RESEARCH INVESTIGATION:

Irregularities in the 2009 Version of the Rules and Regulations of Patio Homes.

Summary. Two themes are combined in this complex series of actions by the Board of Directors (BOD). One involves the BODs decision to submit an updated filing of the Marketable Record Title Act (MRTA) with the county to reinstate our governing documents, which would have renewed anyway in the absence of their action. The other involves the BODs reaction to decisively suppress a challenge to its enforcement authority. All of the actions taken by the BOD were entirely of their own making, although they would have us believe they had no choice in the combined processes and outcomes. In the course of creating the MRTA submission, the BOD convinced itself, and in a highly filtered and confusing way the community as well, that our governing documents required updating. Changes to our Articles of Incorporation, By-Laws, and by repeated implication our Declaration of Covenants and Restrictions as well, were approved by the BOD. Except the changes to our Associations enforceable internal limitations were actually not made to the Declaration, but instead to the Rules and Regulations. The important difference is that changes to the Declaration of Covenants and Restrictions must be formulated by the homeowners, and then approved by a super-majority of the homeowners. On the other hand, the Rules and Regulations, which are not actually part of an MRTA filing, can be changed by the BOD alone, but with a requirement for a proper notification to the community. Our Rules were changed unlawfully, because the proper 14-day explicit notice to the homeowners of the intended changes was not provided. The homeowners were completely marginalized throughout the entire amendment process. An overview of the official record of the relevant time period shows that the content of the changes to the Rules and Regulations were driven by the BODs push to settle a score with a dissenting homeowner. Rather than follow the no-cost process of rules enforcement longestablished in our governing documents, the BOD chose instead to change the Rules and Regulations to patch shortcomings in the existing set of rules. That is, the rules were altered to create the precise violations they needed to penalize the defiant homeowner. This strategy of creating violations through rule changes on-the-fly then led to tactics of costly legal intimidation, and breaches of the proper timing of the rules implementation.

Introduction. A primary problem with the enforcement of the rules in Patio Homes, and the timely compliance of the cited homeowners, is the rampant confusion that exists in the community about the 1

Architectural Control Boards (ACB) and the BODs basis of authority. In many instances where the homeowner has refused to comply, the origin of the problem is the absence of the specific wording of the citation in the homeowners set of governing documents. This documentation is provided to the homeowners before they finalize their purchase in the Patio Homes, and becomes the ultimate reference resource of the limitations and obligations imposed upon them as members of the Patio Homes community. Without a one-to-one correspondence between an HOA citation and the owners documentation, the violation appears arbitrary and unwarranted. The root cause of the confusion about BOD authority and homeowner compliance in the Patio Homes traces back to an ambiguous understanding in the community of the type of limitations that the HOA can lawfully impose on the homeowners. There are basically two categories of such limitations. First, there is the Declaration of Covenants and Restrictions, as one component of the governing documents of the HOA (along with the Articles of Incorporation and the By-Laws). In addition, there are the Rules and Regulations, which are meant to elaborate the details of the limitations specified in the Declaration, but not to enhance them. It is not uncommon for both the BOD and the homeowners within an association to regard the two categories as equivalent and interchangeable, or as a mere distinction without a difference. In fact, they have very different levels of authority, origin, and changeability. The Rules and Regulations are often referred to as board-made rules, and can also serve as abbreviated guest-rules for visitors to the community. The most important feature of these subordinate rules is that they cannot conflict with the homeowners rights afforded in the Declaration of Covenants and Restrictions. The primary difference between these two categories is the legitimate source of the limitation or enforceable policy. Different standards are imposed for the origination of each. The first category, the Covenants and Restrictions, found in the Declaration of the HOAs governing documents, is imparted with the stronger presumption of validity and enforceability, because the law requires their full disclosure to the homeowner prior to purchase. With regard to which governing documents are actually disclosed to a prospective buyer in Patio Homes, further investigation shows that it depends on the supplier. In July 2011, a request to Universal Title Company for these documents turned up only the Declaration, directly copied from the county records. The documentation provided at the same time by the Sunrise Companies comprised the Articles of Incorporation, the By-Laws, the Declaration, and the 2006 version of the Rules and Regulations. It is notable that the most recent and questionable 2009 version of the Rules and Regulations was not included. Clearly, there is no uniformity in the crucial documentation provided to potential buyers in the Patio Homes community. Furthermore, nothing in the provided materials clarifies whether the buyer is explicitly bound by the particular documentation they received prior to purchase. A set of Rules and Regulations may be promulgated (i.e. openly declared and enforced) by the BOD, but remain subordinate in authority to the provisions in the Declaration. In general, the power to promulgate the rules is not the same as the power to create the rules, unless the ByLaws specifically assign that power. The governing documents of the Patio Homes HOA grant 2

to the BOD the the power to make reasonable rules and regulations and to amend them from time to time in By-Laws, Article VI, Section G. This provision has meaning only insofar as the term reasonable is meaningful. This particular wording in our By-Laws is the sum total of the guidance given in our governing documents about how these reasonable subordinate limitations are undertaken by our HOA. Article I of the Declaration, which defines the explicit meanings of many of the legal terms in our documentation [including the Declaration itself] is silent on exactly what the Rules and Regulations are. The Declaration of the PGA-POA is equally mute on the issue, although the POA has its own set of Rules, which were last updated in January 2009.

Guidelines for Rules Formulation. Without any internal regulation of the allowed content of the Rules and Regulations in the governing documents, guidance on this issue naturally defers to state HOA law. The powers entrusted to HOAs are regulated and moderated in the State of Florida by extensive statutory law, as well as in case law decided by the courts. In that context, the aforementioned two categories of lawful constraints on an HOA are recognized by the state, by which the BOD can declare and enforce compliance within a community (as stated in FL 4th District Court of Appeals, in Hidden Harbor Estates v. Basso, 393 So.2d 637, 1981). The term reasonable derives meaning from the courts ruling in this particular case. Regardless of the category of a lawful HOA constraint, four thresholds must be met before a particular limitation can be legally enforced. The first is that of validity, based on considerations of whether the restriction is equal, general, and impartial in its application. In addition, the constraint must be unambiguous, with certain and definite provisions, clearly stated. Overriding the threshold of validity is the requirement that the limitation is in accord with state laws and all the applicable governing documents of the particular HOA. If the imposed limitation conflicts with existing statutes, it is not legally enforceable. The second threshold is that of timeliness and uniformity of application. All limitations must be uniformly enforced against all unit owners and cannot be selectively enforced. In addition, if the enforcement action is not taken on a timely basis, and it lapses for a period of years, the HOA may be estopped from enforcing compliance after that. With regard to whether an amendment to the original Declaration can impose constraints on existing homeowners, or only to future purchasers in the community, in 2000 the Florida 5th District Court of Appeals found that the purchaser of a unit in a HOA should be able to rely on the provisions of the Declaration at the time of purchase, because they may have been influential in the purchasers decision to buy. The court held that a new provision cannot be applied retroactively, unless explicitly limited in duration by provisions in the governing documents, which may permit circumstances to continue for a reasonable time to allow compliance to take place.

Third is the threshold of authority. The entity exercising the enforcement power of specific limitations must have the expressed or implied authority to do so, as stated in the provisions of the governing documents of the HOA, consistent with the provisions of the master association, the PGA-POA in this instance, and the Florida Statutes, Chapter 720. Within the Patio Homes documents, By-Laws, Article XIV defers primary authority to the Declaration, as follows: In case of any ambiguity, these By-Laws and the Articles of Incorporation of the Association shall be construed consistent with the provisions of the Declaration of Covenants and Restrictions. The POA states in its PGA National POA Rules and Regulations, adopted 1/26/09, Article 12 that the rules and regulations of any of those other HOAs or Condo associations are in addition to the to the Rules and Regulations of the POA, but such rules and regulations are subject to the approval of the POA. The cover letter of the amended Patio Homes Rules and Regulations sent to HOA members on 1/15/10 further clarifies the pecking order: The Rules and Regulations of the PGA-POA supersede all rules and regulations contained in this document. The [ascending] order of authority is therefore as follows: Rules and Regulations (Patio Homes), Rules and Regulations (PGA-POA), By-Laws (Patio Homes), Articles of Incorporation (Patio Homes), Declaration of Covenants and Restrictions (Patio Homes), state HOA law (Florida 720 Statutes). The last legal test for the creation of a legitimate rule is that of reasonableness. This threshold requires that the rules enforced by an HOA not be arbitrary and irrational. The test for reasonableness, applied prior to passing a constraint on the homeowners, is that the HOA must possess competent and substantial evidence that objective facts exist showing how a particular rule would create a measurable or demonstrable positive impact on the community it serves. The board-rules are meant to conspicuously advance owner interests, not solely to limit activities. Otherwise, a simple default to the version of the limitation in the original Declaration is considered adequate. Implicit in this last test is the need for an objective rationale to be provided to the community during the BODs formulation of the rules, which clearly requires open channels of communication with the members of the HOA.

Origination of the Rules Change. With regard to the history of the Declaration of Covenants and Restrictions of the PGA-Patio Homes HOA, the record shows that the original documentation dates back to the Root of Title in April 1980. Minor amendments to Article VIII, Section 12, and Article V, Section 1 were enacted in 1981. The first version of Rules and Regulations for the Patio Homes, as a listing of limitations separate from the provisions of the Declaration, was completed in June 1996. The format of these rules was closely modeled after those created previously by the PGA-POA. The extent of the reformatting is striking in these Rules and Regulations of Patio Homes, sharing none of the compositional features of the original Declaration, and having no explicit linkages into the original provisions they serve to elaborate. They appear to replace [unspecified] parts of the Declaration, Article VIII. 4

At a BOD meeting on 7/17/06, the BOD of that time, under the same president, voted to accept a series of proposed rules and regulations, whose origination is unclear. In the Managers Report of that meeting, the record refers to [the rules] changes proposed in the [unspecified] past, and that no record had been found that the board adopted these rules in the past. The significance of these changes is that they form the template of the recent BODs actions to amend the Rules and Regulations again in the summer of 2009. Pivotal to the timing of the BODs decision to revisit the issue of changing the rules again in 2009 was a directive from legal counsel (Gary Fields, Esq.) that the governing documents of the PGA-Patio Homes HOA were on notice to expire in April 2010, as a consequence of the Marketable Record Title Act of 1963 (Florida Statutes 712), which grants marketable title to all legal unit-owners after 30 years. Because MRTA clears all claims from an owners title, it may have the effect of invalidating the duties and obligations incumbent upon a homeowner in the recorded documents of an HOA, unless the original Declaration of Covenants and Restrictions includes the necessary measures to avoid such a lapse in jurisdiction. In most cases the MRTA does not impact the provisions in an HOAs governing documents, but it may be relevant if easement issues are not specifically spelled out in the Declaration. The Patio Homes Declaration of Covenants and Restrictions references easements in detail, in Article IV, Section 1, and Article V, Section 2. More importantly, the Declaration states in Article XII, Section 1, that the covenants shall be automatically extended for successive periods of 10 years each unless an instrument signed by the then Owners of two-thirds of the unitshas been recorded agreeing to amend or revoke said covenants and restrictions in whole or in part. In the absence of an expressed request by a community to change their governing documents, they are simply filed for automatic reinstatement with the county in their original form. That is, there is no implied obligation in MRTA to change the governing documents; updating is optional. Furthermore, any decision to change the board-made Rules and Regulations is completely unrelated to an MRTA filing, as they are internal subordinate limitations that are not filed with the county. A letter dated 1/15/10 from the BOD to all the Patio Homes unit-owners, after the BOD had completed its amendments, states that every 30 years Florida law requires that an Association choose to preserve their Covenants and Restrictions. The purpose of the letter was to provide notice to all homeowners that the Declaration.is being reinstated in the Public Records, and that there is no action required on the part of the homeowners. This statement holds true as long as the homeowners are duly notified of it in advance (Florida Statute, Chapter 720.05(1)), and the Declaration is to be reinstated, or preserved unchanged. One month later the BOD filed our newly-updated governing documents with the county. The letter of 1/15/10 was intended to justify the BODs recent earlier actions to renew our governing documents, after the fact, in a way that plainly marginalized the homeowners. The BODs actions associated with the MRTA filing were confined entirely to discussions within the BOD in the summer and fall of 2009, and were completed in December 2009. The community was notified just before the filing of the Declaration with the county on 2/19/10, in the January letter, which explicitly states that their input is unnecessary. 5

The significance of this last point is that the decision to change [or not] the Declaration is not in the hands of the BOD, although it does have the power to decide changes to the other components of our governing documents. Our governing documents provide for changes to the Articles of Incorporation (Article X) by a majority vote of the BOD, without PGA-POA approval required, and without homeowners input. Changes to the By-Laws (Article X) require a majority vote of the BOD, plus the approval of the PGA-POA. Again, no community input is required. But, with changes to the Patio Homes Declaration (Article XII, Section 5), the covenants, restrictions, easements, charges, and liens of this agreement may be amended, changed, added to, derogated, or deleted at any time and from time to time upon the execution and recordation of an instrument executed.by Owners holding not less than two-thirds vote of the membership of the Association. Translated, this language in the Patio Homes governing documents [since 1980] puts the decision to change our Covenants and Restrictions in the hands of the homeowners, not the BOD. It aligns well with common practice in Chapter 718 Condominium Law, and Florida Statute 720.405 for the revival of HOA Declarations, which provide guidance for the creation of an organizing committee or Member Forum, comprised of at least three homeowners, who are tasked to seek and make consensual recommendations to the communitys membership-atlarge, before a vote of approval is taken. A two-thirds majority of the homeowners is required to adopt the communitys consensus viewpoint about the future content of the Declaration. Even if the decision is only to reinstate the original documents in an MRTA submission, that choice to retain the original Declaration comes from the homeowners, not the BOD. The role of the BOD is then only to alert the homeowners of their governance task. For the BOD alone to choose not to change any provisions in the Declaration, without any consultation of the membership of whether they might want to change it, runs counter to the intent of this section of the Declaration. The BOD was aware of the opportunity to change the Declaration back in April 2009 as part of the impending MRTA filing, and chose not to check whether the community might wish to consider its future content. Instead, the homeowners were told their input was not required just one month before their last meeting to wrap up the MRTA filing with the county. Although the outcome of the entire process shows that the BOD did not initiate changes to the Declaration, their actions clearly show that they had a strong inclination to change the Rules and Regulations, which they achieved in short order after only three meetings in the summer of 2009. The striking difference between these two categories of limitations imposed on the Patio Homes community now becomes clear: only the homeowners can change the Declaration, but the BOD alone can change the Rules and Regulations. Oversight of changes to our Rules and Regulation is minimal, but not absent of the community, as will be explained. With regard to the timing, the actions of the BOD in their latest change of the rules were initially linked to the MRTA filing beginning in April 2009. At the end of the process, the BOD left the Declaration completely untouched, but instead, an expanded set of new Rules was sent to the homeowners in January 2010, just before the MRTA filing. The new Rules and Regulations actually have nothing to do with the MRTA filing, because they are not recorded in the public records of the county. They are internal documents of the Patio Homes HOA. 6

When changes are to be made to the Declaration, Article XII, Section 1 of the Patio Homes Declaration states that no such agreement shall be made effective unless made and recorded three years in advance of the effective date of such change, and unless written notice of the proposed instrument is sent to every Owner at least 90 days in advance of any action taken. This language provides for a grandfathering waiver of enforcement of three years before the implementation of a change in the Covenants and Restrictions is enacted, and even then, requires a 90-day notice of that impending enforcement action. Our governing documents are silent on enforcement waivers of newly amended Rules and Regulations. As a consequence, no restraints are imposed on the implementation timeline of changes to the rules passed by a simple majority vote of the BOD. The only guideline in this timing feature is in Florida case law, which implies a negotiated resolution of pre-existing situations that fall into violation when the new rules are applied to the community, either through grace periods or exemptions. The record shows that the 2006 BOD, under the same President, has granted an exemption to a homeowners violation in the past, as the minutes of the 6/19/06 meeting states that [a unit] had already been issued an exemption letter. The BOD knew about exemptions, but never used them again. These actions by the BOD occurred despite the legislatures expressed intention in Florida Statutes, Chapter 720.3035 [July 2007], to stop boards from passing unreasonable rules that reflect more the personal tastes of the board members than the provisions of the original deed restrictions. That is, to prevent BODs and committees from making up their own rules.

The Process of the Rules Amendment. The process of changing the rules started with the BOD meeting of 4/21/09. In reference to the impending MRTA timeline, the minutes of that meeting state that HOAs are now permitted to amend their antiquated Declarations upon the 30th Anniversary [April 2010 for Patio Homes]. It goes on to state Each Board member is to review a set of the Docs and make notes regarding any changes theyd like to suggest. The BOD strongly implies an intention to change the Declaration at this meeting, and right from the start the homeowners are excluded from the process. As noted, our Declaration, Article XII, Section 5 leaves amendments to the Declaration up to the homeowners, not the BOD. Not only is no mention of homeowner input into the rules amendment process is made at this meeting, also there is nothing in the correspondence record of the BOD in the later time period to show the community was ever invited to participate in the process. In addition, the later record reflects that no BOD member ever alerted the BOD of the proper due process as a result of their review of the governing documents. A year later the BOD claims [this] Board does a tremendous amount of research that the previous one never did. With regard to the proper procedure required to change HOA rules, Florida Statutes, Chapter 720.303(2)(c)2 states in July 2007 that: Written notice of any meeting at which .amendments to rules regarding parcel use will be considered must be mailed , delivered, or electronically 7

transmitted to the members and parcel owners, and posted conspicuously on the property or broadcast on closed-circuit cable television not less than 14 days before the meeting. In addition, the notice of the meeting includes a statement that [assessments or] amendments to rules. will be considered. The acceptance by the 2006 BOD of their new set of rules predates this statute, so noticing requirements then were minimal. But the latest version of the rules created in 2009 is governed by it, and this BOD was evidently unaware of that, or simply ignored it. The noticing of the first meeting on 4/21/09, and also the next three BOD meetings at which amendments to the rules were discussed, before a vote of approval on 9/15/09, were all the same; Notice of the meeting was sent to all Directors & posted at the mailboxes. The extent of noticing of any BOD meetings to the Patio Homes community has been routinely to post a notice in the mailbox bulletin-boards 48 hours in advance, with generic agenda items stated as New Business and Old Business, without any further detail provided. There is nothing in the official records to demonstrate that the BOD gave the proper 14-day notice of any of these important meetings, and of their critical agenda item of changing the limitations we must all abide by. The Patio Homes community was therefore not lawfully notified of the boards intended actions either in terms of the advanced timing of the notice, or the explicit statement of the important agenda At the scheduled BOD meeting on 5/19/09, the ACB reports that a homeowner had replanted the island area without proper authorization..A notice will be sent. The significance and relevance of this incident, which the record shows was committed by Unit 119, is made clear at the next BOD meeting, the Special Meeting held on 8/26/09. This August meeting further compounds the BODs neglect to properly notice the community, as the Patio Homes By-Laws, Article V, Section E states special meetings of the BOD may be called by the president.upon two days notice to each member, delivered by mail, telephone or in person. The notice shall state the time, place, and purpose of the meeting. This requirement dates back to the root of title in 1980, and is separate from the Florida Statute 720.303(2) of 2007, which states: All meetings of the board must be open to all members. (In this context a member is a homeowner within the HOA). As noted, this meeting, like all the others, was noticed only at the mailboxes, and held in latesummer, when effectively none of our many northern snow-bird homeowners are in residence, and many full-time residents are absent on vacation as well. Most of the changes to the General and Landscape Rules and Regulations were discussed at this meeting. There is nothing in the minutes to suggest that any homeowners were present at the meeting. Three additional provisions were introduced at the 8/26/09 BOD meeting along with the preexisting language directly adopted from the 1996 version of the Rules and Regulations (Paragraphs 9.2 and 6.1): Potted plants or decorative items in plant beds or on sidewalks are prohibited. Any edging is prohibited. Alteration to the garage islands is prohibited. 8

The 1996 and 2006 versions of the rules are actually silent on these specific items. That is, they are absent in 1996 sub-paragraph 6.5, dealing with vegetation inside the patio area, and in sub-paragraph 6.6 dealing with visible fixed modifications (e.g. additions, extensions) to the unit itself. Sub-paragraph 6.7 of the same version deals with unattended objects left temporarily outside of buildings, with the clear intent to include moveable items that would logically belong indoors (e.g. lawn-chairs, ladders, boxes, tools, etc.). Furthermore, each one of these new provisions relates directly and unmistakably to an ongoing and longstanding dispute between the BOD and the aforementioned Unit 119, concerning the ACBs authority to prohibit such objects in the common areas, and specifically outside of Unit 119s gate and fence. The ACB states in a letter [to me] dated 5/26/11, that potted plants are not allowed in the plant beds.has been in effect since at least 1996. A careful reading of Paragraph 6 of the 1996 Rules and Regulations demonstrates that this claim, used universally by the ACB around the community for years (e.g. Meeting Minutes of 5/18/10), is misleading. Actually, this wording in the official record originates in the BOD meeting of 8/26/09. The close examination of the record of these events adds the needed nuance to understand the emotional climate in which these new provisions were formulated by the BOD. In terms of the precise timing and specificity of this additional wording, an ordinary prudent person could reasonably conclude that what was driving these changes to our Rules was the priority of the BOD to suppress a dissenter, to decisively settle a score. Their new language adds targeted punitive clout to the existing restrictions of 1996, which were falling short of a clear knock-out punch to a resident who would dare to challenge the basis of the ACBs claimed authority on these specifics. In retrospect, we can now see that Unit 119 was technically correct, because the cited wording of the complaint was not in the 1996 version.

Enforcement of Alleged Violations. Rather than change the rules to suit the BODs need to triumph in this dispute, the proper procedure was already laid out clearly in our governing documents and the Florida Statutes, associated with rules enforcement and dispute resolution. The applicable enforcement provisions of the Patio Homes governing documents are in the By-Laws, Article XI, as amended and filed with the county 2/19/10, which states: The Association, by direction of the Board of Directors, shall have the right to enforce by a proceeding at law or in equity, all restrictions..or the Rules and Regulations of PGA Patio Homes, and shall have the power to levy fines in accordance with the Florida Homeowners Association Act. Specifically, Florida Statutes 720.305(2) allows for a hearing committee within the community to decide whether to fine the cited homeowner, as one option to resolve a dispute. The Association therefore has the option to pursue alleged violations by a proceeding in equity [resolved by non-trial means], and not necessarily by a proceeding at law [resolved at trial]. In that former capacity, it has the power to seek fines levied against a non-compliant homeowner in accordance with the decision of the ad hoc hearing committee. The Board therefore has two 9

options available to it to enforce compliance, and every time, it has chosen the one that incurs legal expenses to the Association in repeated instances over the last few years. The option involving an internal hearing within the community has no costs involved, and comes with the added potential of income from the fine, if it were to be levied. Nevertheless, in the BODs judgment, an outside mediator is a better arbitrator of the alleged violation in Patio Homes than a group of fellow neighbors. Their unmistakable message is that dissent must be decisively suppressed regardless of the cost, which they lament to the community as unnecessarily imposed upon the HOA. If the BOD chooses to offer the homeowner assessed of a violation the prescribed proceeding in equity, the violation is subject to an inquiry of a Hearing Committee appointed by the BOD of at least three HOA members, charged with hearing the facts of the case, and to decide whether to impose a fine. Impartiality is supposed to guide the choice of the membership of this committee through a series of restrictions on who can legally serve. The record shows no Hearing Committee has ever been convened to resolve any enforcement disputes by this BOD against homeowners deemed to be in violation of HOA Rules and Regulations in the last five years. The BOD clearly recognized the existence of this no-cost option for dispute resolution in its Meeting Minutes of 10/20/09, in a matter related to a barking dog, The process required to fine the homeowner would be to first choose a Hearing Committee to determine guilt or not, then the Board could fine the homeowner. While aware of this option to proceed, the BOD chose not to follow up the enforcement action in this way, nor in any other instance. The BOD knows it exists, but never uses it. The convenience of changing the Patio Homes Rules and Regulations by this BOD has taken priority over following the more drawn-out process, which may still proceed to pre-trial mediation, and the uncertain outcome of leaving the critical decision to continue rigorous enforcement in the hands of a group of fellow homeowners. As the later record shows, the BOD has consistently resorted to legal intimidation to enforce compliance, by withholding the internal option of dispute resolution. As one example, in a Statutory Demand for Presuit Mediation concerning an alleged violation of the Patio Homes rules in 2011, the certified letter from the associations attorney (Edward Dicker, Esq.) demands that the homeowner proceed to engage in mandatory mediation, with considerable costs involved. The cited violation is a jumble of language from three sources of rules, the 2009 version, the 1996 version, and the original 1980 version, despite the fact that the BODs letter to all homeowners of 1/15/10 states that the newly amended rules of 2009, enclosed in that mailing substitute.for any you presently have in your documents. The Demand letter proceeds to claim that the BOD may fine the homeowner for the alleged violation from Article 11.2.3 (1996 version), but neglects to inform the homeowner of the provisions in Articles 11.2.1 and 11.2.2 that precede it, offering a Hearing Committee to decide whether a fine can be levied. It then proceeds to cite from Florida Statutes, Chapter 720.305(1) that the BOD may take legal action against a homeowner who fails or refuses to comply with the 10

provisions of the Governing Documents of an HOA, but neglects to inform of the language in 720.305(2) that follows, providing the homeowner the option of initial due process within the community through the actions of a Hearing Committee, if the BOD chooses to offer it.

Approval of the Amendments. Continuing with the chronology of the BODs changes to the Governing Documents, the Meeting Minutes of 8/26/09 finish by stating additional changes will be addressed and all will be voted on at the next Board meeting on 9/15/09, with regard to the wording of the new amendments to the rules. This language clearly signals that there is to be no input sought from the communityat-large, and that regardless of the scope and content of even the BOD-based discussion on this topic at the next meeting, the issue is earmarked for closure after just two [summer] meetings on the matter. At the next BOD meeting on 9/15/09, one other provision was added by a unanimous vote to the draft of the General and Landscape Rules and Regulations from the previous meeting: no vine growth could exceed the height of the sliding glass doors on the buildings nor exceed the height of the shared courtyard wall. Not surprisingly, this additional prohibition again related directly to another existing point of contention at Unit 119. In short order thereafter, the BOD voted at that meeting to adopt their revised General and Landscape Rules and Regulations. In August 2008, the PGA-POA conducted a compliance inspection of Patio Homes. In their report of that inspection, where most of the focus is on community-wide issues, note is made of units where owners have placed potted plants and decorative accessories in various areas. While this is technically against the Rules without ARC approval, the POA ARC does not have specific objection to these items. Furthermore, as part of the drive-through inspection, the POA notes that for Unit 119, trim trees inside courtyard. No mention is made of ivy growth at Unit 119, which at that time extended up the walls of the building far beyond the sliding doors. In fact, another distant unit is the only one noted for vines growing on upper house walls. No mention is made of edging in plant beds or garage islands of any unit in the community. The POA inspection demonstrates two things. That the BOD had no obligation to the POA to tighten rules related to potted plants, garden edging, garage islands, or vine growth. The content of the inspection report also reinforces the sense that the BODs primary motivations in formulating their rules in 2009 were punitive against Unit 119. The 9/15/09 meeting minutes also offer a glimpse of the closed and exclusionary mindset of the BOD towards the homeowners. In that meeting, on the controversial topic of the entrance roadway, a director made a motion to defer discussion of the roadway.to allow the general membership the opportunity to vote, and for the Board to vote based on the general memberships vote. The motion failed. A few months later, at the BOD meeting of 4/20/10, a director laments that most of the people that show up at Board or organizational meetings simply come to complain. An email to a BOD member from the President on 3/12/11 adds 11

another dimension to this elitist mindset. With reference to providing early drafts of meeting minutes to the homeowners, the President states most people have no clue how to interpret them and have made false allegations as a result. The meeting on 10/20/09 continued with the BODs presumed mandate to review and amend the HOAs governing documents, by discussing, as the minutes state, a few items that should be amended in the Articles of Incorporation and By-Laws. The foregoing quote is the entire extent of the detail given in the Meeting Minutes, and the only communication to the community about these issues. At the next BOD meeting on 11/17/09, the items discussed at the previous meeting were reviewed, along with a stated intention that just prior to renewing [in April 2010] will be the time to make changes to the declaration regarding outdated and unreasonably restrictive covenants, etc. The implication by the BOD here is twofold: First, that the intended changes were to be made to the Declaration itself, which as noted earlier, cannot be changed by the BOD. Instead, the BOD changed the Rules and Regulations, not the Covenants and Restrictions. The Rules can be changed by the BOD, as long as the community is notified by mail of the impending changes 14 days in advance. Second, that the existing limitations were excessively restrictive on the homeowners, relative to the amendments they intended to introduce. The BOD ultimately filed the Declaration unchanged with the county in their MRTA submission, and purposely did not file the Rules and Regulations as well. The Rules also were not approved by the PGA-POA. The only interpretation consistent with all of the facts is that the BOD deliberately misled the community into accepting a false necessity for their new set of rules by tying them into the MRTA filing, and into accepting that the homeowners had no role to play in creating those rules. Again, the new rules actually had nothing to do with the MRTA filing. The minutes of the November 2009 meeting go on to state: the Board reviewed the amendments [of the By-Laws] and requested some more definitive language prior to final approval. Again, this wording is the extent of the detail the BOD provides to the homeowners at the time on this matter. The BOD completed the process of amending the governing documents of the Patio Homes, to their own satisfaction, by a vote to accept all of the revisions at their next meeting on 12/15/09. The record shows that the amendments to the Articles and By-Laws were earmarked to be filed with the county on that date. It is stated in the minutes of that meeting that: the new amendments will be mailed to each homeowner. What was mailed was the new set of Rules and Regulations, which was not a part of the MRTA submission to the county, along with the amended Articles and By-Laws. The unmistakable implication of this mailing is that the new rules are a part of the MRTA submission, and that they are as authoritative as the other two primary components of the governing documents. This mailing, dated 1/15/10, is the first communication to the homeowners of the details of the BODs completed set of self-styled amendments, sent out just as the many snow-bird residents 12

began to arrive back en masse into the community, ready and available to attend, and potentially have a voice, at scheduled BOD meetings. It is mailed along with the notification to the community of the impending MRTA filing with the county. The homeowners are instructed to substitute this updated set for any you presently have with your documents. The clear implication of this statement is that the new set of rules replaces earlier version(s), and not just supplements them. Of course, no direct linkages into the content of the original Declaration are provided, because the rules are not part of the Declaration; they are a separate subordinate set of regulations. The mailed amendments were devoid of the required Consent and Joinder of the PGA-POA for amendments to an HOAs By-Laws, as well as the official filing documents with the county. That is because the mailing was performing a confusing double duty, looking both forward and back in time. To the BOD, it was their notice to the community of the MRTA filing the following month. To the homeowners, it was their notification of a completed set of new amendments to our governing documents. As a follow-up to this mailing, the ACB reported at the 2/16/10 meeting that all homeowners should have received a copy of the Rules and Regulations for the Patio Homes. These rules were modified once in 1996 and again in 2009 with very few changes. The committee members will now periodically walk the community, and if any resident is not in compliance, a letter will be sent to the homeowner. There are significant problems associated with these claims.

The Final Rules and Regulations. The 1996 version of the Owner Building Restrictions and Maintenance Rules and Regulations, under Paragraph 6 (6.1- 6.9), is a 1-page inclusion in the larger document covering all of the Rules and Regulations for the Patio Homes. The amended version in 2009 is a four-page manuscript focused just on the Landscape and Front Entry Rules, excluding the cover and endorsement pages. That is, the rules addressing this aspect of community governance have increased in content by a factor of about four-fold. However, they are misrepresented in the record as very few changes, and changes to the declaration regarding outdated and unreasonably restrictive covenants. A major expansion of the content is claimed to ease the earlier limitations. Also, while the Declaration was broadcast by the BOD as the limitations earmarked for change, the changes they actually made were to the Rules and Regulations. Another major problem with the new rules is the timing of their first implementation. Plotted plants at Unit 311 were removed from its adjacent plant beds in June 2009, by a landscape crew at the direction of the BOD. The homeowners at Unit 311 had received no advance notice of the impending removal, and were in Massachusetts when it occurred. The June timing is the most significant feature of this incident: it is a preamble in direct correlation with the timing of enhanced enforcement with Unit 119 after its citation for allegedly violating ACB rules in May, but two months before the details of the rules-amendment were first discussed by this BOD, and three months before the rules changes were voted on by this BOD. 13

Aside from this gross irregularity in the ACBs enforcement timing, there is the issue of the proper procedure that should have been followed to address any alleged violation. As noted earlier, a homeowner assessed of a violation may be offered an inquiry of a Hearing Committee appointed by the BOD of at least three HOA members to hear the facts of the case, and to decide whether to impose a fine (Patio Homes By-Laws, Article XI, as amended 5/13/88 and 6/15/96, and Florida Statutes, Chapters 720.305 and 720.311). Physical removal of the offending object(s) is not an enforcement option available to the ACB, or to the BOD. Instead, fines may be levied until all the legal steps are completed, and only a court order, after pre-suit mediation, can then enforce its ultimate removal, along with legal costs assessed against the losing party. To demonstrate the true extent of the BODs disregard of the proper due process related to the enforceable content of our community constraints, the ACB reports at the BOD meeting of 5/18/10: the ACB wants to re-visit the newly amended rule regarding edging being prohibited. The ACB is willing to consider certain types of edging in plant beds, but remains firm that no edging will be allowed in the garage islands. This recommendation was not discussed or voted at this or any later meeting. The Board is then informed that the non-compliance letters were to be sent this week. It is notable that the BOD operated as follows in this instance: the content of the Patio Homes rules are not amended with the required prior noticing of the community, and not approved by the PGA-POA, but rather, they are adjusted at-will by the two-person majority consensus of a three-member sub-committee, without even the need for a vote of approval from the full board, and delivered to selected violators in very short-order, without any grandfathering courtesy offered. This breach of due process is made the more serious by its violation of Patio Homes By-Laws, Article XIII, which states that, Roberts Rules of Order (latest edition) shall govern the conduct of all meetings of the members of the Board of Directors. One basic principle of Roberts Rules is that subcommittees only have the power to make recommendations to the full board for their approval. A subcommittee alone cannot decide anything actionable. At the BOD meeting of 5/18/10, when a director questions the ACBs enforcement focus on minor infractions associated with the new rules, his concern is deflected by the statement that the rules had been in effect since 1996. As noted earlier, this claim is untrue, and its faulty logic begs the obvious question: if the existing language in the original 1996 version of the Rules was explicit enough to enforce the violations, why was the new language in the Rules necessary in 2009? When one member of the ACB was reluctant to continue with the strict enforcement of one new provision [concerning potted plants in Unit 119s plant bed], the BOD, at its 10/19/10 meeting, voted to remove this dissenting member from the ACB, as a result of this conflict requiring all other homeowners to be in compliance except for Unit 119, thereby constituting selective

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enforcement. The BOD was also informed at this meeting that the Association has incurred legal fees of $2,260.00 due to Unit 119s defiance of the governing docs. This BOD had spent over $2,000 in legal costs to the HOA to remove a couple of potted plants that were not, in point of fact, in violation of any enforceable 1996 regulations. There is no indication that the pots were hazardous or a nuisance to the community. Also, these legal costs could have been avoided if the BOD had instead chosen to resolve the dispute by offering to convene a Hearing Committee to hear the facts of the case, and to fine the homeowner if the violation merited that action. The BOD preferred the expensive option.

Fiduciary Responsibility. In their letter to a homeowner on 5/26/11, the ACB states: It is the ACBs fiduciary responsibility to enforce the landscape and architectural rules and regulations for the Patio Homes and to do that uniformly for the entire community. There is no denying that the directors and each officer of an HOA have a fiduciary relationship with the members of the association. However, common law in the state of Florida inclines this fiduciary relationship, imposing the obligations of trust and confidence, in favor of the HOA members, not the board. It requires each board member to act in good faith and in a manner he or she believes to be in the best interests of the members of the HOA. It means the board members must exercise the care and diligence of an ordinary prudent person when acting for the community, and it requires each of them to act only within the scope of their authority (Florida Statute 617.0830 (1)). BOD members must devote enough time and effort to the performance of their duties to ensure that they are reasonable and faithfully carried out on behalf of the association. The fact that the HOA is a non-profit corporation, and that board members are volunteers and unpaid for their services, does not relieve them from the standards of trust and responsibility that the fiduciary relationship requires (Florida Statute 720.303 (1)). If those responsibilities are perceived as overly burdensome and restrictive by a homeowner, then that individual does not possess the required temperament for a voluntary position of authority, and should not serve on the board.

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