Unexecute By-laws

We are a small 27 single residence HOA incorporated under Florida Statutes Chapter 617 in 1996 (Articles are filed with state), first lot also sold in 1996. We recently discovered that our By-laws were never executed by the Developer. I am an original member here since 1998 and transition occurred in 2000.

No one had ever seen the recorded Articles until 2004, when the Association became entangled in litigation. During transition the Developer handed out unsigned Articles which (we learned later) were different from the ones recorded. He also handed out unsigned, unexecuted By-laws. We all thought we had just gotten unsigned copies of the executed documents. I know STUPID, STUPID, STUPID.

But, we aren't alone in our stupidity because our Association retained an attorney in 2000 to review the documents and represent the Association as needed. He also never noticed the documents were unexecuted.

In 2004 the Association, as I said earlier, became entangled in litigation. The attorney retained to represent the Association recused himself because the Board had failed to follow his written legal opinion issued on the contested matter. The Association retaine other counsel who pursued the matter through litigation.

During the first year of litigation the discrepancies in the Documents appeared. Ultimately the Association lost their case. The Courts opinion agreed with the written legal opinion of the first attorney.

Long story, I know, sorry. The Association is now attempting to adopt By-laws and has been told that the Board has the authority under F.S. 617 to adopt the initial By-laws as long as they agree with the Articles without a vote of the membership. I am concerned about notice requirements of title documents and improper transition. Does anyone have any input? The statute of limitations has expired against the Developer.

I want to keep us out of any more litigation!

Janet,

I was hoping you would post a comment! I appreciate your knowledgeable opinions. It reassures me that your response agrees with what we are being told. We have learned our lesson as far as not doing our homework to find out if an attorney is giving you the response you want to hear or the one you should hear.

However, what if a member states "the association has never been properly formed or transitioned to the members?" What if they say " all the governing documents are required to be recorded in the county records and having never received notice of these documents they must be adopted by the membership to be effective. Also, the developer did not properly transition control because he failed to give us the recorded documents and in fact gave us fraudulent documents."

former F.S. 617.303 current 720.303
1) POWERS AND DUTIES.--An association which operates a community as defined in s. 617.301, must be operated by an association that is a Florida corporation. After October 1, 1995, the association must be incorporated and the initial governing documents must be recorded in the official records of the county in which the community is located.

Can you understand why I am concerned?

Janet,

The Articles of Incorporation were filed with the state in 1996. They have never been recorded in the county as required by former 617.303 or current 720.303. The member I am refering to has an attorney who apparently has indicated the transition was not effective because Notice is required in the title documents of all governing documents. The member has indicated that failure to provide Notice now means that 100% of the members must adopt the Articles and By-laws because they are basically new governing documents.

Our attorney, I am the president of the HOA, has said there could be an argument made that the documents should have been recorded to provide Notice. He said he believed we had the authority as a Board to adopt the By-laws, but this did not cure the defective Notice.

Our Association could be destroyed because there is no way we could get !00% consent to these documents. So where do we go from here. Any advice would be appreciated.

Hi Carolyn:

The following is the statute regarding Corporate “Filing Requirements” for Article of Incorporation:

 617.01201 Filing requirements.—
 (1) A document must satisfy the requirements of this section and of any other section that adds to or varies these requirements to be entitled to filing by the Department of State.
 (2) This act must require or permit filing the document in the office of the Department of State.
 (3) The document must contain the information required by this act. It may contain other information as well.
 (4) The document must be typewritten or printed and must be legible. If electronically transmitted, the document must be in a format that may be retrieved or reproduced in typewritten or printed form.
 (5) The document must be in the English language. A corporate name need not be in English if written in English letters or Arabic or Roman numerals, and the certificate of authority required of foreign corporations need not be in English if accompanied by a reasonably authenticated English translation.
 (6) The document must be executed:
 (a) By a director of a domestic or foreign corporation, or by its president or by another of its officers;
 (b) If directors or officers have not been selected or the corporation has not been formed, by an incorporator; or
 (c) If the corporation is in the hands of a receiver, trustee, or other court-appointed fiduciary, by the fiduciary.
 (7) The person executing the document shall sign it and state beneath or opposite his or her signature his or her name and the capacity in which he or she signs. The document may, but need not, contain:
 (a) The corporate seal,
 (b) An attestation by the secretary or an assistant secretary,
 (c) An acknowledgment, verification, or proof.
 (8) If the Department of State has prescribed a mandatory form for the document under s. 617.0121, the document must be in or on the prescribed form.
 (9) The document must be delivered to the department for filing. Delivery may be made by electronic transmission if and to the extent allowed by the department. If the document is filed in typewritten or printed form and not transmitted electronically, the department may require that one exact or conformed copy be delivered with the document, except as provided in s. 617.1508. The document must be accompanied by the correct filing fee and any other tax or penalty required by law.

617.0203 Incorporation.—
 (1) Unless a delayed effective date is specified, the corporate existence begins when the articles of incorporation are filed or on a date specified in the articles of incorporation, if such date is within 5 business days prior to the date of filing.
 (2) The Department of State’s filing of the articles of incorporation, and the original recorded charter or certified copy of the charter of a corporation which has not been reincorporated under s. 617.0901, is conclusive proof that the incorporators satisfied all conditions precedent to incorporation and that the corporation has been incorporated under this act, except in a proceeding by the state to cancel or revoke the incorporation or involuntarily dissolve the corporation.

Now in the HOA statute below it is noted that “initial governing documents” must be recorded in the County.

 720.303 Association powers and duties; meetings of board; official records; budgets; financial reporting; association funds; recalls.—

 (1)POWERS AND DUTIES.—An association which operates a community as defined in s. 720.301, must be operated by an association that is a Florida corporation. After October 1, 1995, the association must be incorporated and the initial governing documents must be recorded in the official records of the county in which the community is located. …….

If you review the “Definitions”

 720.301Definitions.—As used in this chapter, the term:

(8) “Governing documents” means:
 (a) The recorded declaration of covenants for a community, and all duly adopted and recorded amendments, supplements, and recorded exhibits thereto; and
 (b) The articles of incorporation and bylaws of the homeowners’ association, and any duly adopted amendments thereto.

(3) “Community” means the real property that is or will be subject to a declaration of covenants which is recorded in the county where the property is located. The term “community” includes all real property, including undeveloped phases, that is or was the subject of a development-of-regional-impact development order, together with any approved modification thereto.

(4) “Declaration of covenants,” or “declaration,” means a recorded written instrument in the nature of covenants running with the land which subjects the land comprising the community to the jurisdiction and control of an association or associations in which the owners of the parcels, or their association representatives, must be members.

Now … in the above definition the developer may have screwed up and did not file Articles of Incorporation and Bylaws with the County, but supposedly corporation properly filed with the State. There was intent to have an HOA and all owners were aware of the intent prior to purchase as the Declaration was filed with the County and attached to their properties.

Again, I am not an attorney but I agree with your attorney and here is my reasons based on the above statutes and various court cases I have looked at in the past:

1) If this goes to court the court because Declaration was filed and all owners were aware of association and have declaration attached to their properties will not declare the HOA null.

2) Articles of Incorporation were filed with State and therefore the Corporation per statutes is valid.

3) By-Laws do not affect the property and in essence do not touch the land. These are simple rules describing duties of board/officers, meetings, minutes, etc. The board generally per statutes and governing documents is the entity who can amend and change this document at any time as long as majority of board agrees. In essence generally members do not control this document.

4) Current association board is attempting to follow their fiduciary duty to insure that proper filing of documents takes place, because research of the current statutes has brought this situation to their attention.

No court potentially would punish the current board because the developer was apparently not too bright. The board is only attempting to insure everything is in proper order moving forward. Just be sure to carefully document everything in case someone else needs to review for future reference.

Janet,

Thanks for all the research. I am familiar with the statutes you referenced. Here are the others though that are giving us a headache.

617.0205 Organizational meeting of directors.--

(1) After incorporation:

(a) If initial directors are named in the articles of incorporation, the initial directors shall hold an organizational meeting, at the call of a majority of the directors, to complete the organization of the corporation by appointing officers, adopting bylaws, and carrying on any other business brought before the meeting;

The statute above states SHALL not may. The initial directors named in our Articles failed to properly complete the organization of the corporation and failed to let us know they had not completed the organization of the corporation. They provided us with documents that were not the filed documents and presented us unexecuted documents as though they were executed. At the first meeting where "transition" occured the meeting was organized by a group of homeowners. The meeting was not properly noticed in accordance with the requirements in the Articles these guys had! They showed up at our meeting and took it over claiming they were the Directors of the Association.

Unfortunately, we have no recourse against them. We are just left trying to clean up.

Also, our Articles do state that an affirmative vote of the majority of the members present in person or proxy must vote to ammend any By-Laws and the Articles establish a quorum of 50% in person or proxy of the membership entitled to vote for any action requiring a membership vote at a DULY called meeting.

Hi Carolyn:

Can you post the "exact" verbiage from your Articles?

Hi Carolyn:

I think you possibly are worrying too much … but let me give you potential options and what if scenarios and you can check with your attorney:

If we look at the entire statute:

 617.0205Organizational meeting of directors.—

 (1) After incorporation:
 (a) If initial directors are named in the articles of incorporation, the initial directors shall hold an organizational meeting, at the call of a majority of the directors, to complete the organization of the corporation by appointing officers, adopting bylaws, and carrying on any other business brought before the meeting;
 (b) If initial directors are not named in the articles of incorporation, the incorporators shall hold an organizational meeting at the call of a majority of the incorporators:
 1. To elect directors and complete the organization of the corporation; or
 2. To elect a board of directors who shall complete the organization of the corporation.
 (2) Action required or permitted by this act to be taken by incorporators or directors at an organizational meeting may be taken without a meeting if the action taken is evidenced by one or more written consents describing the action taken and signed by each incorporator or director.
 (3) The directors or incorporators calling the organizational meeting shall give at least 3 days’ notice thereof to each director or incorporator so named, stating the time and place of the meeting.
 (4) An organizational meeting may be held in or out of this state.

Here potential options are (2) or (3). If the initial directors are around, see if they would sign the “Original Bylaws” and a written consent describing why after all this time signature is required. Or, see if they will attend a meeting with the current new directors at the attorneys office to sign the bylaws. Be sure it is noted as an “organizational meeting” and reason it is happening at this time.

If they are no longer around or available, I would utilize (2) at a board meeting, with the written consent describing why current board is adopting the “ORIGINAL” Bylaws. The attorney could then file both the Articles and Bylaws with the County and include a cover sheet with explanation that developer apparently Properly filed with State; however, failed to file with County and which is now being rectified.

Now if someone wants to throw a fit the following is part of a Corporate Statute:

 617.07401 Members’ derivative actions.—

 (3) The court may dismiss a derivative proceeding if, on motion by the corporation, the court finds that one of the groups specified in paragraphs (a)-(c) has made a good faith determination after conducting a reasonable investigation upon which its conclusions are based that the maintenance of the derivative suit is not in the best interests of the corporation. The corporation has the burden of proving the independence and good faith of the group making the determination and the reasonableness of the investigation. The determination shall be made by:
 (a) A majority vote of independent directors present at a meeting of the board of directors, if the independent directors constitute a quorum;
 (b) A majority vote of a committee consisting of two or more independent directors appointed by a majority vote of independent directors present at a meeting of the board of directors, whether or not such independent directors constitute a quorum; or
 (c) A panel of one or more independent persons appointed by the court upon motion by the corporation.

I am of opinion that potentially about the worst item that could happen is:

720.311Dispute resolution.—

Potentially if this happens the Court would possibly find:

1) Board is executing valid documents which everyone assumed were already valid in the beginning when they purchased. However, it has come to the boards attention recently that said documents while potentially valid were not filed with County and steps were taken to correct this issue. This was supposed to have been completed by initial directors who are no longer available AND could have been taken without a meeting per corporate statute.

2) Everyone has the Declaration attached to property, it is a valid HOA. Proper documents and filing of said documents is necessary for the future of the association.

3) ORIGINAL Bylaws were adopted and which were to be in effect in the beginning; therefore, potentially as they were not amended, altered, or rescinded then the vote of majority of members was not necessary.

4) Because it is a valid HOA and valid Corporation per the State, then the Bylaws are necessary and would need to be adopted and filed.

As I stated before I am not an attorney, but if someone wanted to have a fit I do not potentially see where they could win. When you previously stated – “Notice is required in the title documents of all governing documents.” … What type of notice is required and for what purpose? I could understand for amending a document, but this is not regarding amending only filing original valid document with County. Is there something in the original bylaws that anyone has an issue with?

You only have 27 owners, so I am having a difficult time understanding what reason someone would have to disagree with this action to file articles and bylaws with County. Disagreement will not eliminate the Declaration attached to their property, nor the HOA which still would need to operate. The only thing it would potentially accomplish is having everyone need to pitch in more money for the HOA attorney and court fees, if needed.

You are most welcome.

Maybe Donna will be on later and can review everything and also give her opinion. She owns a number of properties in Florida and is very familiar with the FL state statutes.

Phil,

Good info. However, this thread is from 2011. It's best to start new topics (threads) than to reactivate old threads.

Understood, Phil, but it's a long shot.

As Tim pointed out, this thread is over 3 years old. Furthermore, the OP has had only 73 posts in all that time, so it is very unlikely that the OP is still active on this forum and will never see your post. Email addresses are not disclosed unless the person posting wishes to disclose it. Also, it is possible to use fictitious names. The best shot would be if a currently active contributor from Florida happens to recognize the case and knows the answer. Good luck.