Condo Associations and Their Responsibilities
The recent tragic collapse of Champlain Towers South in Surfside, Florida has drawn the nation’s attention to condo associations in this state. Much of this attention centers on the roles, characteristics and responsibilities of condo associations throughout Florida. Florida condo associations are fiduciaries, (usually) non-profit entities, consist of decision-making panels of community representatives and are a heavily regulated housing authority.
Individually, let’s explore each of these roles of the condo association .
The Condo Association as a Fiduciary
Perhaps the most important role played by condo associations throughout Florida is that of a fiduciary. Fiduciary responsibility is based on whether the association board takes actions that any “reasonably prudent” group or individual would take given the same circumstances.
Condominium boards usually have individual and collective fiduciary responsibility. This means that the board collectively, as well as the members individually, could be subject to lawsuits from unit owners for failing to act with reasonable prudence.
For example, as a building ages, it is reasonable to expect that maintenance costs will be incurred to keep the building in an occupiable state. The annual fees levied by the association may not be sufficient to cover the extensive building repairs over time. In such a case, it may be necessary to charge association members a “special homeowner assessment” that covers their portion of the repair and maintenance costs. Failing to collect these fees to pay for essential building repairs could be viewed as a breach of fiduciary responsibility. In such a case, the consequences of failing to plan financially could involve civil or even criminal action if it can be shown that the failure directly caused a loss of life or property.
The Condo Association as a Registered Non-profit Entity
Although Florida statute provides for both for-profit and nonprofit condo associations, the vast majority of condo associations are nonprofit entities. All condo associations are obliged to have a set of unique formation and reporting requirements including three essential governing documents. These are the association’s articles of incorporation, declaration and bylaws.
The articles of incorporation are, in effect, the association’s contract with the State of Florida. In most cases, this document incorporates the association as a corporation-not-for-profit.
The declaration consists of the contractual components of association membership. This might include such items as rules relating to pets, vehicles and guests. It gives the association it’s authority to conduct background checks on prospective residents, outlines insurance requirements, and also spells out the responsibilities of the association to its members.
The association’s bylaws are procedural in nature. They explain, for instance, the “how, when and who” related to voting, board membership and the fiscal year of the association.
These three documents form the legal identity of the condo association and will be the first point of reference in disputes, investigations, arbitrations or lawsuits. Because all three documents incorporate each other by reference, all associations should work with a Florida HOA attorney to ensure that there is consistency between them.
“Condominium boards usually have individual and collective fiduciary responsibility. This means that the board collectively, as well as the members individually, could be subject to lawsuits from unit owners for failing to act with reasonable prudence.”
The Condo Association as a Community Representative
Arguably, the most important role of the condo association is that of representing the community over its own interests and the interests of its board members. This means making decisions that benefit current and future members of the community with regards to health and safety, finance, property values and the look and feel of the condo’s common areas.
The maintenance of the commons areas and the exterior components of the condo’s building(s) is a very important part of the association’s responsibility. The concept of “reasonably prudent” decisions may apply when an arbitration committee or court analyzes the basis of a condo association’s choices. In such cases, the decisions will be judged as prudent from the perspective of the community rather than simply prudent to the board members themselves.
For example, if structural repairs of an older building are necessary then it is in the best interests of current and future members that the current membership invest in the repairs by way of a “special homeowner assessment”. Although current members may conclude that they would rather not pay the sometimes hefty costs incurred by structural repairs, it is important for the board to make decisions that include the best interests of future condo owners as well.
The Condo Association as a Heavily Regulated Housing Authority
A condo association is a neighborhood authority that levies fines, assesses fees, sets out community rules, limits access to a community and can go so far as to place liens on homeowners’ properties. The full extent of an associations powers includes:
- Assess fees
- Enforce the association bylaws
- Grant waivers
- Hire and manage condo staff and vendors
- Investigate inquiries regarding violations, maintenance and other pertinent issues
- Levy fines
- Make decisions regarding litigation
- Respond to and often adjudicate owner disputes
In the State of Florida, condo associations are tightly regulated entities governed by statute. In addition, federal housing laws apply including the Fair Housing Act which prevents discrimination against protected classes of US person by condo associations, homeowner associations and those working in the real estate or real estate finance industries.
South Florida Law
Condo associations are often made up of well-meaning volunteers who bear enormous responsibilities to safeguard the lives and well-being of residents. The complexities of Florida’s HOA and condo association law make it difficult to navigate for even experienced HOA board members. Be sure not to “go it alone”. Here at South Florida Law we have boutique firm attention to detail with the big firm resources necessary to draft and review HOA documents and represent HOAs and Condo associations. Call us today at 305.900.8885 or reach out via our contact form.