TC Palm Q&A Column, October 29, 2017

By October 29, 2017News, Questions & Answers

Editor’s note: Attorneys at Goede, Adamczyk, DeBoest & Cross, PLLC 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, litigation, estate planning and business law.

Q: I received my annual meeting proxy in the mail and there is a question asking me whether I want to waive the audit for this fiscal year. I can’t remember the last time we actually had the audit performed. Isn’t the Board required to have the audit performed to make sure the financials are in order?

R.Y., Port St. Lucie

A: The answer to this question would have been different a few months ago. In a homeowners association, Chapter 720 of the Florida Statutes requires each association to conduct a financial review based on the revenue and size of the association. The larger the association’s budget, the higher level of scrutiny is required in the financial review. The statute does, however, allow the membership to waive the required financial report in favor of a report with a lower level of accounting scrutiny. For example, if your association is required to obtain an audit every year based on the statutory thresholds, the membership can authorize a review financial statement or simply a report of income and expenses. The statute governing homeowners association does not limit how many consecutive waivers you can obtain.

In a condominium association, the statute previously only permitted three waivers before the full financial statement was required. In other words, if you were required to have an audit based on the statutory thresholds, your condominium membership would be required to have a full audit every four years or less because you could only waive the audit for three consecutive years. That being said, effective July 1, 2017, that waiving limitation was deleted by the legislature. Moving forward, a condominium association can now waive its financial reporting requirement for more than three years and, technically, indefinitely. It is a totally different discussion whether an association should waive its audit or financial reporting requirement year after year, but it is legally permitted.

Q: We just discovered that the Board engaged a contractor immediately after Hurricane Irma to clean up the property. We were charged a lot of money and the decision was made by the Board without notice to the membership. The Board is arguing it was an emergency. Was this proper?

G.W., Hobe Sound

A: This is a good question. Ordinarily, no, this would not be proper because the Board can’t authorize contracts without a Board meeting and Board meetings require at least 48 hours’ posted notice and there may be additional notice requirements depending on your specific governing documents.

Florida Statutes section 718.1265 does, however, provide emergency powers. When Governor Scott declared a state of emergency in Florida, this triggered the Board’s emergency powers under the statute. One of those emergency powers is to conduct Board meetings “with notice given as is practicable”. Your question does not indicate whether there was damage to roofs and/or homes or whether it was simply landscaping cleanup. As you can imagine, a leaking roof would warrant less notice than landscaping debris.

I should also note that the emergency powers statute does not alleviate the need for notice, it just only requires practicable notice. Thus, as soon as the Board knew there would be a meeting, there should have been a notice posted in the community to provide as much notice as possible.

Finally, the question is difficult to answer without knowing the exact need for the meeting. In addition to the above, the emergency powers statute provides that these powers are permitted broadly when reasonably necessary to protect the health, safety and welfare of the community and to mitigate damage and make emergency repairs. I would assume that the Board’s needs fell within this description if immediately after a hurricane event, but this should be confirmed.

John C. Goede Esq. is co-founder and shareholder of the Law firm Goede, Adamczyk, DeBoest & Cross, PLLC. 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, Adamczyk, DeBoest & Cross, PLLC 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.