When can a board hold a closed meeting? (FL)

Editor’s note: Attorneys at Goede, Adamczyk, DeBoest & Cross respond to questions about Florida community association law. With offices in Naples, Fort Myers, Coral Gables and Boca Raton, the firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, litigation, estate planning and business law.

Q: Our homeowners association (HOA) board called a private board meeting for personnel issues. The meeting was held to discuss an email a director sent by mistake to the general manager. The email had some satirical comments about a board member’s decision. The board voted to ask the director to resign for ethics reasons and if they did not resign to remove them from their officer position. Is this a meeting that can be legally closed? They also had private board meetings which were called to discuss a vendor contract but had it without an attorney present. The way I read the Sunshine laws, that is also not a legal meeting. When I asked the board president about the meetings, he said their attorney said they were legal because they were contract negotiations. Your opinion? C.C., Naples

A: Thank you for your questions. The law applicable to the HOA is Section 720.303, Florida Statutes which provides: “Notwithstanding any other law, meetings between the board or a committee and the association’s attorney to discuss proposed or pending litigation or meetings of the board held for the purpose of discussing personnel matters are not required to be open to the members other than directors.” The law for condominiums is identical.

A meeting of the board to discuss the actions or communications of a director or officer as you have described is not a personnel matter in my opinion. An officer or director of the association is not the association’s personnel. If the meeting was about comments made about the general manager, then it could be considered a personnel matter but that would mean it involved something about the general manager who is the association’s employee, i.e. personnel. You indicated the purpose of the meeting was to discuss comments made to the GM about the board not about the GM. This does not qualify in my opinion as a personnel matter that would allow the meeting to be closed to members.

Meetings to discuss negotiations about the vendor contract when the association’s legal counsel was not present is also not a meeting that can be closed to the members. Even if the association attorney was present at the meeting it likely should not have been closed because the purpose of the meeting was not to discuss proposed or pending litigation, as required by the law.

Boards often want to hold closed meetings to discuss matters that they otherwise do not want to publicize, sometimes for good reason such as negotiation of contract terms when there are several service bidders, but neither of the two exceptions apply for this purpose.

Q: Can the association require a $25 processing fee for rentals? J.Z., Bonita Springs

A: Condominium and cooperative associations can only charge a fee in connection with a rental application if 1) The governing documents require the association to approve rentals or leases and 2) The governing documents expressly provide that a fee can be charged. Further, if the fee is authorized, the law provides that it cannot be greater than $100 per applicant with each adult deemed to be a separate applicant. However, spouses are deemed to be a single applicant. The HOA law does not address these issues but in my opinion, the authority to charge a rental application fee must be found in the governing documents.

Q: The developer of our community said that he expects to turn over our development to the homeowners when 90 percent of the homes are sold, which he said should be before the end of the year. The developer also said that he will be asking for a small group of “concerned homeowners” to accept the development in the name of all the homeowners. After that happens, the developer said the homeowners will elect a board of directors for our newly formed HOA. In addition, the developer said that there will be no reserve money in our HOA at time of transfer. What are the responsibilities and legal risks for the small group of concerned homeowners who will be accepting the development in the name of all homeowners prior to the election of the board of directors? Also, I would appreciate any other comments and suggestions regarding this issue. T.C., Estero

A: The process you are describing is called transition or turnover, more commonly. At a certain point after a developer creates a condominium, co-operative or HOA the law requires that control of the board of directors be turned over to the non-developer homeowners. This transition occurs at a turnover meeting. At the meeting three things will take place: 1) The developer appointed directors will tender their resignations. 2) The non-developer homeowners will be elected or appointed to the board, and 3) The official records will be delivered to the new board. Within 90 days after the turnover meeting the developer is obligated to pay for and deliver an audit of the association’s financial operation from the date of incorporation to the date of the transition meeting. The audit should disclose if there are any reserves and if not, if the reserves were properly waived or not required to be created. It is very common to start the turnover process by creating a transition committee. The committee’s role is to begin to get familiar with the operation of the association so that at the time of turnover the owners can smoothly take control. A common misconception is that the owners have the right to prevent or not accept turnover until all perceived deficiencies in the community are corrected by the developer. This is not true nor is it warranted. The statute of limitations to have deficiencies corrected does not end on the day of turnover rather it begins at turnover. There is very little legal risk to serving on the transition committee, but the pre-turnover committee has no authority to waive or accept the conditions of the community prior to being properly seated on the board.

Q: I’m a condo owner at an association and our board of directors uses a local attorney as needed to rule on various questions from other owners. The attorney asserts that he/she is working for and responsible only to the board and not all the owners. As a result, the attorney and members of the board are inclined to ignore many of the questions or suggestions from owners who are not elected or appointed leaders. If there is conflict between the board and the other owners, the attorney claims to be an agent of the board and refuses to concede being responsible to all owner-members of the association. What is the role of the association’s legal counsel? L.N., Marco Island

A: This is a common misunderstanding. The legal counsel’s client is not the board nor is it the individual or collective homeowners. The client is the corporation, i.e. the association. The board of directors of the association are the decision makers, so the association’s legal counsel takes action as directed by the board. However, if the board directed the legal counsel to take action that the legal counsel believed was illegal or unethical, he or she would be obligated to refuse to take the action.

Attorney Richard D. DeBoest is a shareholder at the law firm of Goede, Adamczyk, DeBoest & Cross. Visit the website at www.gadclaw.com or ask questions about your issues for future columns by sending an inquiry to: info@gadclaw.com.

Original Source: Naples Daily News
Original Source Link: https://www.naplesnews.com/story/money/real-estate/2018/12/29/when-can-board-hold-closed-meeting/2406507002/

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