The election is over, and you have earned a coveted seat on your condominium association’s board of directors. Now what? This helpful guide will provide you with a “CliffsNotes” version of important things to remember as you embark on your journey as a director.
What exactly does a member of the board of directors do? The board is the decision-making authority of the association; the directors are the captains of the ship. You are responsible for the administration and operation of your association, and you will be communicating with unit owners, association managers, and professionals retained to provide services, guidance, and advice to the board. The board is granted all of the corporation’s powers and duties and is tasked with making important decisions that will impact the owners and community. Directors must be very familiar with the association’s governing documents, hold meetings, prepare budgets, fund reserves, and maintain association property. Directors have a fiduciary relationship to the unit owners and must keep the interests of the association above their personal interests. Directors shall act honestly, in good faith, and in the best interest of the condominium all while exercising due care, diligence, and skill that a reasonably prudent person would exercise in similar circumstances. You are probably thinking that this sounds like an overwhelming list of responsibilities; however, there is a wealth of resources and professionals that you can (and should) rely on to help guide you in your new role.
Do Your Homework
If you have not done so already, you should take the time to review your association’s articles of incorporation, declaration of condominium, and bylaws (known as the “governing documents”), and you should understand what role each of these documents play in the operation of the association. The articles of incorporation establish the corporation. The declaration is the “guidebook” that regulates the use, appearance, and maintenance of the property. Can an owner park a commercial vehicle in the association’s parking lot? Can a unit be rented for periods of less than 30 days? Who is responsible for replacing windows and screens? The answer to all of these questions is found in your declaration. The bylaws contain the rules and procedures regarding the operation and governance of the association. The bylaws define how elections are held, when meeting notices must be posted and/or mailed, the responsibilities of the officers, how board vacancies are filled, and much more.
Schedule and Notice Board Meetings
The board conducts all association business and operations through scheduled board meetings. Any time that a quorum of the board is present discussing association business, it is considered a board meeting. All board meetings must be properly noticed and, with limited exceptions, are open to all unit owners. Notice of regular board meetings must specifically identify agenda items and must be posted conspicuously on the condominium property at least 48 hours before the meeting. However, there are certain board meetings, such as meetings at which a special assessment will be considered or where the board will adopt rules regarding use, that require notice to be delivered to owners and posted at least 14 days prior to the meeting. As a director, it is important to know when notice of meetings must be given to owners and how notice must be given, what meetings are “open” to unit owners, and when it is proper to hold and notice a “closed” board meeting.
Maintain the Property
The board of directors has a duty to maintain, repair, and replace property when necessary. In order to carry out these duties, directors must understand who is responsible for maintenance and repairs. The parties’ obligations are detailed in the declaration. Typically unit owners are responsible for the interior of their units, and the association is responsible for maintaining the common elements (areas outside the boundaries of the physical unit). Notwithstanding this general rule, directors must also understand the maintenance responsibilities for limited common elements such as balconies, garages, and lanais. Determining maintenance responsibilities can be complicated, and some obligations may change if certain factors exist. As such it is prudent to consult with the association’s legal counsel to get a clear understanding as to maintenance responsibilities to avoid potentially costly issues now and in the future.
Directors should also understand that there are times when maintenance, repairs, and replacements are necessary due to events other than routine maintenance issues. When the property is damaged by a casualty event, the provisions in the declaration no longer dictate the parties’ responsibilities; the Condominium Act, Chapter 718, Florida Statutes, applies, and the association should report the claim to its insurance carrier.
Protect the Property
Every residential condominium in Florida is required to maintain adequate property insurance for full insurable value, replacement cost, or similar coverage that is based on the replacement cost of the property as determined by an independent insurance appraisal at least once every 36 months. The deductible is determined by the board and may be based on industry standards and the practice for communities of similar size and age, and having similar construction and facilities in the locale where the property is located. The insurance policy must provide primary coverage for all portions of the condominium association as originally installed or replacement of like kind and quality, in accordance with the original plans. The association’s coverage must exclude certain components that are the unit owners’ responsibility to insure, such as personal property within units or limited common elements, appliances, built-in cabinets, floor coverings, etc. An insurance professional familiar with condominium associations can assist in ensuring that your coverage complies with Florida law.
Budget, Plan, and Reserve
Inevitably, money issues are frequently a hot topic in condominiums. With insurance premiums skyrocketing and the cost of living increasing, there may be a temptation to keep assessments low. It is important to keep in mind that fiscal responsibility and financial management does not mean keeping the fees low by putting off necessary maintenance, repairs, and replacement. For certain associations, the law requires the association to undertake a reserve study (i.e., structural integrity reserve study); however, whether or not your condominium is required to commission a structural integrity reserve study, it is prudent to obtain a reserve study (and to update it regularly) to adequately budget and reserve for maintenance, repairs, and replacements.
Budgets must include estimated revenues and expenses. The budget also must include reserves for roof replacement, building painting, pavement resurfacing, and any other item of deferred maintenance or replacement cost exceeding $10,000. Associations that are required to have a structural integrity reserve study (generally, associations that have buildings on the condominium property that are three stories or higher) must also maintain reserves for specific components identified in the Condominium Act that are related to the structural integrity of the building. Proposed budgets must include fully funded reserves; however, funding of certain reserve components (i.e., nonstructural integrity components) may be waived or reduced with a vote of a majority of all members. When it comes to preparing a budget and reserve funding, board members should work with qualified professionals to ensure that the association’s funding requirements are met.
Serving as a director of a condominium association does not have to be a daunting task. By familiarizing yourself with the association’s governing documents and the Condominium Act, educating yourself on important community association issues, and surrounding yourself with professionals and qualified consultants that can provide advice and guidance when needed, your term as a director will be more effective, efficient, and beneficial to your community. And, who knows, it may evolve into a rewarding experience.
To read the original FCAP article, please click here.
Jennifer Biletnikoff is a Board Certified Specialist in Condominium and Planned Development Law and represents condominium, cooperative, mobile home and homeowners’ associations located throughout Southwest Florida including Collier, Lee, Sarasota and Charlotte Counties. She has particular experience in covenant enforcement and foreclosure law, and has also practiced in the areas of commercial, business and tort litigation.