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Are HOA Board Members Allowed To Profit From Community Projects?

On Behalf of | Jul 7, 2016 | Condo / HOA, Firm News |


Q. It seems that our homeowners association is allowing members of the Board to profit from certain projects in the community. Last year, the association hired the wife of the Board President to redecorate the clubhouse. At the last board meeting I attended, there was talk of another Board member, who happens to be a realtor, renting out one of the homes that the association owns through foreclosure. There will probably be a rental commission paid. Are these transactions with Board members legal?

A. These transactions are not necessarily illegal, but they are generally not a good idea and your association needs to pay attention to a new law that could take effect on July 1, 2013. Chapter 720 of the Florida Statutes governing homeowners associations will now provide that if the Association enters into a contract with or transacts with a Director or a company that a Director has a financial interest in, then the contract must be approved by 2/3’s of the Directors. Further, the contract or deal must be fair and reasonable in terms of the benefits received. In other words, the fee paid to the president’s wife for redecorating the clubhouse must be a fair fee based on market rates. Further, at the next regular or special member meeting, the contract or transaction must be disclosed to the members. The members can vote to cancel the contract or transaction by a majority of those voting.