Prop. Mgmt. Contracts

Started by RW1 • 6 replies • 1055 views

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RW1 (Texas)
Posts: 149

Posted:

I live in a FLA. HOA incoroprated under FL Chapter 617 in 1998.

Is it common (or heard of) for a PM Co. to have a clause in their contract allowing them to spend a fixed maximum amout of $ without [prior] BOD aproval?

Could this be legal?

If such a clause exists, I guess by signing the contract the BOD has "voted"?

Seems odd and maybe unwise unless strick conditions are attached such emergency conditions exist(ed).

Would it be legal for the BOD to approve such a clause?

TIA...

RW1

GloriaM (North Carolina)
Posts: 829

Posted:

Yes, the MC usually will have a set amount that they can spend without BOD approval, and in the case of an emergency to save the HOA from further damage the MC's contract will give them the right to make their best judgment call.

Our contract reads that we will pay the HOA's monthly bills, however anything outside of the normal monthly bills will go to the board for approval.

NancyD1 (Florida)
Posts: 447

Posted:

RW1,

May I ask why your community is under FL 617? Being incorporated under 617 leaves a lot to be desired verses FL 720. #1 being that the board is held liable personally if someone decides to sue the corporation, #2 that if the board decides to pay themselves they can, but only if the by-laws state otherwise. These were two of the driving forces behind enacting FL 720. Your community can not file under the IRS 1120H which has some extremely good tax benefits for HOAs. 720 is also more explanatory than 617.

NancyD1 (Florida)
Posts: 447

Posted:

If your board voted for it, and it is allowed in your By-Laws they can do it. I personally don't like these clauses. We do not allow the MC any access to the HOA money, nor do we allow them to sign any contract for the HOA. If there is an emergency, there are 5 BOD members. He can reach one of us. We have in our By-Laws that if there is an emergency one or more of the BOD can make a decision about the emergency only if it will protect the community. I know this is subjective but it worked during the hurricanes when there were a lot of emergencies.

RW1 (Texas)
Posts: 149

Posted:

Nancy,

I have been asking the same question several ways regarding how our HOA is subject to 720 due to our being incorporated under 617 and no re-filing, recording, etc. since 720 was enacted.

I was not aware of the 2 items you mentioned and have not heard of this before.

I can only aGUESS that portions of both of these Statutes (as well as others) CAN apply to any HOA if not addressed in the HOAs governing documents. As we are first a not-for-profit corp. and seconh an HOA.

Then there is the question when the gov. docs. overlap the Statutes which one has precedence?

I'm still not sure and that makes me uncomfortable.

RW1

NancyD1 (Florida)
Posts: 447

Posted:

RW1, 720 was written only for HOA's only. 617is for "not for profits", and there are few statues in 617 that relate the present day HOA. If there is a question that is not answered in 617 you cannot use 720,you go to your docs, if not there you have to go back to FL 712 Marketable Record Title to real property. You will not find any answers here for anything for a HOA, but this is how it will work. If I don't find it under FL 720 for my HOA, I go to our doc's, not 617 because I have already been there. I don't go back to the beginning. You have no where to go but back.

You have to consider the state statute 617 first then your governing doc's. This would be the same for me only 720 then our docs. This is where the difference for me would come in. If 720 and my docs don't say it, I go to fl 718 condos, which is where most of 720 came from.

I tried to make this as clear as I could. I haven't read or referred to 617 in a long time but I do no think it even mentions HOA's.

PaulM (Pennsylvania)
Posts: 1,347

Posted:

RW1: I don't feel it is appropriate for the PM or PM Company to be 'allowed' to pay bills without Board member approval. The PM is your community's agent; they are under contract to you, they are to act as their responsibilities are stated in the signed contract with you. But, they are not to act independently of what the contract's responsibilities state.

Further, the Board should be alert to the monies coming in from paid (and those unpaid) association fees and that they are being spent correctly according to work performed. Part of this is to be aware of outstanding bills and to approve the payment of same.

Down the road, if the Association is brought into court over a situation concerning bills/money spent, it will not be the PM who will have to 'prove' their position, but the Board.

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