FL HOA - Does Board have to meet to approve expenditure?

New member, so please excuse the basic question.

I just got appointed to my HOA Board. I am VERY familiar with RE and have worked in the business for 16 years. However, not that familiar with HOA specific laws. The Board in my community rarely meets - probably once a quarter. However, they are spending money like crazy, and our property manger and Board President show no interest in obtaining multiple bids on anything. My background is construction, and sales, and some of the bids they are awarding are ridiculous. I went and got other bids on my own time for 2 jobs, and the President, VP, Manager, and one other Bd. Member got pissed!! Told me I was overstepping my role. Problem is the bid they had was for $12,000 and I had 2 bids - 1 at $3200 and 1 at $3450. They voted via e-mail to give it to the contractor at $12,000. This contractor is also doing work at a house one of the Board Members has elsewhere in the area - I pulled the permits/NOC.

All the expenditures are being approved by a majority of the Board via e-mails. Their attitude is it saves time. Myself and the other new member either vote "NO" or abstain. No minutes or records kept of these votes. I read Chapter 720 and this seems blatantly wrong. Problem is our C&R says nothing about expenditures, bidding or meetings. So, do the requirements of 720 apply?

Is it legal to approve expenditures that are completely non-emergency without a public, or noticed, meeting? We are a small Association with many "snowbirds" so few if any members attend meetings. Very few delinquincies or forclosures - only 2 out of 90 units. However, now I know why the HOA dues have gone from $350/mo. to $450/mo in 2 years.

Any insight, opinions, or advice would be greatly appreciated.

Hi Steve:

Welcome to HOAtalk.

You are correct in that in Florida the state statutes require all meetings of the board (except for very few minor exceptions regarding items such as attorney-client confidential information) MUST be open to all members.

 2)BOARD MEETINGS.—
 (a)A meeting of the board of directors of an association occurs whenever a quorum of the board gathers to conduct association business. All meetings of the board must be open to all members except for meetings between the board and its attorney with respect to proposed or pending litigation where the contents of the discussion would otherwise be governed by the attorney-client privilege. The provisions of this subsection shall also apply to the meetings of any committee or other similar body when a final decision will be made regarding the expenditure of association funds and to meetings of any body vested with the power to approve or disapprove architectural decisions with respect to a specific parcel of residential property owned by a member of the community.

If you are an HOA then 720 applies and in some cases supersedes except for sections in which the state statute defers to the governing documents or when the governing documents sometimes have items which are not addressed within the state statutes.

Sounds a little like the snowbirds need to potentially become aware that their assessments are possibly being used for some back scratching. The board needs to realize it is not their personal money and they have a fiduciary duty to receive bids and pay for services in a prudent manner for the benefit of all the homeowners. While the board does not necessarily need to accept the lowest bid, having numerous bids lower than the accepted bid is an issue. If someone pulled financial information and challenged in a court of law, then outright negligence can incur personal liability and potentially is not covered under HOA D&O insurance.

Thanks so much for your 3 replies.

I am a little tentative about how to proceed at the moment, because I want to understand the facts and the law before I decide how to proceed and talk to to other people. One member of the community who is an attorney wants to file a suit against them and get a Temporary Restraining Order (TRO). Right now, I am not in favor of doing that, but after gathering more information it may be a course we choose.

Unfortunately, garnering community opinion is very difficult. Probably only 50% of the complex is occupied 5 months of the year, and 10-20% of those are tenants. Only 30% of complex is occupied by full-time residents, and the rest use the place for a few weeks a year. The management company will not release the contact info on file for the owners of record as the President of the Board has instructed them not to.

No competitive bids are even taken for insurance policies and that item alone represents about 25% of our budget. My read of 720 is that multiple bids must be taken for any item that is over 10% of the budget.

Thanks, again for your opinions/advice. In the coming week or so we will have to decide how to proceed.

Would you confirm that you are an HOA of individual homes on individually owned lots and not a condominium association. Your first post sounded like individual homes, but when you later use the term "complex" and owners only coming a few weeks a year, I would like to verify that you are an HOA under 720 and not a condo association under 718.

Keep in mind with regards to what Peter posted above:

As noted in the Corporations Not For Profit statutes if anything between Corporate and HOA are similar and conflict, then the HOA statute supersedes the Corporate statute:

 617.1703 Application of chapter. — In the event of any conflict between the provisions of this chapter and chapter 718 regarding condominiums, chapter 719 regarding cooperatives, chapter 720 regarding homeowners’ associations, chapter 721 regarding timeshares, or chapter 723 regarding mobile home owners’ associations, the provisions of such other chapters shall apply. The provisions of ss. 617.0605-617.0608 do not apply to corporations regulated by any of the foregoing chapters or to any other corporation where membership in the corporation is required pursuant to a document recorded in the county property records.

Hi Peter:

I would have to respectfully disagree as the section I posted is titled:

617.1703 Application of chapter.

The referenced Chapter is titled:

Chapter 617 CORPORATIONS NOT FOR PROFIT

Therefore anything in Chapter 617 regarding items such as board meetings and which is also covered within Chapter 720 … then Chapter 720 controls.

720 clearly states:
All meetings of the board must be open to all members except for meetings between the board and its attorney with respect to proposed or pending litigation where the contents of the discussion would otherwise be governed by the attorney-client privilege.

The section you posted references:
… action required or permitted by this act to be taken at a board of directors’ meeting or committee meeting may be taken without a meeting …

720 references both ALL and MUST with regards to board meetings.

I read 720 very carefully and highlighted it twice before I posted here. It seemed pretty clear to me that votes have to be taken at meetings that are noticed and open to the members, and expenditures have to be voted on (approved or disapproved) at meetings.

I would probably agree on the interpretation that 617 does not apply at 720 addresses meetings. Regardless, it does not apply in my case as the Board has never approved anything unanimously. Although they have "approved", and told the manager to enter contracts based upon a majority e-mail vote, that vote has never been unanimous. At least one Director, and usually two, has abstained or voted no on everything in private.

Steve - do you have an approved budget?

It MAY be that line items have been approved for budgeted amounts, and they are just filling that number. Not saying that's right, but it may be the reason why the board appears to be "spending money like crazy" when if fact, they are implementing budget allotments.

That $12,000 and $3500 figure seems really too far apart.
Sure you are comparing apples to apples? Time to take a good look at the contracts.

That's great, but 720 is not the ONLY statutes applicable to Fla. HOAs.

Regarding 'actions [by directors] without a meeting'...

Donna said earlier:
'Reference to 617 is used whenever 720 does not address an issue..."

Exactly.
It is not a matter of which statute has jurisdiction in this arguement, i.e. 720 vs. 617, because 720 is SILENT on the issue of 'actions [by directors] without a meeting', look for it, so 617 would apply.

The 'test' now moves to, quoting from the first sentence of the 617 statute included at bottom, "the (i.e. SteveJ6's)articles of incorporation or the bylaws provide otherwise".

The articles of incorporation or bylaws of SteveJ6's HOA must address the issue defined as: 'Action by directors without a meeting' to override 617, OR, is it not so-called 'silent' and thus cannot "privide otherwise"?

720 says this:
2)BOARD MEETINGS.—
 "(a)A meeting of the board of directors of an association occurs whenever a quorum of the board gathers to conduct association business..." Even if they ALL meet at Starbucks to discuss baseball there is NO MEETING.
Agreed.

Now... an officer gets an idea and circulates a proposal (say officer-door to officer-door) for an action to: "Open the community entry and exit gates over the Memorial day weekend, between 8 a.m. and 11 p.m. Saturday, Sunday, and Monday only, to make it easier for members and their visiting guests".

Where's the meeting?
There is NO MEETING.

...AND, properly evidenced and signed as per 617.0821... the action is legal and the gates can be raised!

For the record, my HOA docs. address 'actions [by directors] without a meeting' so 617.0812 would not apply to us because our docs. "provide otherwise".

Finally,
Assuming SteveJ6's docs. are silent on the issue,

How does 720 being silent on the 'action by directors without a meeting' issue some how mean that 617's specific language doesn't apply?

That would seem contrary to this notion: 'Reference to 617 is used whenever 720 does not address an issue..."

"Absence of proof is not proof of absence"

----------------------------------------------------------------------

617:
617.0821 Action by directors without a meeting.
—(1)Unless the articles of incorporation or the bylaws provide otherwise, action required or permitted by this act to be taken at a board of directors’ meeting or committee meeting may be taken without a meeting if the action is taken by all members of the board or of the committee. The action must be evidenced by one or more written consents describing the action taken and signed by each director or committee member.

(2)Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date.

(3)A consent signed under this section has the effect of a meeting vote and may be described as such in any document.

History.—s. 47, ch. 90-179.

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Peter,

You are right, my HOA Articles of Organization and Covenants and Restrictions are silent on the whole issue of Board Meetings.

I understand your point, but whether 720 applies, or 617 applies, the action to decide a matter (or award contracts-expend funds) is not not valid in my situation. In the case of 720, decisons to expend funds must take place at a meeting that is noticed and opened to members. In the case of 617, the decision was not unanimous, and not every Director signed off, so the decision by the majority was not sufficient for approval.

If anyone diagrees, I would like to hear why.

I understand a good bit about incompetence, arrogance, and the potential for kickbacks as I was in the RE and construction business in NY. As bad as it was up there, I never saw anything as crazy as this!! As I don't have proof, I am not sure whether it is negligence and arrogance, or greed (kickbacks). All I know is I don't want to pay for it, and it has to stop.

Presently considering my next step. Items to be considered are asking HOA attorney for legal opinion on points discussed here to just suing the Board - an several option between those extremes. Not sure what step to take yet......

Everyone must also understand that the State Statutes 617 are for ALL not for profit corps, therefore many meeting requirements and voting matters would not work in HOA situations where all members are entitled to vote, voice opinions and have hands on with the runnings of the corp. The HOA is not like it would be in running a boys club or blood bank and that type of non profit org. That is why 720, 718, 723 were written and will be used for such matters as meetings, etc. I have never seen actions of the Board without a meeting go successfully. Members demand to be part of Board meetings, if only to be counted as present.

You said that there is a resident who is an attorney? Have him read the meeting requirements to these bozos and hopefully they might catch on.