Gelfand & Arpe, P. A.

December 2000

MEMORANDUM TO CLIENTS
CORPORATE PROCEDURE: ANNUAL MEETINGS

With the Aseason@ upon us, so are annual members= meetings. Nearly all community associations hold their annual members= meetings between December and April. Even if your meeting is not until the end of season, avoid personal and meeting space scheduling conflicts. It is not too early to begin preparations. The firm generally recommends that associations begin preparations 180 days before the scheduled annual meeting date.

Advance planning allows communities to do it right the first time. Regardless of recent and continuing headlines it bears repeating: technical voting requirements must be followed! All too often an officer, director or manager will ask Awhy do we have to follow the technicalities?@ If voting requirements are not followed, then the election results are subject to challenge. This is especially so in condominium and cooperative associations regulated by the Division of Land Sales.

There are practical reasons to follow Atechnical@ laws. If directors are perceived as being the product of an unfair election, then owners do not extend the respect that is necessary to govern. Of course, if there are challenges, then valuable resources are expended on association-infighting. To avoid challenges, these pointers may avoid problems:

Condominium and Cooperative Associations. Notices of initial meetings should be provided 60 days before an annual members= meeting. With the second notice, the actual notice of meeting should be with an agenda and a ballot. Names must be listed in alphabetical order by the last name. The first order of business at the annual members meeting at which there is a contested election is the gathering and counting of ballots.

Homeowners= Associations. If an absentee ballot is utilized, then a proxy must accompany the returned ballot, unless the association=s Agoverning documents@ provide otherwise. Any member is entitled to nominate themselves from the floor of the meeting. Unlike condominium and cooperative associations, a quorum must be present for a meeting to occur and an election to be held.

Ballots, proxies and tally sheets are to be kept as association official records.

Let us not read about your association election in the newspapers.

CONTRACTS: SEVERANCE PAY

AJust sign it!@ How many times have you been told, ADon=t worry, it=s just words.@ You sign the paper. Later you sheepishly wonder what did you sign. You do not dare say anything because you know it is so embarrassing. You signed a contract without even reading it, not to say understanding it.

A recent decision from the Florida Fourth District Court of Appeals reaffirms what we should know. Contracts are very important. Papers should not be signed without due care and consideration.

In Barakat v. Broward County Housing Authority, 25 Fla. L. Weekly D2474 (Fla. 4th DCA October 18, 2000) the appellate court reviewed a contract that may have not been provided due consideration. Mr. Barakat sued his former employer, the Broward County Housing Authority. The contract between Barakat and the Housing Authority provided in part Ashould Barakat be terminated, then he would be given severance pay in the amount due, as if said contracts had run its full length.@ Apparently there was no provision providing for severance not to be paid if termination by the Housing Authority Afor cause.@

Unforeseen problems began after Mr. Barakat was convicted of filing a false tax return. Fifteen days after the conviction the United States Department of Housing and Urban Development advised the Housing Authority that Mr. Barakat was suspended from participating directly or indirectly in HUD programs. The Housing Authority asserted, and the trial court agreed, that as a result of the suspension, Mr. Barakat could not perform his duties for the Housing Authority, was terminated Afor cause@ and thus was not entitled to severance pay.

The appellate court reversed, noting that while contracts are to be given the effect of the parties= intent, if the contract terms are unambiguous then the contract=s meaning is to be defined from the contract language itself. If the Housing Authority and Mr. Barakat desired to provide exceptions to severance pay, then those should have been stated. In other words, unless there is an ambiguity or a conflict in contract testimony, the parties cannot explain what they meant.

The proverbial moral to this story is that associations need to carefully review their contracts. The courts will not protect an association from a bad deal. As the appellate court here ruled AA fundamental tenant of contract law is that the parties are free to contract, even when one side negotiates a harsh bargain.@ Another way to put this is Awhat you see is what you get.@

Frequently associations desire to terminate contracts. Unfortunately, some termination provisions do not anticipate that a contractor will not perform adequately. In those situations severance pay has to be paid albeit it does not appear fair.

OFFICE NOTES

Happy holidays to all. In observance of national holidays, the firm=s offices will be closed on December 25, 2000 and January 1, 2001. Please note that the firm=s offices will also be closed on the afternoon of Friday, December 15, 2000.

Please welcome Rena Uzzi. Rena became a litigation secretary in the beginning of November assisting Tanique Lee. She has an extensive background in the legal and real estate fields, owning and operating a real estate brokerage company from 1992 until 1999. Rena is an avid cyclist and reader and the mother of two boys.

This information is provided for public information purposes only and is provided without obligation or fee. It is distributed to the firm's association clients to provide a general notice of recent legal changes. This information is not to be considered as legal advice. The changes in the law may not have been reviewed by Florida courts and may be subject to further challenge. Before taking any action you are urged to consult with counsel to ensure that your legal rights are protected.

8 2000 by Gelfand & Arpe, P.A.