Take It To The Board with Donna DiMaggio Berger
Take It To The Board with Donna DiMaggio Berger
Addressing Florida’s Condo Crisis and How to Fix It
The aftermath of the Champlain Towers tragedy has led to a flurry of legislative responses, but are they hitting the mark? Was the Florida Legislature's response to the Champlain Towers tragedy misguided in terms of overlooking some key factors that led to that deadly collapse and placing some obligations on the parties least able to shoulder them? Join Take It To The Board host Donna DiMaggio Berger as she unpacks this complex, multi-layered issue affecting countless communities across the Sunshine State who are facing looming and costly deadlines for engineering inspections and reserve funding mandates. Together with her podcast producer, Claude Jennings Jr, they confront the issues that may be causing countless people to reconsider life in a Florida condominium. They delve into the historical context and regulatory challenges, revealing the profound economic and social impacts on individuals, especially seniors on fixed incomes that these new laws are already having.
Their conversation also addresses the difference between highly functional, functional and dysfunctional boards and why dysfunctional boards are more than just a nuisance—they're a liability. In this episode, they explore the financial strains and governance challenges that can lead to board dysfunction. With Donna's expertise, they offer insight into identifying red flags and the importance of expert professional advice. From engaging legislators to revising governing documents, this episode promises solutions to foster highly functional boards amidst the ongoing crisis. Tune in for expert advice, actionable strategies, and a path forward for those navigating the murky waters of Florida's condo crisis.
Conversation Highlights Include:
- 9 questions to confirm if you're serving on a dysfunctional board!
- The Media's role in the Condo Crisis
- Who is most responsible for a safe building?
BONUS: Future Predictions
Related Links:
Hi everyone, I'm attorney Donna DiMaggio-Berger and this is Take it to the Board, where we speak condo and HOA. In today's episode of the Take it to the Board podcast, we are going to explore the escalating condominium crisis in Florida, a complex, multi-layered issue affecting countless communities across the state. As insurance premiums continue to soar, legislative changes unfold and aging buildings confront new safety mandates, condominium boards and residents face unprecedented challenges. I'm joined once again by my podcast producer, Claude Jennings Jr. We are going to examine the historical roots of this crisis, the regulatory frameworks at play and the economic and social impacts on both individual owners and associations. We hope you join us as we discuss these critical issues and shed some light on what lies ahead for Florida's condominium landscape. Hi, claude, how are you doing?
Speaker 2:Donna, I'm doing wonderful and, by the way, we have great guests on the show but these are my favorite shows because you get to share your expertise and I really feel like the listeners enjoy hearing your thoughts and the things that you know about this field, because you're one of the best at it, and so I'm looking forward to this episode.
Speaker 1:Oh well, that's very nice of you to say, although I have to say my partner, ken Director. He's got the highest numbers of downloading for his episode on committees. And you know, I told him that was going to be a good episode and he didn't believe me. He's like committees and I'm like, yeah, committees. People need to need to know what to do with them.
Speaker 2:Right, yeah. Well, you can't be that far behind. You've got to. You've got to be second or third or something like that, I'm not going to say Well, let's jump into this. The Florida condo crisis Some people may not be aware of it outside of Florida, but there have been a lot of articles about the Florida condo crisis and I'm sure you're reading those. Just take us through some of that and what you think and what you've been seeing and reading.
Speaker 1:Yeah, and I know we've got Claude a lot of people who listen in other states. But Florida, in this regard, is both a cautionary tale and it's also going to set the example for what to do in the aftermath of a catastrophe. So I did read the Palm Beach Post article. That was I think it was October 27th and it was a six-page article. It was called Condos in Crisis why Florida's New Condominium Safety Inspection Law is Creating Havoc for Condos. So not the most positive title for an article, but yeah.
Speaker 1:I mean listen, there's been a lot of articles out there right now talking about the looming deadlines for thousands of older Florida condominiums, and those deadlines are end of the year deadlines for buildings that are three stories or higher. They're deadlines for the milestone inspections, which are engineering inspections to go in and have an engineer look at these older buildings and say whether or not they detect any structural weakness or structural deficiencies. And then there, of course, are the new reserve funding mandates by the end of the year for these three-story or higher buildings. And it's not just three stories. You also have to have a certain number of units within the building to be impacted by this legislation.
Speaker 1:So, for the reserve funding mandate. It's setting aside money under what we call the Structural Integrity Reserve Study, or SERS. But listen, since these laws were passed, there's only been, I think, a handful of buildings, claude, that have actually been evacuated due to safety concerns. So that's the good news Not the good news for those few buildings, but it hasn't been mass evacuations. But the bigger issue is how are people going to pay for this? So you've got seniors living on fixed incomes and they're starting to wake up to the reality that they may not be able to afford to live where they're currently living. Now, maybe they were living there all these years because, as a membership body, they were voting year after year to not fund reserves. They had that right under Florida law and perhaps they were also not prioritizing maintenance and repair projects. So those folks are starting to realize you know what the board has to pass budgets that are going to pay for these things, which means what the assessments are going to go up and for some folks, they are not going to be able to continue living there.
Speaker 1:By the way, other people who are being impacted are younger purchasers who may be looking.
Speaker 1:Who once upon a time would look at these older buildings. Maybe the property values were right. But now they're looking at it and they're saying is this too much of a financial risk to buy into an older building, particularly one clod that's along the coastline? I think purchasers are getting more sophisticated about what to ask for, and now the law requires them to be given a copy of the structural integrity reserve study so they can look and see how healthy financially the community is, if they've got money in reserves to pay for things like roof replacement, painting and waterproofing, concrete restoration. So for those younger families, they may no longer be looking to buy in some of these older buildings because they're just realizing that it may be too costly down the road to continue to upkeep older buildings. And then, lastly, you've got investor owners who are impacted by these changes. These are folks who have bought down here and in Florida. Sometimes it's second homes, so there's vacation homes. A lot of the times, though, it's people who have purchased these condo units in Florida and they rent them out.
Speaker 1:And for those folks. They're not so happy about having to spend a lot of money to maintain the buildings, because that cuts into their return on investment. So they're impacted as well.
Speaker 2:Yeah Well, and you hit the nail on the head as far as with maintenance costs and a lot of people have to leave because they can't afford to maintain them. But that might be news to some but not news to some experts. A lot of these articles, they're saying that the experts are saying that this is an overdue reckoning for some of these people, Like, did you see this coming from afar off? And did others see it? And how come things weren't done earlier to try to fix it?
Speaker 1:I'm going to tell you I have read those articles with the experts are like well, you got what was coming to you. You know you can almost see them wagging their finger in the air and to a certain extent they're right. There should have been, there should have been more attention paid to both the budget, the reserves, and to the to the maintenance issues both the budget, the reserves, and to the maintenance issues. Look as humans do some of us engage in short-term thinking as opposed to long-term strategic thinking. I think the answer is yes.
Speaker 2:I feel like my whole life is based on short-term thinking and I've got to strategize better for the new year. But anyway, we'll talk about that later.
Speaker 1:I mean, look for some of these people. I don't think they thought they were going to live this long, so you know that's another thing.
Speaker 1:We used to call them the green banana crowd, where they wouldn't buy green bananas because they weren't sure they were going to be around to see them ripen. I hate to say that, but there was a certain mentality. And also I think, claude, that when people were purchasing decades ago in Florida, they were sort of given the impression I don't know who gave it to them, I don't know if it was their friends and neighbors, or it was realtors at some time, or the developers, but it was a turnkey proposition, right, I don't have the same issues of maintaining a single family home. I'm going to go buy that condo unit and I only have to worry about my white box, the four walls, right, I just turn the key and that's it. It's like a hotel room. Well, it's not. You own your unit, but you also own a prorated share of the common elements, which is the building exterior, the roof, the pool, all the recreational amenities. So for those who say this is a long overdue reckoning, I can certainly understand that. But I also I'm empathetic to the people who perhaps, whether knowingly or unknowingly, didn't see this coming.
Speaker 1:And look, there's another school of thought too, claude. There are people who believe that these new laws are designed to facilitate a land grab by developers who you know thinking that at some point these older owners are just going to simply give up and they're going to sell the land. Because a lot of these older coastal buildings think about it that's where would you build this great long coastline here in Florida? That's where buildings you've had buildings in existence for 40, 50, 60 years in Florida. So they're in great locations.
Speaker 1:So there are some people who think part of this is potentially a land grab. So they sell and what's going to happen? Newer, more expensive buildings are going to go up in their place. I think the truth is somewhere in the middle. I think the days of being informal when it comes to operating your community are over. There is certainly heightened potential personal liability for people sitting on these boards. I mean you have to think long and hard about it and you have to make sure that you are functioning as a board and that you understand what your obligations are, because their obligations are more intense than they ever were before.
Speaker 2:Yeah, and you talk about that more than they ever been before. Let's go to the politics of things a little bit, and you and I had a discussion of politics before we started recording the show. We won't talk about that, it was just us talking stuff. But anyway, let's talk a little bit about the Florida laws and like consequences to them. Were there a problem with the way some of these bills were drafted that affect these condo units and I was kind of seeing it come to fruition?
Speaker 1:Yeah, and that's a, by the way, it's a great question. Claude and I were talking we are the day after election here, and so we are two days after election here it feels like a day Could be election day.
Speaker 2:It's all running together. It's a blur.
Speaker 1:It's a blur. Well, you know what they say about laws it's like sausage. You don't want to see the laws being made. But here's the thing. Florida is a huge state. We have 67 counties. They are very different counties. So before Champlain Towers collapsed, there were only two out of 67 counties in the state of Florida that required inspections for older buildings, and those were Miami-Dade and Broward. Actually, champlain Towers was situated in one of two counties that required older buildings to be certified upon their 40th birthday, and that's important to understand.
Speaker 1:So after the problem now we've had three we're going into four legislative sessions post-Champlain Towers tragedy. Right, and remember, after the after Champlain Towers collapsed, the Florida legislature did not pass any legislation designed to address safety building safety in older buildings during the regular session. They were called back during a special session because people were basically saying how could you go into session and not do anything about this tragedy? So they went back into special session. They passed a bill that was Senate Bill 4D, but they did that in a very condensed special session. So you can just imagine that there were going, it was inevitable that there were going to be unintended consequences and things they hadn't thought about. And then, after that first bill there was a Senate Bill 154. And then last session we had what we call Condo 3.0.
Speaker 1:There are still issues and I think some of the problem is that the initial legislation was based on some misperceptions. And I'm going to say it again, I think the media really contributed. I mean, our legislators read news articles like everybody else, and in the media's rush to assign guilt and try to get to the bottom of a story, there's a lot that they didn't cover. So do you want to know what I think the misperceptions were?
Speaker 2:What's that?
Speaker 1:First of all, it was deferred maintenance leads to tragedy. Okay, they looked at a building. It fell down and it was terrible and 98 people lost their lives. And they said, well, that board didn't do its job. It was deferring maintenance. Okay, Deferred maintenance. First of all, let's talk about this. It's not just about collapse and potential tragedy. Deferred maintenance means that when an association finally gets around to completing that repair project, it's gonna cost more and in the interim, property values in the community could have gone down. So deferred maintenance is always a bad idea if for no other reason that you're going to spend more, the longer you wait. Typically and we certainly have seen that over the last couple of years with the inflation that we've experienced and also the labor and supply issues that we've had. In the case of Champlain Towers, one thing that the media never reported on is that they were conducting their 40-year certification several years before the deadline.
Speaker 1:So they were actually years ahead of it. That's not to say that there couldn't have been deferred maintenance throughout, like most communities, different repair jobs, but when it comes to the building certification which is now what we have, this milestone inspection, that particular community was actually conducting it years ahead of time. So that's the first thing, if you're only looking at deferred maintenance as the problem, and this is what contributed to the collapse. By the way, as we sit here today, they still have not released what the official cause or causes were for that tragedy.
Speaker 2:Oh, wow.
Speaker 1:Still don't know Years later, but we're going to talk about that in a second. The other issue was lack of reserves leads to tragedy, so lack of money. So this is like you and I if we had a household with no money and we had to replace our roof, we're going to have a problem doing it right, yeah, yeah, absolutely. So it would be the same thing with an association If they don't have any money to undertake the necessary projects, whether it's a roof replacement, concrete restoration, painting and waterproofing, whatever it may be.
Speaker 1:Now they have to borrow money or they have to pass special assessments. I'm going to go back to Champlain Towers again. They had been funding reserves for several years before the collapse and they also had financing in place. So the two things that the legislature was hanging their hats on deferred maintenance and lack of reserve funding those were not really contributing factors. They're not really contributing factors.
Speaker 2:Wow. So there are things that people are obviously missing. You know, not deferred maintenance or anything like that. There's got to be something like location, different conditions for different locations. Something's missed. So what are some of those things that's not considered by the legislature when it comes to drafting some of these bills, or even when we even talk about any of these inspections or things like that?
Speaker 1:Well, here's where I think the Florida legislature got it wrong. First of all, they shifted all of the risk and the potential liability onto the parties that are least able to protect themselves the consumers. So think about all of the risk. All of the potential liability was shifted onto board members and association members, the people living in these buildings. Here's what they didn't start out doing. Safe buildings start with the people who build them right, that's pretty obvious, right?
Speaker 1:If your building's safe to start with, it's going to give you a leg up in terms of maintaining it down the road so safe. I'm going to say it again safe buildings start with the people who build them. The thing that I think the legislature did not take into account and they should have taken into account during that first special session after the collapse in June 2021, was building standards. More consumer protections were needed to pursue safety, construction defects particularly. And also, I want to say now, if they had done that, now that we've got all of these associations spending millions of dollars, claude, with repair projects, what's to say that some of the concrete restoration going on right now and the roof replacement going on right now and the electrical and plumbing work going on right now is not effective.
Speaker 1:And these associations will need to pursue those contractors for bad work. In fact, the legislature went the other way. So when you're talking about exercising your rights, regardless of the jurisdiction, regardless of the state, there is going to be something called the statute of limitations. It's the length of time you have to pursue your rights. In Florida, the longest amount of time you have, it's called the statute of repose used to be 10 years, so it would be 10 years and you had that time to figure out if there was a construction defect in your building. Okay, that was. The Florida legislature reduced that some years ago from 10 years to seven years. Right around the time that they were dabbling in all these issues with the post-Champlain Towers tragedy, they agreed to further reduce the time period that owners had to assert their rights against developers by starting the clock earlier, and in some cases for homeowners associations, the clock would have run out before the owners could even take control of the association from the developer.
Speaker 2:OK, yeah, yeah To me it's madness.
Speaker 1:If you're talking about a tragedy tied to residential construction, why would you make it more difficult? For people to pursue their rights? Difficult for people to pursue their rights, and why would you make it easier for developers or contractors to say, well, here's our risk. And now our risk just got a little bit less because the Florida legislature has given us a nice gift and tied it up in a bow. So that's number one. If I had been in the legislature at that time, I would have said folks, what are we going to do?
Speaker 1:Okay, you're right, we need inspections, Absolutely. We need these volunteer boards to hire licensed engineers or licensed architects to go in. They need to hire reserve specialists to tell them how much money to set aside. It's no longer good enough for Bob or Sue on the board to come up with these numbers out of thin air. But I also would have said what are we doing to hold developers accountable to make sure that the housing stock that's being built in the state of Florida, in the Sunshine State, is safe? Here's the other thing where I think the legislature got it wrong. Local government should be held accountable for its role in building safety.
Speaker 2:Okay.
Speaker 1:Let me go back to Champlain Towers. A local building official had told those folks at an open membership meeting just weeks before the building collapsed that the building was safe. They'd been working with an engineer who was working with the local building department. How does that happen? At the time the building was built, certain, there were certain changes that had to be signed off on by the city and the county. Okay, at the time the building, there was new construction going up next door to champlain towers huge skyscraper. There were changes made there too. Those things were all approved how does?
Speaker 2:that happen yeah, yeah, yeah, yeah yeah.
Speaker 1:So right now, local government, all government, enjoys the benefit of something called sovereign immunity, which protects them, insulates them from a lot of liability if they make mistakes. And that makes sense, right? We can't function as government if we don't have some protection from our own mistakes. Sure but for the real big mistakes. I think there should be more accountability for government.
Speaker 2:No, absolutely, and I like that. Thought we should do new segments. You know where Donna thinks Phil on the Blank got it right, where Donna thinks Phil on the Blank got it wrong. I like that. But let's talk about the boards. You talk about accountability. You know we don't want to paint with a broad brush, but I imagine that there are some boards that are better at meeting these challenges than other boards. Have you seen any difference in some in your experience?
Speaker 1:Well, yeah, I mean when I'm reading these articles about the condo crisis. Claude, there are definitely communities that I work with that they're not in crisis. They're not in crisis at all. They've stayed on top of their maintenance and repair projects. They have consistently, you know, funded their reserves. They hold regular board meetings. I've been out to those board meetings. They're pleasant People seem. The people who show up seem to be happy. There's no, you know, throwing of rocks. There's no, you know, torches and pitchforks. So not everybody's in crisis in terms of their operations. However, I will say that just about every Florida community is in crisis when it comes to insurance.
Speaker 1:So it is very difficult to get reasonable insurance premiums in Florida Condominium associations. They fall into a commercial residential category which does not afford them the same level of consumer protections that a pure residential insurance policyholder would have. So everybody's dealing with the insurance crisis and I want to take a step back. Remember I told you in terms of drafting what I thought they got wrong, and I mentioned building standards. They didn't take into account. They didn't take into account more accountability for insurance.
Speaker 1:I mean more accountability for local government. The other thing they didn't take into account was the insurance crisis.
Speaker 1:So you can't load up people with all these costs with very specific deadlines, without also acknowledging how much their budgets have increased over the last five years when it comes to insurance in the state of Florida, even though they were tinkering with different changes. I think that should have been acknowledged. And the other thing I do want to take a step back on that they didn't also take into account the old adage that location counts, so these buildings are not all deteriorating at the same level. They didn't also take into account the old adage that location counts, so these buildings are not all deteriorating at the same level. Okay, depending.
Speaker 1:They used to have it where it was proximity to the coastline, and then they changed that. The other thing they didn't take into account that there would be a supply and demand issue. For all you know, you got to use a licensed engineer or architect, so that became an issue too. And then, lastly, they didn't take into account credentials for reserve specialists. So our legislature's got some work to do. But let me get back to what you talked about. There are great boards out there that are still grappling with the insurance crisis, but those communities are not suffering as much because they have a board in whom they have confidence. And there are certain hallmarks to good boards, highly functional boards, and there's certain hallmarks to the completely dysfunctional board.
Speaker 2:Okay. So let's do bad news. Good news. Let's do bad news first. How do you know that? Because I'm just thinking of myself, if I was on my hoa, you know there's. There's the obvious things, I think. But like, what are some of those hallmarks of a dysfunctional?
Speaker 1:we'll do dysfunctional first and then we'll do highly functional okay, so let's play the game so you know those like those quizzes, like if you answer more than one of these or two of these, you may have adhd or you know oh sure, all the clickbait out there.
Speaker 2:You've answered yes to three or more of these. Then you have this, or then this is your your problem. Yep, got it.
Speaker 1:Yeah, I don't know I never know how, I never know how credible those are, but they always suck me in, for what reason or not. Okay, so I created a little. If you answer yes to two or more of these questions, you very well might be on a dysfunctional. Answer yes to two or more of these questions, you very well might be on a dysfunctional board. Okay. So, two or more Do you rarely, if ever have meetings, board meetings.
Speaker 1:Do the board meetings you hold require security or, in the absence of security, result in screams, profanity and incivility. Have you been unable to fill a vacant board seat? Do you have directors with undisclosed conflicts of interest that you know of? I mean, they haven't disclosed it to the board, but you kind of know what's going on, right. Have you been unable to adopt a board member code of conduct?
Speaker 2:I'm sorry. I'm sorry, donna, if I could interrupt right there For someone who may think that they think of a you know, conflict of interest. Would that include, like OK, well, there's a certain company that has a landscaping contract but it happens to be the brother in law of someone who's on the board? Like, is that the kind of thing you're talking about there with the?
Speaker 1:Yeah, it is so that. So the board member whose family member owns the landscape company that is contracting with the association in Florida. There's very specific law regarding the disclosure that needs to be made on that and 75% of the board has to agree that that's okay, because they're doing business with the association. But the other kind of conflict of interest is a little bit different.
Speaker 2:Let's say you're a realtor.
Speaker 1:This comes up all the time. You're a realtor, you're serving on the condo board. You're not doing business with. You're serving on the condo board. You're not doing business with the association, but you have listings in the building. Is that a conflict of interest?
Speaker 2:Okay.
Speaker 1:What do you think? What do you think Claude?
Speaker 2:I think yes, it is.
Speaker 1:I agree it is. It doesn't mean that a realtor cannot sit on a condo board in a building in which they all have listings.
Speaker 2:They need to know. They need to know, they need to disclose that information.
Speaker 1:They do need to know and they need to abstain from voting on the approval of the people they're selling the units to.
Speaker 2:That is clearly a conflict of interest.
Speaker 1:Yeah, yeah, yeah, yeah, yeah, okay, okay so if you answered yes to that one, if you have one or more directors with undisclosed conflict of interest.
Speaker 1:have you been unable to adopt a board member code of conduct? You know that one. I'm always surprised when people resist it. A board member code of conduct is not meant to be punitive. It's really meant to map out a framework, a reasonable framework, Because a lot of times people get on these boards. I served on my own HOA board. Nobody tells you what you're supposed to do. People get on these boards. I served on my own HOA board. Nobody tells you what you're supposed to do.
Speaker 1:You know there's things that come up, we're doing this or we're doing that, but in terms of defining your role and in terms of sitting down as a, as a deliberative body and and doing some sort of onboarding, it rarely happens. So I don't know why there's a resistance to adopting a board member code of conduct. It can be a simple one-page code of here's how you know, like almost like a mission statement, or it could be 12 pages if you really need it. Here's a few other questions. If you answer yes, you may be on a dysfunctional board. Do you have one or more directors who violate the covenants and rules? Directors are meant to set the example. So if you and in Florida, listen, and I'm sure other states there are things that disqualify people from serving on the board, like being delinquent. How could you possibly pass judgment on a neighbor for being delinquent if you, as a board member, are delinquent yourself or if you're violating the parking rules, the leasing rules, whatever it may be? Do you have one or more directors who are taking illegal compensation kickbacks?
Speaker 2:in Florida.
Speaker 1:That's going to be a crime Now also in Florida. The law does allow board members to be compensated if the bylaws so provide. In all my years of doing this, I've only had I think it was two associations where they actually paid their directors and it was authorized under the documents. Do you have one or more directors who breach confidential information? That's a big, big example of a dysfunctional board. So you're on the board. Some of you are going to be on the losing a different vote, which is really timely, because what did we start out talking about?
Speaker 1:before we joined this, we just had an election and I'm sure, 50% of the people are not happy with the result. 50% or more are happy with the results. You're on a board. You're not always going to be on the winning end of a vote. The question is, how do you handle that? Do you say, okay, I said my piece, I voted the way I voted, I lost. This is the position the association's taking. Or do you run around and gossip in the neighborhood and try to defeat the measure that was just adopted by the board? If you've got directors who are breaching confidential information, that's a pretty big sign that you are on a dysfunctional board. And then, lastly, has your board been subject to a recall or litigation more than once in a 24-month period?
Speaker 2:Okay, all right, all right. There we go. Now, before we get to what makes a board highly functional, I want to ask you questions, donna, and if you say yes to two out of these three questions, then that means you have a good podcast. Ok, number one is the number one, so you got. If you answer yes to any of these three, then you have a good show. Do you enjoy your show?
Speaker 1:I do enjoy my show.
Speaker 2:All right.
Speaker 1:Is that a bad thing?
Speaker 2:No, no, no you said yes. Do you think your guests are interesting?
Speaker 1:I always think my guests are interesting.
Speaker 2:All right, and do you receive feedback to your show?
Speaker 1:Not as much as I'd like. I would love to have more of our I mean, we do Like when we post it, we do, but I would love to hear more from our listeners. I get great, we get great feedback, claude, from our guests. You know I started this podcast because I was just curious about so many different things. It's funny I recently the last episode we did before taping this well, actually two before this was Ben Friedman with the windows.
Speaker 1:And I'm thinking you know windows and every time I learn so much about person and what they do. And even when you dig into it, you get to know people what their personal passions are as well.
Speaker 2:Sure, absolutely. Well, there you go. So it sounds like you have a good podcast, then, because you answered yes to at least one of the three questions. All right, so how do we know that we are part of a board that's highly functional?
Speaker 1:I mean, listen, a highly functional board is obviously the goal, should be the goal for every association, right? They have frequent meetings and they enjoy the meetings, just like you asked me if I enjoy my podcast.
Speaker 2:I do.
Speaker 1:It's nice to get people on boards who actually enjoy being with people. Sometimes we get people on boards. They don't really like people all that much, or they really don't enjoy being in a meeting.
Speaker 1:It's not their deal and that's okay. But if that's really not what you like to do, which is to be sitting in front of at an open meeting, sitting in front of your neighbors and talking and sometimes giving bad news, then maybe being on serving on this board of directors is not for you so highly, especially now with having to increase budgets and you know, really, with having to increase budgets and tell people that this is what we have to do and what we're going to do.
Speaker 1:So, they have frequent meetings and the board members like the meetings. They're respectful People show up at the meetings. They actually board members like the meetings. They're respectful People show up at the meetings. They actually like coming to the meetings and you know what, and it's a conversation. It's a two-way conversation. I have seen boards that serve alcohol and food. It's almost like a party. I like that. I don't think you should serve too much alcohol, because I've seen those meetings kind of go off the rails.
Speaker 1:Highly functional boards, associations and boards they have multiple communication channels because not everybody likes the same mode of communication. Right, they give a lot of different choices. So they may have a newsletter, they have a website, they may have a social media channel like Facebook. They just they have a lot of different communication channels. They also, the highly functional communities, tend to have a lot of social events throughout the year.
Speaker 1:That brings people together, so that's always really helpful. They also highly functioning boards. They do engage, claude, in short-term and long-term strategic planning. They're not just putting out fires from one year to the next or one month to the next. They actually have a plan and they've worked with professional advisors on that plan.
Speaker 1:The other thing that really highly functional boards do and I'm surprised more don't do is create a good and welfare report at the end of the year and they let people know what they've done. You know, in regular for-profit corporations the shareholders get that good and welfare report so they know what's gone on. If you've got people that don't live year-round in your community those investor owners perhaps, or the second, you know, the vacation home owners, even people who do live there but they're busy with their lives and their families do an end of the year report and let them know how many meetings did you hold, how many projects did you undertake, how much money did you collect if you had any delinquencies, and where do you go from here? Also, how many classes did your board members attend? People like to know. A lot of times the boards are doing all this and they're not communicating. Really highly functioning boards, claude.
Speaker 2:They know how to hire professional advisors and not do it themselves and they know how to vet those people and we've talked about this before on previous shows about, you know, whether from lawyers or like higher professionals who know what they're doing.
Speaker 1:Bingo. You know, even if you have that retired architect on your board, you've got the retired attorney, you've got the retired CPA. If you're trying to wear all those hats while also serving on a board you are flying, You're on that high wire without that safety net. So hire the professional advisors you need. Don't do it solo. That's what the highly functioning boards do.
Speaker 2:So, OK, before we close the episode, let's talk about predictions. Okay, and so you know, the condo crisis. This whole episode has been about that. How long do you think this will last? And what's next? What's coming up, what's down the pipe, what to do next?
Speaker 1:I can't say how long I think it's gonna last, but I do think we can shorten the crisis with a couple different techniques. One, I think it's crucial that people living in Florida condominiums reach out to their legislators and talk to them and educate them about their budgets, about what they're facing, about their demographics, and ask them what's going to happen in the next session. And also, I do think that some of these communities should make plans to go up to Tallahassee you know we only have a 60-day session in the state of Florida part-time legislature, so maybe folks need to go up there. And they need to talk to our public policymakers Because, as we talked about earlier, a lot of this legislation was based on some, some of it was based on misperception, but a lot of it was based on not having not thinking about all the other factors that contribute that truly contribute to building safety. So I would say that's going to be a key. The same thing with insurance. They need your public policymakers need to understand what's going on with the insurance crisis in Florida Working with counsel on your governing documents, because a lot of times you've got old language in your governing documents that are making it harder for you to seek out affordable, reasonable insurance, because your governing documents may be requiring a certain level of coverage. So that's going to be very important.
Speaker 1:I think you're going to see condo terminations in the state of Florida. I know I'm working on at least a half a dozen right now where my clients are being approached by developers. These are well-maintained buildings. Actually, these are not decrepit buildings, they are well-maintained, but they are in really prime locations and those folks are doing the math right now. They're trying to figure out whether or not it makes sense to sell or whether they're going to be able to continue to afford the maintenance. And you know, we don't know what the weather is going to bring either. Right, sure, right, yeah, that's been more predictable.
Speaker 2:You know, we don't know what the weather is going to bring either right Sure, right yeah, and that's been more predictable, you know, lately than you know unpredictable than we've seen.
Speaker 1:Exactly Because a lot of the building safety also hinges on how much battering these buildings are taking when it comes to storm season, our six month storm season each year. So, and again, I think they also need to reach out. People are going to need to reach out to local government officials and talk to them. They may be able to get a little bit more time from local government if they're taking the steps necessary, if they're showing a good faith effort to comply. I think people want to be reasonable, people want to help, and then, lastly, there are counties that are earmarking funds to help older people meet their special assessments. It really does all boil down to Claude, though. You have to be informed.
Speaker 1:You can't just be looking on social media and saying, well, I think, we could do this and I read this and I hear from a lot of people. They think they know how to interpret the statutes. They think they know how to interpret what's being put out there. Hire the right professionals to help you.
Speaker 2:Yeah, and just one last question, if I can sneak this in. Sometimes it's like I think of the fire alarm that goes off in the building and you're wondering is this the fire alarm or is there something really going on? On a scale of one to 10, with one being I don't worry too much about it, and 10, like oh, it's threat level midnight, like how bad is it? Or how concerned should people be with this kind of crisis?
Speaker 1:I think an eight and a half.
Speaker 2:Oh, wow.
Speaker 1:Yeah, it's pretty bad.
Speaker 2:Okay.
Speaker 1:It's pretty, but you can navigate it. Here's the situation. You can't get through this crisis Boards can't by not taking the steps they need to take to comply with their fiduciary duties. So they're getting a lot of pressure from members saying we can't afford this. But if you're sitting on that condo board in Florida, the statute says you're going to breach your fiduciary duty if you don't meet certain deadlines. So you do this board members at your own risk and your own peril. I had a conversation the other day with a potential new client who was saying well, can we do this or can we do that? And I said have you amassed any assets in your life? This was a 70-year-old man. I assume he's going to your house a vehicle have you amassed any assets? Well, yes, if you're going to sit on that board, you better make sure you're ready to take the steps that you need to take to comply with the law, and that means that there very well could be some people that need to sell and move.
Speaker 1:And it's unfortunate, but that's probably what's going to happen. So I would say we're at about an eight and a half.
Speaker 2:Okay, right about an eight and a half.
Speaker 1:That's the kind of that's just me. Well, that's just me.
Speaker 2:That's good. And again, listen to the professional people, Listen to the one who knows what they're talking about and conduct yourselves accordingly. Donna, it's always great, you know, hearing from you and you know this. I've said this before. I do feel like having episodes where you lend your expertise is really valuable to the listeners, and so thank you so much for your time and for you know. Handling this Florida condo crisis.
Speaker 1:Well, thank you, Klon. I hope we helped some people today. Thank you for joining us today. Don't forget to follow and rate us on your favorite podcast platform or visit takeittotheboardcom for more ways to connect.