Board Election: Revocable Trust Issue

Hi, everyone. I'm new here and want to thank everyone for the valuable insight provided on these forums. Before I get to my scenario and questions, let me first state that I've conducted a search of topics on revocable trusts and have failed to find an answer to my three questions.

Scenario: I live in a very contentious community. During this past year, the next-door neighbor of the BOD's President (let's call the neighbor Mr. X) was appointed by the BOD to serve in an empty position on the BOD. This appointment appears to properly comply with our governing docs, except . . . in 2003, Mr. X. transferred title of his property to what I presume is a revocable living trust, but we have not been given the trust documents to confirm this. Our annual election of the BOD is to take place in 10 days.

Question #1 (holding a position on the Board): Our Articles of Incorporation specifically provide the following: "If an Owner shall be a corporation, partnership, or trust, then an officer, partner or beneficiary of such Owner shall be qualified to be a director." However, § 617.0801, Fla. Stat. (Corporations Not For Profit), contains language which conflicts with our Articles of Incorporation. The statute provides that a either a grantor (of a revocable trust) or a beneficiary of the trust shall be deemed eligible to serve. Does the statute (which allows for the grantor or the beneficiary to serve on the BOD) trump our Articles of Incorporation (which limits service to beneficiaries)?

Question #2 (exercising right to vote): Our Bylaws provide one vote per lot. "If a lot is owned by a corporation, partnership or other business entity, an officer, partner or employee thereof entitled to cast the vote of Lot for the corporation, partnership, or other business entity shall be designated in a certificate for this purpose . . . If such a certificate is not on file with the Secretary of the Corporation for a Lot owned by more than one person or by a corporation, partnership or other business entity, the vote of the Lot concerned shall not be considered in determining the requirement for a quorum, or for any purpose requiring the approval of a person entitled to cast the vote for the Lot, except if said Lot is owned by a husband and wife." Since the Lot is in a revocable trust, and the Bylaw provision quoted does not specifically mention trusts as requiring a certificate, is Mr. X required to file such certificate with our Secretary?

Question #3: Should the BOD require Mr. X to provide a copy of the trust document to resolve these issues prior to the election?

Thank you in advance for your guidance.

Hi Heidi:

What the association can do is look up the property on the local tax assessor’s website and which will state who owns the property. In many cases even if property is in trust, this information will many times still list the owner.

Q1: If an owner places property into a trust then they are generally deemed the grantor and sometimes also the beneficiary, in certain cases such as husband-wife each are grantors and each beneficiary should one pass before the other.

The state statute will generally supersede unless a statute makes a reference such as “unless otherwise noted in declaration”, or some other similar reference to governing documents.

Q2: I would potentially say no.

Q3: I would again potentially say no. You do not need to be given trust documents, and no one should give their trust documents to an HOA as that is information which is no one else’s business. I know it would be a cold day before I gave just anyone my trust info.

Heidi,

FL law 617.0802 Qualifications of directors. clearly states "a grantor of a trust described in s. 733.707(3), or a beneficiary as defined in former s. 737.303(4)(b) of a trust which owns a unit, parcel, or mobile home shall be deemed a member of the association and eligible to serve".

Therefore, there is no conflict with FL law or you governing documents and the individual should be allowed to be nominated, and if elected, serve.

Per FL law, 617.0721 Voting by members, the Association may only reject a vote if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has a reasonable basis for doubting the validity of the signature on it or the signatory’s authority to sign for the member.

Based on what you posted, the previous owner of the lot is the owner of the trust. Therefore, I do not see any basis for the Secretary of the Association has "a reasonable basis" for rejecting the vote.

If the Association is concerned, they could ask for a statement from the trust identifying MR. X as the sole representative of the Trust to the Association. However, a copy of the actual Trust document would not be required.

Heidi, are you a member of the board or just a concerned member of the Association? I ask because it sounds like there is more associated with the questions - like this individual should not be allowed to serve for xyz reason.

Tim

I agree with the previous posts.

A1: Yes. Most likely, Mr. X is both the grantor and the beneficiary, anyway.

A2: Likely no. A court would likely side with Mr. X and not require a certificate.

A3: No. Mr. X could simply write and sign a document to certify himself as the representative of his trust.

At best, the Board would have a very weak legal case to defend if it were to deny Mr. X either his nomination or his vote, even if he chose not to comply with providing a certificate or revealing the contents of his trust.

Donna,

Thank you for your response. However, this is not a homestead exemption issue. In fact, this property is a second home which does not entitle it's owner to a homestead exemption in Florida.

The property was transferred into the revocable trust by deed. Thus, the deed shows the revocable trust as the owner of the property, not the grantors.

However, as I stated before, it appears this is not an issue anymore because the Fla. Stat. specifically provide the grantor may serve on the BOD.

Heidi

Again, thanks to everyone.

I just want to repeat something that was in my original post and I'm wondering if it makes a difference: I'm assuming the property was transferred into a revocable trust, but there's really no way to tell.

Does this make any difference in any of your responses?

Heidi

Hi Heidi:

It does not change my responses.

Per your previous statement part of which is noted above you apparently have a copy of the deed putting the property into the trust and the tax assessor’s lists the trust. This would in essence be various ways to tell if the property is in the trust and these items are public information.

I also would like to say thank you for your time and effort on behalf of your association.

Hello! I live in Az and we just had an issue with this very topic. The laws will ALWAYS trump anything in your governing documents. Same type of situation....contentious HOA and member just got elected who was not listed on the tax record HOWEVER he was listed as a member of the trust I guess. We never say the papers. It is awful when things get to this point. You could ask your legal person what they think. We have had other directors that are not listed an owners per say, but are on the trusts. I don't quite understand why folks do this. One other issue we have had to deal with is members of LLC. Because there are so many investors around, LLC are being formed and we want to know all the members of the LLC too. People have gotten very sneaky and we are very strict on who rents here and for how long so we want to know who all the owners are. If you have an approval form for sale approvals, you might have a place to list the owners. Hope I helped. I too have gotten wonderful help on this site.