By
Eric Glazer, Esq.
Published
December 16, 2013
We all know that in both a condo and an HOA board members
serve without compensation.
Suppose however that a member of the Board owns a
business and that business wants to enter into a contract with
the association? For
example, let's say the condominium needs a paint job.
The condo President is a general contractor and his
company is qualified to do the work.
The President tells the other Board members that the
association should hire his company to do the job because he
will give them the best price, he will personally supervise the
job, he will provide the standard warranties and his company is
licensed, insured and will pull the proper permits.
Can the Board vote to hire the services of the company
owned by the association President?
The answer is "Yes" but only if certain legal
hurdles are accomplished first.
Both
Florida
condominium and H.O.A. law would allow the association to enter
into this agreement. First
however:
(a)
The association shall comply with the requirements of s.
617.0832, meaning the contract and the relationship must be
disclosed;
(b)
The disclosure shall be entered into the written minutes of the
meeting.
(c)
Approval of the contract or other transaction shall require an
affirmative vote of two-thirds of the directors present.
(d)
At the next regular or special meeting of the members, the
existence of the contract or other transaction shall be
disclosed to the members. Upon motion of any member, the
contract or transaction shall be brought up for a vote and may
be canceled by a majority vote of the members present. Should
the members cancel the contract, the association shall only be
liable for the reasonable value of goods and services provided
up to the time of cancellation and shall not be liable for any
termination fee, liquidated damages, or other form of penalty
for such cancellation.
I know that some of you may think it's simply a bad idea
to hire the services of a company owned by one of the directors.
I can't say I agree.
If the Board member's company is reputable, the
association is getting a good deal and the statute is complied
with, perhaps it can work out well for the association.
I would love to know if any of you had positive or
negative experiences in this regard.
