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Florida Condo & HOA Legal Blog News & Updates on Condo & HOA Laws & Legislation in the State of Florida

HOA Board Members Should be Wary about Contracting with Their Association

Posted in Budgets, Reserves & Financial, Fiduciary Duty of Board of Directors, Landscaping, Service Contracts

Man trimming hedges with shearsQuestion: I own the company that provides landscaping services to the community where I live. The association recently sent out a notice soliciting self-nominations for the board of directors. I submitted my nomination, but the board has indicated that I am not eligible to run given the current contract between the association and my landscape company. Is this correct? (F.P. by e-mail)

Answer: No, while it is probably not wise for you to be on the board, you are legally eligible.

The Florida Homeowners’ Association Act identifies three circumstances where a member is ineligible to run for the Board. A member is ineligible to run if he or she (1) is delinquent in the payment of any fee, fine, or other monetary obligation to the association on the day that he or she could last nominate himself or herself or be nominated for the board, (2) was convicted of any felony in Florida or convicted of an offense in another jurisdiction that would be considered a felony in Florida, unless his or her civil rights have been restored for a period of at least five years as of the date on which he or she seeks election to the Board, or (3) has a pending charge of felony theft or embezzlement offense involving the association’s funds or property.

The association’s governing documents may prohibit contracts between the association and its officers and directors. If that is the case, your contract may have to be terminated or you would have to divest yourself of any interest in the company. If the governing documents do not contain such a prohibition, the association may enter into contracts with its directors provided the relationship is disclosed and the contract approved as required by law.

The statute provides that after entering into a contract with one of its directors, the relationship must be disclosed, the contract must be approved by disinterested members of the board, and the members must be given the opportunity, at the next annual or special members meeting, to cancel the contract. You would also be precluded from participating in future board votes regarding your landscaping services. I think you should choose.