Resolution for 2015

 Welcome to 2015 and my best wishes to all of my blog's followers for a very happy and healthy new year.

2014 was an extremely busy year and I was unable to post entries here as often as in previous years.  I'm hereby resolving to do better in 2015. 

We'll start 2015 with a reminder that all community associations are not created alike.  A board member in one of the cooperatives we work with asked me last week whether a husband and wife (who together own only one unit in the community) could both run for the board of directors.   Chapter 718 of the Florida Statutes, which governs condominium associations, prohibits co-owners of a unit from serving on the board of directors at the same time unless:

  • the condominium association has less than ten units,
  • the condominium association includes timeshare units or timeshare interests, or
  • there are not enough eligible candidates to fill the vacancies on the board at the time of the vacancy

Those provisions in Chapter 718 are not found in either Chapter 719 or Chapter 720, which governs mandatory homeowners associations.  This means that, in a cooperative association or mandatory homeowners association, if there are five named owners of the unit or parcel, assuming that each of those five named owners would otherwise be eligible to serve on the board, all five of them could run and all five could serve if they were elected--even if they only owned that one unit or parcel in the community.

This is just one example of why community association board members, managers (and their attorneys) cannot simply assume that "one size fits all".  At least for the time being. when it comes to condominiums, cooperatives, and subdivisions in Florida, nothing could be further from the truth!

I'm looking forward to speaking at the EPROC meeting this Friday at Emerald Pointe in Zephyrhills and hope to see many of our East Pasco County friends at this event!

 

ROC Presidents Should Preside, Not Rule

Florida statutes governing condominium and cooperative associations specifically provide that it is the association's board of directors that is responsible for the administration of the association.   Similarly,  the governing documents for most mandatory homeowners associations governed by Chapter 720 of the Florida Statutes and community associations governed by Chapter 617 of the Florida Statutes provide for administration by a board of directors elected by the association's members.

Unfortunately, it's not uncommon for a President to overlook or ignore statutes and the association's bylaws and attempt to bypass the association's board (and in the most extreme situations, the association's members) in making decisions or taking actions unilaterally.

These decisions or actions are often taken without any input from other board members or the community's manager.   As a result, the President may have already committed the association to a particular course of action (such as entering into a contract to purchase a vehicle or other expensive piece of equipment) before anyone else in the community knows that the purchase has occurred.

In these situations, the President may have clearly exceeded his or her authority--however, he or she may have nonetheless bound the association under the doctrine of "apparent authority" and the association's members would be obligated to honor a contract that the association's board of directors never approved.

Presidents should be reminded that, in most, if not all, community associations, the President is elected by only a small group of individuals--the members of the Board of Directors.   The Board of Directors does not have the authority to delegate the power to run the association and the community to any one person, including the President.

The association's members elect a Board of Directors and it is that Board--and not any one person-- that is empowered with the administration of the ROC.  

Presidents should also remember that a Board that appoints one of its members as the association's President has the power to remove that person from the office of President if that Board sees fit to do so.

Obviously, there are certain day-to-day operational decisions that should fall within the discretion of a President and/or ROC manager.   However, the President that chooses to exceed the scope of his or her authority does so at the President's peril--and that of the association itself.

 

 

A Few Important Differences in Florida's Laws Governing Condominiums and Cooperatives

ROC managers, board members and the professionals that advise them quite often long for the "good old days" when the Florida Statutes governing condominium associations (Chapter 718) and cooperative associations (Chapter 719) were almost identical in provisions concerning elections, eligibility to run for the board, and waivers of financial reporting requirements. 

Those days are, for better or for worse, long gone.   Here's a quick sampling of the just a few of the important differences that now exist between the statutes governing cooperatives and condominiums:

  1. Terms of board members:   F.S. Section 718.112(1)(d) now provides that the terms of all members of the board of directors of a condominium association expire at the annual meeting unless a majority of the unit owners approve a provision in the bylaws that permits staggered terms of no more than two years.   F.S.  Section 719.106(1)(d) imposes no such term limitation on board members in cooperative associations.
  2. Eligibility to serve as a board member:   F.S. 718.112(1)(d) also prohibits co-owners of a unit in condominium associations with more than 10 units from serving on the board at the same time and also prohibits persons who are more than 90 days delinquent in payments of any fees or assessments due to the association, and many persons convicted of a felony from such service.  There is also a rather curious requirement that any candidate for the board of a condominium association sign a form certifying that "he or she has read and understands, to the best of his or her ability, the governing documents of the association" as well as the provisions of Chapter 718 and any " applicable rules".   Any member of a cooperative association that wishes to run for the board of directors will find that Chapter 719 does not contain any of these eligibility requirements or prohibitions if he or she wishes to serve his or her community.
  3. Financial reporting requirements:  F.S. 719.104(4)(b) allows cooperative associations that are larger than 50 units  to waive the requirement that the association's financial statements compiled, reviewed or audited.   This waiver must be done annually by the vote of a majority of the voting interests present, in person or by proxy, at a duly called membership meeting.   F.S. 718.111(13) now prohibits a condominium association's membership from waiving these financial reporting requirements for more than 3 consecutive years.

I've just highlighted a few of the many differences that now exist between Chapters 718 and 719.   We haven't even touched on Chapter 720 HOA's or those "hybrid" ROCs that may or may not be governed exclusively by the provisions of Chapter 617, Florida's statutes for not-for-profit corporations.   With the next session of the Florida legislature just a few months away, we'll just have to wait and see if there's any hope of returning to those "good old days".

Stay tuned.