighborhood. It is not disputed that if the votes were separated and grouped by neighborhood, less than a majority of the voting interests for specific neighborhoods cast votes to recall its particular representatives. Chapter 720, Florida Statutes, specifically addresses those circumstances in which class or representational voting is used or required: (10) RECALL OF DIRECTORS.-- (a)1. Regardless of any provision to the contrary contained in the governing documents, subject to the provisions of s regarding transition of association control, any member of the board of directors may be recalled and removed from office with or without cause by a majority of the total voting interests. 2. When the governing documents, including the declaration, articles of incorporation, or bylaws, provide that only a specific class of members is entitled to elect a board director or directors, only that class of members may vote to recall those board directors so elected. The requirements of the statute are echoed in the administrative rules governing recall. Rule 61B (4), Florida Administrative Code, provides as follows: 2

3 (4) Class Voting. When the governing documents provide that a specific class of homeowners is entitled to elect a director or directors to the board, the class of homeowners electing such director or directors shall constitute all the voting interests that recall or remove such director or directors. The statute and the rules thus each require in essence that the recall follows the vote: viz.: those entitled to recall a given board member are those owners entitled in the first instance to vote the board member into office. 1 Thus, it is concluded here that the recall was flawed in that owners were allowed to cast their votes in favor of board members that they did not vote into office. 2 The homeowners in favor of recall also argue that no formal meeting of the board of the community association was held regarding the petition for recall arbitration. Instead, it appears that the neighborhood committees met and determined to reject the recall effort, although a majority of the members of the board of the community association were present at these meetings. Consistent 1 The same result exists under the condominium statute, upon which the HOA recall provision is based. See, for example, Sea Ranch Club Condo. Association, Inc. v. Patti, Arb. Case No , Final Order (November 25, 1997), holding that where the documents provide for class voting, only members electing a director would count towards calculating a majority required for recall. 2 The documents of the community association provide no assistance in this regard as they do not address recall. 3

4 with this error is the mistaken case style on the petition in this case that lists the petitioners as the neighborhoods as well as the community association. The neighborhoods have no legal identity and cannot be named as parties herein, and even if they could, it is not intuitive that the community association has the capacity or standing to initiate legal proceedings in the name of the neighborhoods. However, even given these fundamental errors, the arbitrator concludes that the recall effort was void ab initio, and that the failure to properly call and hold a board meeting of the community association does not operate to cure the fatal flaws contained in the recall effort. Compare, for example, Rolling Hills Golf and Tennis Club Condo. IX Association, Inc. v. Unit Owners Voting for Recall, Arb. Case No , Summary Final Order (June 7, 2005), holding that where a recall effort is void from its inception, the failure of the board to properly notice or conduct its meeting will not rehabilitate an otherwise invalid recall agreement. WHEREFORE, based on the foregoing, the arbitrator hereby rules that the recall effort was void, and hereby affirms the decision of the community association not to certify the recall. The arbitrator also notifies the parties that prevailing party costs and attorney s fees are not available in this proceeding under the rationale stated in the case of Planter s Walk Homeowners Ass n. v. Homeowners Voting for Recall, Arb. Case Number , Final Order on Attorney s Fees and Costs (February 20, 2006) (prevailing party attorney s fees and costs are not available to an association in a recall arbitration brought pursuant to sections (10) and (1), Florida Statutes), adopted herein. 4

5 DONE AND ORDERED this 11th day of July, 2006, at Tallahassee, Leon County, Florida. Karl M. Scheuerman, Arbitrator Division of Florida Land Sales, Condominiums, & Mobile Homes Dept. of Business & Professional Regulation 1940 North Monroe Street Tallahassee, Florida Copies furnished to: Phillip J. Croyle, Esquire 370 W. Camino Gardens Blvd. Suite 300 Boca Raton, Florida Evan M. Bower 6891 Lake Island Drive Lake Worth, Florida