Q: My condominium association board recently said it is considering replacing all of the roofs on our buildings and taking out a big loan pay for it. Don’t unit owners have to vote on this? (M.M, via e-mail)
A: The Florida Condominium Act does not specifically address the authority of an association to borrow money, except in the context of the exercise of emergency powers in response to a disaster for which a state of emergency has been declared. In such cases, the Act provides that the association may borrow money without unit owner approval.
Chapter 617.0302(7) of the Florida Not For Profit Corporation Act (which also governs most condominium associations) generally empowers not for profit corporations to borrow money. In the opinion of most attorneys I have discussed the issue with, the language of the condominium documents play a central role in answering this question.
If the condominium documents require unit owners to vote to authorize the association to borrow money (and many do), the requirement is valid (except with the possible exception of disaster situations, discussed above. If the documents were silent on the issue, most attorneys would opine that the association, through the board of directors, would have the authority to borrow money. Of course, a well-written set of condominium documents would regulate this issue without room for interpretation or conflict.
While the Act does not address unit owner approval concerning the authority of the association to borrow money generally, Section 718.111(7)(a) of the Act provides that the association may not mortgage association property except as provided in the declaration, or if the declaration is silent, then upon 75% approval of the total voting interests in the association. Therefore, if your association is taking out a loan that is secured by association real property, a unit owner vote may be required by the Act.
However, most loans to condominium associations are not secured by real estate, but usually some pledge or assignment of assessment rights. Here, it is important to note that the prevailing view (and the position of the applicable state regulatory agency) is that reserve funds cannot be “hypothecated” (tied up as security for a loan) unless an owner vote is taken. This position is based on the provision of the statute, which generally prevents the use of condominium reserves for a non-scheduled purpose unless a vote of the unit owners is taken.
Q: Our condominium association wants to replace our current board president with a different director. Can this be done by e-mail or do we have to post notice for a special meeting? (K.O., via e-mail)
A: As I have discussed many times in this column, while directors can only be removed from the board by a recall vote by the unit owners, the officers serve at the pleasure of a majority of the board of directors.
As such, a majority of the board of directors can vote to change who the officers are. Therefore, only the board can vote to change who serves as the association’s president. This action must be taken at a board meeting by a board vote and cannot be done by e-mail. While the Florida Condominium Act allows board members to communicate by e-mail, Section 718.112(2)(c) of the Act specifically says that board members may not cast votes on an association matter by e-mail.
Therefore, if the board wants to consider changing who serves as the officers, it would have to do so at a properly noticed board meeting. Such meeting would require forty-eight (48) hours’ posted notice, would need to disclose the proposed action on the posted agenda, and would be open for all unit owners to attend, observe, and be given an opportunity to speak to the proposed action.