HOA Q&A: What happens if there aren't enough members willing to serve on the board?
Editor’s note: Attorneys at Goede, DeBoest & Cross respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, civil litigation, estate planning and commercial transactions.
Q: My condominium association does not have enough members willing to serve on the Board of Directors for our association. If there are not enough members to fill the Board positions, will our current Board members be required to stay on the Board, or will it get turned over to a receiver? In the event a receiver is required, what is the process?
A: In the case that there are no members willing to fill the vacancies on the board of administration for an association, per section 718.112(2)(d)2, Florida Statutes, if all members’ terms would otherwise expire, but there are no candidates, the terms of all board members expire at the annual meeting, and such members may stand for reelection unless prohibited by the bylaws. If, however, the existing board does not want to stand for reelection, the board could then get turned over to a receiver. Note that while the below discusses the condominium law, Florida Chapter 719 for cooperatives and 720 for homeowner associations contain the same law.
It is strongly encouraged that your association try to find members willing to serve on the board of administration and/or encourage the current board members to remain on, as appointing a receiver has numerous negative implications for an association. Specifically, the receiver would be entitled to receive a salary and reimbursement of all costs and attorney’s fees payable from association funds. As such, this could be a significant new cost for your association that could be avoided. The appointment of a receiver could also have negative implications with regard to, among other items, adversely impacting property values, as a receivership will likely look unfavorable to potential homebuyers and lenders, and a receiver could have possible negative insurance coverage implications, etc. In the event that a receiver needs to be appointed, the process is as follows:
Per sections 718.1124 and 718.127, Florida Statutes, if an association fails to fill vacancies on the board of administration sufficient to constitute a quorum in accordance with the bylaws, any unit owner may give notice of his or her intent to apply to the circuit court within whose jurisdiction the condominium lies for the appointment of a receiver to manage the affairs of the association. The form of the notice shall be as follows:
NOTICE OF INTENT TO APPLY FOR RECEIVERSHIP
YOU ARE HEREBY NOTIFIED that the undersigned owner of a condominium unit in (name of condominium) intends to file a petition in the circuit court for appointment of a receiver to manage the affairs of the association on the grounds that the association has failed to fill vacancies on the board of administration sufficient to constitute a quorum. This petition will not be filed if the vacancies are filled within 30 days after the date on which this notice was sent or posted, whichever is later. If a receiver is appointed, the receiver shall have all of the powers of the board and shall be entitled to receive a salary and reimbursement of all costs and attorney’s fees payable from association funds.
(name and address of petitioning unit owner)
The above notice must be provided by the unit owner to the association by certified mail or personal delivery, must be posted in a conspicuous place on the condominium property, and must be provided by the unit owner to every other unit owner of the association by certified mail or personal delivery. The notice must be posted and mailed or delivered at least 30 days prior to the filing of a petition seeking receivership. Notice by mail to a unit owner shall be sent to the address used by the county property appraiser for notice to the unit owner, except that where a unit owner’s address is not publicly available, the notice shall be mailed to the unit. If the association fails to fill the vacancies within 30 days after the notice is posted and mailed or delivered, the unit owner may proceed with the petition.
Upon the appointment of a receiver by a court for any reason relating to a condominium association, the court shall direct the receiver to provide to all unit owners written notice of his or her appointment as receiver. Such notice shall be mailed or delivered within 10 days after the appointment. Notice by mail to a unit owner shall be sent to the address used by the county property appraiser for notice to the unit owner. The association shall be responsible for the salary of the receiver, court costs, and attorney’s fees. The receiver shall have all powers and duties of a duly constituted board of administration and shall serve until the association fills vacancies on the board sufficient to constitute a quorum and the court relieves the receiver of the appointment.
Destiny Goede, Esq., is an attorney at the law firm Goede, DeBoest & Cross. Visit www.gadclaw.com or to ask questions about your issues for future columns, send your inquiry to: question@gadclaw.com. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.
This article originally appeared on Treasure Coast Newspapers: HOA Q&A: What happens if there aren't enough members to be on board?
