Recently I was asked whether it would be a conflict of interest for a director to serve on both an association and master association at the same time. Assuming the governing documents of both the association and master association do not prohibit this, one must look to Florida Statutes to determine permissibility.
Florida Statute 617.0802 provides a basic set of criteria for a person to be eligible to sit as a director on a board. The most important thing to know though is that it defers to the governing documents of the corporation for limitations on who can hold such a position. In other words if an association’s governing documents require a person be a member of the association to serve on the board then it trumps the premise under Section 617.0802(1) that a director need not be a member of the corporation. In a Homeowner’s Association setting [720.306(9)] all members of the association shall be eligible to serve on the board of directors while in the Condominium setting [718.112(2)(d)(3)], directors can be unit owners or other eligible persons. Ownership of a property is not required by statute, but the governing documents may impose ownership or membership criteria. Once a director, the person shall pursuant to Florida law [617.0830; 718.111(1)(d)] discharge his or her duties:
- In good faith;
- With the care an ordinarily prudent in the same position would use; and
- In a manner he reasonably believes to be in the association’s best interest
Director conflicts of interest are also addressed by Florida Statute [617.0832]. Whenever there is a relationship or interest between a director of an association and a person or entity the association is doing business with there exists a conflict of interest. The conflict in and of itself does not or invalidate the agreement if:
- Disclosure was made to the board or committee which authorized, approved, or ratified the agreement (the vote of the director with the conflict is not counted);
- Disclosure was made to the members entitled to vote on the agreement and they authorized, approved, ratified it; or
- The agreement is fair and reasonable as to the association at the time it is authorized by the board, committee or members.
- In the Condominium the setting the following additional criteria [718.3026(3)] apply to avoid conflicts:
- The disclosures to the directors shall be entered into the written minutes of the meeting where they are made;
- Approval of the agreement shall require an affirmative vote of 2/3 of the directors present; and
- The disclosure to the members shall be made at the next regular or special members meeting after the agreement is made.
Going back to the question at hand, it appears that there is no language in the Florida Statutes which prohibits a director of a master association from sitting on a sub-association’s board or vice versa. For information on master associations and their elections, read Master Associations Required to Elect Board by Joe Adams.