We normally have eight people on our community board of directors. Due to vacancies the board has decreased to three people. Two of those board members have voted to employ a management company at a cost of $150,000. Do they have the authority to make this change without the full consent of the community?
It’s an interesting question and attorney opinions do differ a bit, but here is how I evaluate this situation. A typical set of bylaws will say something similar to the following: “a quorum at a board of directors meeting shall consist of a majority of the entire board of directors.” Now, that could arguably relate to either the total number of board members specified by the bylaws, or instead the number of currently seated board members. But, consider that the Not For Profit Corporation Act, at Section 617.0824, Fla. Stat., states that “unless the articles of incorporation or the bylaws require a different number, a quorum of a board of directors consists of a majority of the number of directors prescribed by the articles of incorporation or the bylaws.” That is, in your situation, eight. And, consider that the various community association laws provide that unless otherwise provided in the bylaws, vacancies on the board shall be filled by the vote of a majority of the remaining directors, even if those directors constitute less than a quorum (which strongly suggests that they otherwise would not be able to conduct such basic association business, otherwise that language would be irrelevant).
So, taken as a whole, it is my general opinion that where your bylaws specify the board is made up of eight directors, and where a quorum is a majority, you need at least five directors to conduct business; and if you have fewer than five directors seated to the board, the board effectively cannot conduct business, other than to appoint replacement directors. Now, that opinion may vary depending on the specific language of the relevant articles or bylaws, but overall I think that’s the likely outcome.
As such, it’s likely that the three remaining directors on your eight-member board cannot properly conduct business. My recommendation would be that they appoint replacements and then ratify the decision to hire the management company. Note that community consent would never come into the picture—the board generally has the right to appoint replacement directors in between elections (though I have seen rare bylaws that require an election in those circumstances), and so the board would first replenish the active directors, and then vote on the contract.
My condo association board just put out an agenda saying they will be voting on a rule that restricts real estate showings to Monday through Saturday, 10 a.m. to 3 p.m. Showings are prohibited on Sunday. In addition, homeowners will need to contact the management company 24 hours in advance of any showing. Is this legal? Can the board prohibit all showings on Sundays, which is the most popular day for showings in the real state world? Can they demand 24 hours’ notice? Would these rules constitute interference with the sale of my condo (which I am planning to list in the next few weeks)?
Your condominium association likely has broad authority to govern the use of the common property (which would include access to the units) for the general welfare of residents. Any rule would be judged on a reasonableness standard—is the rule reasonably tailored to achieve a legitimate association interest? Many condominiums and HOAs have rules that restrict commercial activity on weekends, as it tends to disturb residents who are using the property for their own recreation. You can imagine why owners, who are rarely home during the week, may want to enjoy a building free of extraneous visitors (such as prospective home buyers) on the weekends. My gut feeling is that the rule you describe would be found reasonable, but I have never searched for cases that are directly on point—I just know that similar rules are very common. Really, this is no different than a rule prohibiting weekend deliveries. It may be inconvenient for some owners, but overall the board feels that it benefits the majority of the community. Your best counter argument would be that it is unreasonable for the board to interfere with the free transfer of your unit, and that prohibiting weekend showings will effectively limit your ability to sell. But, my gut feeling is that would be a losing argument.
Ryan Poliakoff, a partner at Backer Aboud Poliakoff & Foelster, LLP, is a Board Certified Specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff, pioneer of the community association legal industry, tireless advocate, and author of treatises, books and hundreds of articles. Ryan Poliakoff and Gary Poliakoff are co-authors of New Neighborhoods—The Consumer’s Guide to Condominium, Co-Op and HOA Living. Email your questions to [email protected]. Please be sure to include your location.