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Condo And HOA Board Dysfunction - Are There Early Warning Signs

By Christopher Carter - Real Estate Broker Associate

February 28, 2024

With increasing frequency, we hear about Florida residential Owners Associations that are experiencing difficulty with governance, financial, maintenance, or legal issues. Further investigation often reveals that some of these problems are the result of a Board of Directors that has temporarily strayed off course.

The situation is compounded when a Board member oversteps the limits of her or his authority, ignores fiduciary duty, or neglects administrative responsibilities while the rest of the Board sits around and lets that happen. It is very important for owners and Board members to see the early warning signs of administrative breakdown so they can prevent or correct it.

There are always more Association owners than Board members, though when not enough of those owners participate in Association business, the few on the Board get to make more decisions for the many in the Association.

I am NOT an attorney. For interpretation and application to specific circumstances of anything you read on this site, you must speak with a Florida-licensed attorney.

Residential Owners Association Boards function as elected administrative bodies with decision-making authority and responsibility. Here in Florida, Directors (Board members are also known as Directors) can only speak for the Board based on decisions they have made together at properly-noticed and organized Board meetings. Individual Board members cannot make decisions regarding rule enforcement, maintenance, security, finances, or any other Association business on their own. Communication regarding Association business comes from the Board as an executive governing body, often delivered through its designated property manager.

According to Florida's Condominium Act and Homeowners Association Act, Board members have a strict fiduciary duty to all owners in the building or community. This means they must put Association member-owners' interests above their own.

At the same time, they are required to comply with the Association's own Governing Documents and either the Condominium Act (Florida Statutes Chapter 718) or the Homeowners Association Act (Florida Statutes Chapter 720).

Directors have ethical and legal obligations that attach to holding a position on the Board. When they lose sight of those obligations, things tend to go "off the rails" in a Condominium building or an HOA Community.

Newly-elected Condominium and Homeowners Directors in Florida are only required to take a 2-hour certification class (conducted by law firms specializing in Condominium and Planned Development law) within the first 90 days of taking a seat on the Board. Attorneys go over basic aspects of COA and HOA governance, rule enforcement, Director responsibility, Official Records, an introduction to Governing Documents, and more.

Instead of taking the class, new Directors are also allowed to just sign a statement saying they have read through the Governing Documents on their own (I am not making this up). There is no verification or follow-up involved with "self-certification." This earlier article expands on Board member education: The 1st Step In Becoming An Association Board Member? Education. (thefloridarealestateblog.com)

(Board certification classes may become mandatory if/when Florida Senate Bill SB-1178 is passed into law during the current 2024 Legislative Session. Many of us engaged with Association governance matters have supported this effort for years.)

Directors start out as property owners and Association members. Most of them genuinely want to contribute for the benefit of all residents so they sign up to run for the Board of Directors when there is an open seat. Many run because they feel there are inefficiencies in how the building or community is functioning and they want to help things get better.

While most serving Directors are there to make a positive contribution, some view being on the Board as a social function, playing the congenial host or hostess at meetings. A few might have been looking to exercise some level of power and authority over their neighbors. There are even a few who were bored sitting around the pool and thought being on the Board would give them something to do (Board replaces Bored). Yes, really.

Efficiently and effectively running a residential Owners Association is a business, not a social function.

Whatever your Directors' reasons for being there, all must individually and collectively follow what is in the Governing Documents and either the Florida Condominium or Homeowners Association Act.

It is not only up to Board members to understand and follow the rules and laws that guide Association function. All member-owners in the condominium building or HOA community have the responsibility and obligation to understand and follow Association rules and regulations. Being able to recognize the red flags of questionable Board behavior requires working knowledge of how your Association is structured and what rules guide it.

Association owners are welcome to attend most scheduled Board meetings, either in person or live online. A few internal topics are limited to closed-meeting Board discussion, especially when the Association attorney is involved.

VERY important - When you have a question or concern about Association business - finances, maintenance, rule enforcement, Board action, or anything else that affects living in your building or community, ask the Board to put it on the agenda for the next meeting. If a topic is not on the agenda, there is no requirement to discuss it. When something is brought up verbally in the "new business" part of the meeting, it can be postponed indefinitely. You need to get your concerns on the agenda for the next Board meeting if you want them addressed.

Now that you have an overview of how residential Association Boards of Directors are supposed to function, what are some of the indications that yours may have strayed off course?

Here are a few examples of questionable Board activity mentioned by readers:

• Individual Directors making decisions without participation of the entire Board
• Poor communication with owners
• Delaying needed repairs and maintenance
• Directors resigning before their terms are completed, coupled with a lack of candidates willing to run for open Board seats
• Retaliation against owners who ask questions or disagree with Board action
• Asking owners to vote a certain way without providing the Board's reasons why
• Raised voices, personal insults, unprofessional behavior at meetings
• Resistance to owner requests for Official Records
• Giving managers and Management Companies authority that is beyond their licensing or employment contract limitations

Association Board dysfunction has been widely suspected (and reported) for decades all across Florida. Largely as a result of the deadly Champlain Towers South structural collapse and the Hammocks (alleged) multi-million dollar HOA embezzlement case, there are currently some Association-related Bills being debated in the 2024 Florida Legislative Session. If/when these Bills are passed, become State Law, and a sufficient enforcement mechanism is in place, there is a good chance the stories about dysfunctional Association Boards and management may begin to slow down.

Again - There are always more Association member-owners than Board members, though when not enough of those owners participate in Association business, the few on the Board get to make more decisions for the many in the Association.

Education and participation are the keys to owning and living in a Florida condominium building or HOA community. It is the built-in obligation of ALL owners to learn the basics of how their Associations operate, keep their eyes open, and watch what their Boards are doing.

Learn all you can, pay attention, and ask questions.

Editor's Note: Christopher Carter is NOT an attorney. He does not give legal advice. For interpretation and application to specific circumstances of anything you read in this article, you must speak with a Florida-Licensed attorney.

Have a question or comment about anything you see here, if so, visit: www.TheFloridaRealEstateBlog.com

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