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: Our condominium is proposing a significant remodeling project and the membership supports the change, but there is disagreement on how to pay for it. The Board claims that it can borrow the money from a bank without membership approval and there are a lot of members who do not want to pay interest. Can the Board do this?
B.D., Vero Beach
A: Possibly. Because the Association is a not for profit corporation, Chapter 617 governing these corporations provides that the Board alone can decide to borrow. The next question is therefore whether the Association has self-imposed a requirement to obtain membership approval in its Declaration of Condominium, Articles of Incorporation, or Bylaws. These documents generally address this question and will either require membership approval or not. If the documents are silent, I would argue that Chapter 617 would generally apply and the Board could borrow the funds for the project without membership approval. Keep in mind that most all lenders will require an affidavit from the Association attesting that the Association received the proper approvals to borrow, which means an individual Director or Officer would be taking a great risk to borrow funds without feeling comfortable with the approval requirements.
Q: Our Board of Directors is supposed to have five (5) Directors but we have a vacancy and nobody wants to run for the Board. Does the statute provide a deadline to fill the vacancy?
A: The statute does not provide a deadline to fill any vacancy. The statute provides that, unless your Bylaws provide otherwise, a vacancy is filled by the remaining Directors. Assuming your Bylaws do not require a membership election for a vacancy, it is common that either a) there is nobody willing to fill the vacancy; or b) there is a deadlock vote to fill the vacancy.
I generally advise that the Association has a duty to try and fill the vacancy. A full Board of Directors provides a better spectrum of knowledge and background and provides for an odd number of Directors to make decisions. If you really are unable to find a single eligible volunteer, you can move forward with four directors until the next election, at which time you would want to fill the vacancy if the term has expired.
Q: A large portion of our condominium association wants to lower dues. At the last annual meeting, we voted to reduce reserve funding but the Board adopted a full reserve schedule anyway. Doesn’t the membership vote control?
A: Likely no. The Board of Directors has control over drafting and approving the budget, including reserve funding levels. If the membership voted to reduce reserve funding, this act would only authorize the Board to adopt a budget with underfunded reserves, but it would not require the Board to adopt a budget with underfunded reserves. If there really is enough support to lower the reserve funding, you could consider trying to replace the Board and amending the budget. I would recommend you engage a licensed Florida attorney to review your specific governing documents as your community may have specific provisions which are inconsistent with the above general response.
Steven J. Adamczyk Esq., is a shareholder of the law firm Goede, Adamczyk, DeBoest & Cross, PLLC. Ask questions about your issues for future columns, send your inquiry to: firstname.lastname@example.org. 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, 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.