Q&A: Flipping Out Over Flip Tax

Q Just over a year ago, my wife and I bought into a four-unit condo complex. One of the units is about twice the size of all the others, such that this shareholder owns about 40% of the shares. She's been in this building over 30 years. The rest of us each own about 20%. Another resident has been in the building about 20 years. The last resident bought their unit about 7 months after we bought ours and moved in. We never paid much attention to how things were run or decisions made, assuming such a small complex just ran things informally through consensus. Fast forward to our first board meeting. Notice was just sent by e-mail to all of us and was nothing formal. We showed up at the meeting, after a bit of song and dance and a reference to the additional costs associated with "transients," such as ourselves and the other newbies, one of the older folks brought forward a vote on a flip tax of 1.5% of gross sales prices, the other seconded, and a vote was held. I stayed quiet (my wife wasn't at the meeting) and the other newbies, after being pressured into believing this was typical in all condo complexes, agreed.

Since that meeting, I spoke with the newbies and they thought the structure of the meeting was a bit unfair (to say the least). I have also read our proprietary lease and bylaws and think this was definitely not adopted in a legally enforceable manner. I tried to speak with our major shareholder (leaving her numerous voicemails) and after getting no response, wrote her an e-mail to the effect that I didn't think they followed proper procedures and would be happy to discuss a compromise that would work for everyone. A week later, I received a letter directly from the condo's attorney telling me the flip-tax was duly adopted by the condo's board of directors and legally enforceable. Since then, I have just tried to determine who in fact the directors and officers of my co-op are, to no avail. I'm convinced the "informality" of the meeting and historic operations are meant to just make it clear that the board members just do what they want, and the rest of us are left at their mercy. Do you have advice as to what we can do?

—Confused in Clearwater

A While you indicate that you live in a condominium, you later reference a “proprietary lease,” which would indicate that you may actually live in a cooperative,” notes Attorney Michael E. Chapnick, managing partner and founder of Chapnick Community Association Law, P.A. in Boca Raton. “While the two forms of ownership are similar, there are some very distinctive differences between the two. Condominiums are governed by Chapter 718, Florida Statutes, in addition to their Declarations of Condominium, Articles of Incorporation, Bylaws, and Rules and Regulations. Cooperatives are governed by Chapter 719, Florida Statutes, as well as their Proprietary Leases, Articles of Incorporation, Bylaws, and Rules and Regulations. In a cooperative, the association owns the units, and an owner’s interest consists of shares and a corresponding right to lease the unit. For condominiums, the unit owner owns that part of the property delineated as a “unit” in the Declaration, and owns an undivided share of the common elements in common with all other owners. In either case, the procedures for amending the documents should be set forth in the document that the Association intends on amending. If not, there are statutory default procedures that must be followed. As an owner, you are entitled to know who your board members are, and I would recommend that you send a certified letter to the Association’s registered agent requesting that information. While there are statutory protections in place in the event that you do not receive that information, the easiest way to find out may simply be to go to www.sunbiz.org and to do a business name search for your association.”

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