Editor’s note: Attorneys at Goede, DeBoest & Cross respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, civil litigation, estate planning and commercial transactions.
Q: Hi, I live in a condominium, and the owners recently discovered that our Board President, who had been advertising his need for a job, is now employed part-time by our property management company. When confronted at the last Board meeting by a new Board member who called this situation a conflict of interest, our Board president and the property manager responded that they had checked with our attorney who determined that it was not. I don’t understand how this can’t be a conflict of interest. It would take a person of unusually strong character, I think, to be able to make impartial decisions with regard to our management company being an employee of that company in whatever capacity. If it is not a conflict, I would think it unethical at the very least and that we should be looking for a new president who has better judgement.
-A.V., Vero Beach
A: The fact pattern that you describe is highly unusual and certainly presents the potential for a conflict of interest, particularly in the event that the Board is not satisfied with the property management company’s performance and wants to have a meeting without the property management company present in order to discuss the issues in an open forum, as well as the possibility of replacing the property management company. To further complicate the issue, the President owes a fiduciary duty to the association, while at the same time he or she is employed by one of the vendors of the association, which may lead to situations where the President is either breaching the fiduciary duty owed to the association or acting outside of the parameters of his or her employment arrangement with the property management company. Another issue to consider is that 718.112(2)(a)(1) Fla. Stat. provides that the Board serves without compensation unless otherwise provided in the Bylaws, and an argument can be made that since a portion of the assessments which are collected from the owners and are paid indirectly to the President through his or her employment with the property manager that the President is in fact receiving compensation for serving on the Board. We recommend that you seek counsel from a qualified Florida Bar licensed attorney so they can review your association’s bylaws and advise whether there is any language approving a Board member to be paid compensation and to opine whether the indirect payment is the equivalent to the Board member receiving compensation for serving on the Board.
Q: We live in HOA in Jensen Beach, and in November 2017 our Board voted to raise our dues by 50%. Can they do that legally, or does there have to be a vote from the homeowners?
-J.N., Jensen Beach
A: Unfortunately, unlike a condominium association where if the budget is increased by more than 115% from the preceding year the membership has the authority to file a petition with the Board to have the budget reconsidered pursuant to the Condominium Act, the HOA Act does not have a similar provision. However, if your association’s governing documents have a self-imposed limit on the amount the budget can increase year over year, then your Board would have to follow that limitation. As an alternative remedy, if the membership is not happy with the decisions the Board is making, the membership may recall members of the Board by following the procedure as set forth in 720.303(10) Fla. Stat. We recommend that you seek counsel from a qualified Florida Bar licensed attorney to review your association’s governing documents and advise whether there is any language pertaining to a self-imposed limitation on yearly budget increases, and, if there is interest in the community among the membership, to discuss the procedure for recalling members of the Board.
Avi S. Tryson, Esq., is Partner of the Law Firm Goede, DeBoest & Cross. Ask questions about your issues for future columns, send your inquiry to: question@gadclaw.com. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.