Friday, March 07, 2014

To Proxy or Not

Many condo units in our area are owned as second homes or as investments. When condo association meetings are held, non-resident owners are often absent and important changes to condo docs can be passed with very few owners physically present. Sometimes remote owners will mail in a ballot with their vote or decline to vote but very often, owners will assign a proxy to cast their vote at the proxy's discretion.  The proxy may be a wonderful neighbor but he may have a dangerous agenda.

I recently attended an annual condo meeting of a popular weekly rental complex that was attended by less owners than the stack of proxies one of the board members was holding. The majority vote that he was holding in his hand combined with a few other votes carried the power to make every unit in the building more difficult to sell and potentially worth less. Specifically, the item on the ballot that day would have prevented any owner from self-managing or using an outside manager to rent his unit. It would require all rentals to be handled by the on-site office. The reason any owner would want this restriction is unclear.  Whatever the genesis, this amendment to the docs made it's way onto the ballot. Luckily for the owners, the item did not get voted on at that meeting because the ballot was improperly worded and the vote had to be postponed. If this item passes at the upcoming special meeting, any potential buyer who wants to manage his own rentals will have to exclude this building from consideration. The pool of potential purchasers will be limited to persons willing to trust the on-site office to effectively and fairly manage their unit.  This will exclude most of my investor clients and, I'm guessing, a good portion of all other potential buyers. When the time comes to sell a unit there may be some regrets. 

Condo owners should be aware that ballot items that restrict rental rights are not binding on owners who do not vote for them, however, the restriction will be binding on a new owner of their unit should they sell.

Florida Statutes 718.110(13) 
(13) An amendment prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period applies only to unit owners who consent to the amendment and unit owners who acquire title to their units after the effective date of that amendment.

"The songs that are played by every band are played by EVERY band. If I hear Mustang Sally one more time I'll puke."   _____A resident of the Villages