Legislature Passes Bill Placing Oversight on Condo Boards

Florida lawmakers passed a bill this week placing oversight on condo boards that imposes criminal penalties for some board violations.

This bill was drafted upon recommendations of a Miami-Dade grand jury and Florida’s DBPR after the uncovering of massive condo board fraud by various news outlets in 2016.

To become law, the bill, CS/CS/HB 1237, still needs Gov. Scott’s signature.  If signed, it becomes effective on July 1, 2017.

 

CS/CS/HB 1237 covers a number of condo oversight rules, but high-profile ones include:

  • If a condo association has more than 150 units, it must publish its financial reports on a password-protected web page.
  • If owners are denied documents and if fraud is proven, the people responsible for the fraud could face felony charges after July 2018.
  • Condo board directors are limited to eight years unless they get a super-majority of votes in later elections.
  • Directors can’t receive payments from the condo association, nor can they hire relatives.

2 Comments

  • Grace bisanti

    Has the Bill been amended regarding that a Director Cannot receive payments from the Association?
    Our President is being paid by the Association as our Property Manager !

    • hklegalgroup

      There is a rebuttable presumption of a conflict of interest if a director/relative enters into a contract for goods and services with the association; OR if a director/relative holds an interest in a business entity that conducts business with the association or proposes to enter into a contract or other transaction with the association. Meaning it is presumed a conflict BUT can be argued that there is no conflict too; it is not 100% removal from the agreement.

      I would say yes, under the new law a director cannot be the property manager. The law goes into effect July 1 before it can be enforced though. Currently that arrangement is ok.

      The statutory language:

      “If a director or an officer, or a relative of a director or an officer, proposes to engage in an activity that is a conflict of interest, as described in subsection (1), the proposed activity must be listed on, and all contracts and transactional documents related to the proposed activity must be attached to, the meeting agenda. If the board votes against the proposed activity, the director or officer, or the relative of the director or officer, must notify the board in writing of his or her intention not to pursue the proposed activity or to withdraw from office. If the board finds that an officer or a director has violated this subsection, the officer or director shall be deemed removed from office. The vacancy shall be filled according to general law.

      A director or an officer, or a relative of a director or an officer, who is a party to, or has an interest in, an activity that is a possible conflict of interest, as described in subsection (1), may attend the meeting at which the activity is considered by the board and is authorized to make a presentation to the board regarding the activity. After the presentation, the director or officer, or the relative of the director or officer, must leave the meeting during the discussion of, and the vote on, the activity. A director or an officer who is a party to, or has an interest in, the activity must recuse himself or herself from the vote.

      A contract entered into between a director or an officer, or a relative of a director or an officer, and the association, which is not a timeshare condominium association, that has not been properly disclosed as a conflict of interest or potential conflict of interest as required by s. 718.111(12)(g) is voidable and terminates upon the filing of a written notice terminating the contract with the board of directors which contains the consent of at least 20 percent of the voting interests of the association.”

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