FL HOA Board won't buy Fidelity Bond required by FL Statute 720.033 #5

More than 6 months ago, I brought to the attention of the HOA Board of Directors (BOD) meeting the FL Statute 720.303:

(5) The association shall maintain insurance or a fidelity bond for all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this subsection, the term “persons who control or disburse funds of the association” includes, but is not limited to, persons authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost of any insurance or bond. If annually approved by a majority of the voting interests present at a properly called meeting of the association, an association may waive the requirement of obtaining an insurance policy or fidelity bond for all persons who control or disburse funds of the association.

The BOD voted at a monthly meeting to NOT require the bond. I brought to their attention that it needed to be a "membership meeting", so they brought it up at the Annual Meeting last month (no published agenda, not mentioned in the letter sent out about the annual meeting). There was not a quorum for the annual meeting, but a "meeting" was held and the President asked for a show of hands as to who votes yes vs no on this issue....it was supposed to be an indication of where members in the audience stood, slightly more said "no need". Now, the BOD is saying they don't have to get a fidelity bond because of that show of hands (note: our General Liab Policy doesn't include coverage).

I have pointed out, the need to notice the members of the pending vote, the need to have a quorum, that members need to know a "protection offered via the Statutes was being given up"...etc. .but the BOD are "not going to do anything further". I asked they speak to an HOA attorney (we have no manager, self-managed HOA) but am told there is no need. Members are saying I should "trust" BOD...

Am I correct in my analysis that the BOD must have a fidelity bond until a properly called meeting voting otherwise, is arranged?
The BOD does many other things out of line of the statutes, what can I do to get compliance?

(several other members in the community feel the same way...I am not on the BOD due to liability concerns for myself and, the "old guard" doesn't want me on the Board, because I have questioned their not following the statutes which supersede the HOA Docs.)

Francie,

Does your Association maintain crime insurance? I am not an attorney, nor do I work in the legal profession, that insurance may me enough to satisfy the compliance of that statute.

Please note, if you are very concerned that the Board is doing things improperly, you should gather support from other homeowners and either recall or simply not reelect the individuals currently serving on the Board and replace them with those who will do things properly.

No other crime insurance in general insurance policy. The rest of the comments have been discussed....many had previously been on the BOD and won't return, this is a 30 year+ association, not alot of turnover in the community, and in a "small town" atmosphere.

I am looking for "fresh" ideas (not just move out or move on, replace BOD, etc...the most obvious comments) that will have minimal discord with my neighbors on the Board. Trying to get them to go to a Board certification class and find "professional" input and guidance for the BOD to learn from and hopefully to change how they look at things. My thought was maybe this venue would provide healthy, knowledgeable, non-antagonistic, realistic feedback I could share with them....

I think your cite should be 720.3033

The last sentence of (5) seems to say that what happened to you is ok if it is "annually approved by a majority of the voting interests presently at properly called meeting of the association."

Looking at 720.306, it looks like your board is relying on:

(4) CONTENT OF NOTICE.—Unless law or the governing documents require otherwise, notice of an annual meeting need not include a description of the purpose or purposes for which the meeting is called. Notice of a special meeting must include a description of the purpose or purposes for which the meeting is called.

As I read it, they are in the clear if the vote occurs at the annual meeting - no prior notice required.

Unless ... there is something in your docs that set greater restrictions than 720. If I were you, I would scour your docs.

I agree. However, it is an option under FL (and other State) statutes.

As per the OP:


In VA, and possibly in FL, crime insurance (purchased to cover the higher amounts) can be purchased and meets the statuary requirements.

From our Crime Policy:

FIDELITY
1. Employee Theft
The Company will pay the Insured for the Insured’s direct loss of, or direct loss from damage to,
Money, Securities and Other Property directly caused by Theft or Forgery committed by an
Employee, whether identified or not, acting alone or in collusion with other persons.

Employee means:

4. any natural person:
a. who is a member of the board of directors, member of the board of trustees or
LLC Manager while acting as a member of any of the Insured’s elected or
appointed committees, including any member of such committee, to perform on
the Insured’s behalf, specific, as distinguished from general, directorial acts;
b. who is a non-compensated officer; . . .
e. who is a former Employee, member of the board of directors, partner, LLC
Manager, or member of the board of trustees retained as a consultant while that
person is subject to the Insured’s direction and control and performing services
for the Insured;
f. who is a guest student or intern pursuing studies or duties in any of the Insured’s
offices or Premises; while such person is subject to the Insured’s direction and
control and performing services for the Insured;
g. who is a volunteer, while such person is subject to the Insured’s direction and
control and is performing services for the Insured, or . . . .

Our State requirement is to cover an amount equal to to the lesser of $1 million or the amount of the reserve balances of the association plus one-fourth of the aggregate annual assessment income of such association. (VA § 55-514.2)

For our Association, this policy costs us $444 per year.

Tim,

Thanx for the info

We are debating terminology