Q. In a past column, you indicated that directors and officers cannot receive kickbacks or receive personal gain from positions they serve. Is there a specific chapter or section in the condominium act that covers this? I made a cursory search, but could not find anything specific in the act.
A. The term kickback can be synonymous with many terms and is covered by federal laws and state laws. You must think outside the condominium box. It is considered to be unjust compensation or even the expectation of receiving value. It is an element of contract law violations or just about any exchange of services or value. The condominium act specifically states that directors may not receive compensation for their services. While this section is not necessarily addressing kickbacks, it could be said that it would be a part of the requirement not to receive kickbacks. In certain situations the law could say it was racketeering. Here are two situations that I have seen: The board contracted with a vendor for services at the recommendation of the president. Three months later, the vendor did work in the president’s apartment. It was found that the president received a 25 percent discount on the repairs. The second involved a manager who received $500 under the table for allowing a vendor to see the other bids before the board saw the final bids. Such enrichments are illegal.
Q. I believe a board of directors can hire a licensed manager by majority of board votes without a vote by HOA members. In your opinion, absent specifics in bylaws, can a board of directors, by a majority vote of the board, terminate the manager and replace it with another also without a vote by the association members? Naturally any contractual terms would have to be considered, but review the question as if the manager’s contract has not been renegotiated and no longer effective even though the manager continues to provide service and receive payments.
A. Members elect the directors to operate and manage the affairs of the association. To assist the directors and officers, the board can engage or dismiss qualified licensed persons. It is not the members’ position to vote on issues of employees or contractors, but the director’s duties. As to a contract expiring, the relationship can continue in most situations to automatically renew or continue month-to-month subject to the language in the agreement. I would advise that the board put in writing their intent to continue or not continue the contact in advance of the termination date. In order to avoid a possible lawsuit for wrongful dismissal, I would suggest that you have your attorney provide guidance and advice to the board before contacting for services or terminating services.
Q. We had four board members (a quorum) attend a board meeting. One of the members attending was the president. A motion was made and two members voted for the motion and two members voted against the motion. So it was a tie vote. Our president then said that he had the power to vote and declare the motion as passed or failed; whichever he so desired even though he had already cast his vote. Does the president of a condominium association have the right to break a tie and declare the motion to have failed or passed even though he already voted on the motion?
A. No officer or president has a vote at a condominium or HOA board meeting. Only directors vote on motions. Just because one of the directors serves as the president, does not give him/her a special vote. In most associations, it takes a majority vote by the directors to approve a motion. A split vote is not enough to pass a motion. The president breaking a tie vote is not found in Robert’s Rules when it comes to condominium or HOA voting as the statutes take priority.
Q. If the bylaws state three board members constitute a quorum, have the recent amendments in July change this requirement? We may only have one or two board members attend our next board meeting. Can they still hold a board meeting or vote?
A. In the case of three directors, I assume that the documents refer to a five-member board of directors. Quorum is 51 percent of the board, which would mean that three directors must be present to conduct business and vote. It is possible for an association to have three directors, or five, or seven, and even larger number of directors. Regardless of the size, a quorum would be half plus 1 percent.
Q. I recall reading one of your articles showing how condominium and homeowners associations (HOA) might be able to legally collect dues in arrears. Unfortunately, I failed to clip that column. Our condominium association has several owners, whose dues are woefully in arrears, resulting in budget shortfalls for us and limiting the maintenance we can do without raising monthly assessments on those who are not in arrears.
A. I am sure that your documents provide information on how to proceed against delinquent owners. In addition, FS 719.116 instructs the directions to place liens and foreclosure action against delinquent condominium units. HOA statutes have similar instructions (FS 720.3085). My recommendations are to have the association attorney help draft a collections policy and the board approve the policy. That policy would include delinquent letters being sent for non-payments; having the attorney lien units after the letters are sent, sometime shortly after the account has not been paid in 60 days, and then the attorney start foreclosure action sometime after the next 30 to 60 days. I would inform the owners of the policy and then take action to follow the policy. If the board does not take action as described, it can result in loss of funds to be collected. Above all, the board must seek guidance from an attorney.
Richard White is a licensed community association manager in Florida. Questions should be mailed to him at 6039 Cypress Gardens Blvd. # 201, Winter Haven, Fl. 33884-4415; e-mail CAMquestion@cfl.rr.com. To be considered, questions and comments should include the author’s name and city. Questions should be about association operations, not legal matters.