Valid Board Member Question - Florida

Typically HOA's deal with a type of corporation called an "Limited Liability Corporation" or LLC's. It's usually when 2 or more people join together to form a corporation/business to limit their personal liabilities. I like to call it "Let's pick straws who goes to prison" set up. Basically, going after these types of LLC's are a bit difficult as they pass the buck around.

However, the LLC can assign someone to represent their LLC as a whole if they want. That person can then run for a board position representing their LLC co-operation. The LLC is still a member of the HOA but are counted as "One". The LLC picks which one that is.

The governing documents Bylaws should specify what happens with multiple owners insofar as voting. In our Bylaws for instance, ALL owners must sign a Certificate naming the voting member and submit that to the Secretary Director who will use it to certify any vote by that parcel. In the case of a corporation, the corporation would have to also submit the authority of the Person who acts on behalf of the corporation to designate the voting entity. So TWO documents would be necessary.

The governing documents, specifically the Bylaws, only say unit owners can run for the Board and does not talk about artificial entities like corporations and trusts. There is discussion defining who can represent the owner(s) when it comes to voting where membership is given the opportunity to vote. Since the shareholders are really the owners of a corporation then anyone who owns at least one share can run for the board is one argument. Another argument is that artificial entities cannot run for the board. In this case the person designated to vote in behalf of the corporation is not a shareholder but an employee of the corporation.

Yes.... the developer gave himself an exception saying 'only owners can be one the board except that the developer's may appoint non-owners prior to turnover.'

The Bylaws may say one thing and the CCRs may say something different. If there is a conflict, the CCRs always prevail.

No legal background here, but....I'd say that every lot is q required to have a vote on your HOA elections, etc. I think that every lot also can have a rep no matter how many owners it has. We have, for instance, a condo that's owned by three couples or trade-off using it for vacay purposes. They legally, I'm quite certain could select one of them to be on the Board.

So they are "real" vs. "artificial" people, but I think the artificial person could select a person to run for the board. What y'all can do is campaign against them saying they know too little about your HOA since they don't even live there (assuming s/her does not).

But....with others this is a legal question.

Our Covenants say that when a unit is owned by a corporation, the corporation must name one person as their agent for that unit and that agent has all the rights of an owner.

I'm sure that the Articles of Incorporation and/or the Bylaws of any corporation spell out who has the authority to act for the corporation, and whoever that is it's certainly not individual shareholders. I own some stock in a large tech company. Do you think I would be able to buy property in the corporation's name? Or lease office space in the company's name? Hardly. In fact, that would probably be fraud if I represented myself as having the authority to act for the corporation.

If the Articles of Incorporation and/or Bylaws do not spell out who is to act in behalf of a corporation then can no one run or can everyone holding shares run ?

Do you believe that corporations should send copy of their Articles and/or Bylaws to the Association so the association could determine who, if anyone could run for the board ?

No, I don't think you would be able to buy property or lease office space in the company's name. However you might be able to run for the board depending on what your association bylaws say about who can run. I am told that who can run is determined by the governing docs and state law. As I understand what constitutes fraud, I don't think running for a board seat, without association argument, alone constitutes fraud, if state law and the governing documents permit. However I am still looking for any case law or other statutes that would address the situation.

Right now I have a corporation that is owned by another corporation that has a multitude of shareholders where one of the shareholders want to submit to run for the board. The corporation has not provided a voter cert indicating who can vote in behalf of the corporation. The submitting to run candidate maintains that he has the right to run since he is a part owner of the corporation and thus has an equity interest in 69 units held in the corporations name. He asks for anything in the governing documents or state law that would prohibit him from running.

As an aside, having the 69 votes makes it a certainty that he would win a seat, based on election history of this association. So the secretary needs to decide if that person is qualified to run in the first place.

If there is no indication as to who represents the corporation's interest then can more than one person from that corporation run for the board with claim they are owners too and are compliant with the governing documents and state law as to board eligibility?

To Geno S. And

We did indicate more than one person representing a unit may not be able to run for the board but the response was Ok, I also have an equity interest in 68 other units, I will just pick another one.

In this case Voter Certification forms were sent but never received back. Their argument is a shareholder of the corp is is also an owner, although without a controlling interest. Given that there is no Voter Cert. I would contend that the corporation cannot vote in anything that is for membership to vote on. However running for the board is another matter.

Was hoping to be pointed to some case law, especially at the appeals level, that addresses the issue of 'Who is allowed to run for the board'. So far I cannot find anything but will keep looking.

It is turning out to be an interesting question. One of those where if you ask three attorneys you get four different answers. If the answer was an easy one then I would not of had to seek the input from this board.

Thanks all for chiming in.

Obviously........ except for your first sentence I disagree. I am not in power to make anything more difficult anyway. We are just seeking to understand what the rules are and thus be fair and avoid lawsuits.

Agree. So in this case, given the details cited, your position would be that no one could run for the board citing an ownership interest in the subject corporation. I have some that agree with you.

Language like that is common re. only an "authorized representative" (or similar language) may vote on matters that come before the homeowners and to cast a ballot in an election.

On the other hand (and I've been looking for an hour) language that says whose name may be placed in nomination and/or on an election ballot is not so common, especially when a business entity is the owner.

I entirely agree with Janet & others. As in my opinion above (not legal), every lot has the right to cast one vote for Association business, and to have one person serve on the Board of directors. I, here in my HOA as a board member, do not care how they choose that one individual.

Here, I would campaign against any candidate for the board who does does not reside here full time due to their ignorance of day-to-day life in our HOA. We now have two such directors in a Board of 7 and their ignorance of everyday life, is, well, disgusting!