2011 DRAFT HOA REFORM BILL

ELECTIONS, ELIGIBILITY, QUORUM + RECALL

Opinion by Jan Bergemann, President 

Cyber Citizens for Justice, Inc.

Published January 25, 2011

  

A reform of FS 720.306 is long overdue. Changes to the statutes have created some ridiculous rules over the years. Add the bad economy and the fact that many homes and units don't pay dues or are not even occupied and you have some election and recall regulations that are just ludicrous.

  

Changes are desperately needed. And since jurisdiction over disputes about elections and recalls for homeowners' associations has been turned over to the DBPR Arbitration Section in 2004, it's only common sense to use the proven language of the condominium provisions from FS 718 to replace the inadequate language from FS 720. Below is a bill draft for changes in FS 720.303(10) [Recall of Directors] and FS 720.306 [Membership meetings, quorum, amendments, elections and eligibility].

 

If you consider that FS 720 still allows convicted felons to serve on the board, it's no wonder that we have a convicted double-murderer (drug deal gone bad) serving as president of a HOA and a fellow who embezzled association funds in New Jersey serving as a treasurer. And since many bylaws in HOAs are not calling for secret ballots, the neighbors -- mostly elderly people -- are afraid to vote against the felons.  Don't forget, FS 720 allows the bylaws to regulate the election methods, meaning boards can quickly change the system, using a method that fits their needs to stay in office.

  

How about this example: Bylaws calling for a nominating committee (husband/wives of sitting board members will be appointed) that only nominates the sitting board members. Every opposition will be ignored. Election is by written ballot, only the names of nominated candidates are on the ballot. The last line calls for a write-in candidate. The provision that every member can nominate himself/herself from the floor is covered. They can do so. But by that time the election has long been decided by the written ballots. All totally legal, according to the statutes in place. There are a lot more "TRICKS" to stay in office forever.

  

Using the language from FS 718 avoids entering uncharted territory. Guidelines and arbitration rulings are available in abundance -- no need to start everything from scratch -- avoiding useless lawsuits. Using the same language makes life easier for all the professionals involved. Only too often the professionals mix apples with oranges -- Condos with HOAs -- leading to botched elections and meetings, false proxies and extra mailing costs. 

   

Changes to the statutes, allowing associations to suspend the voting rights of members [FS 720.305 and FS 718.303(3)], have created a situation in some associations that makes meetings, elections and especially recalls actually impossible. Don't forget, we have associations where 40% and more of the  owners are failing to pay dues. In order to make these associations still manageable, the wording in the statutes has to be changed to "eligible voting interest." 

   

Without these proposed changes associations and their owners will run into even more serious problems. These are not changes that help and/or protect any special interest group. These are just changes that common sense dictates.  In order to guarantee that certain rights necessary to uphold democratic rules are in place, changes must be enacted!


 

PROPOSED CHANGES:

 

FS 718.112(2)(j)  Recall of board members.-- Subject to the provisions of s. 718.301, any member of the board of administration may be recalled and removed from office with or without cause by the vote or agreement in writing by a majority of all the eligible voting interests. A special meeting of the unit owners to recall a member or members of the board of administration may be called by 10 percent of the voting interests giving notice of the meeting as required for a meeting of unit owners, and the notice shall state the purpose of the meeting. Electronic transmission may not be used as a method of giving notice of a meeting called in whole or in part for this purpose.


FS 720.303 (10)  RECALL OF DIRECTORS.--

(a)1. Regardless of any provision to the contrary contained in the governing documents, subject to the provisions of s. 720.307 regarding transition of association control, any member of the board of directors may be recalled and removed from office with or without cause by a majority of the total eligible voting interests. 

 

720.306  Meetings of members; voting and election procedures; amendments.--

(1)  QUORUM; AMENDMENTS.-- 

(a)  Unless otherwise required by law, and other than those matters set forth in paragraph (b), any governing document of an association shall only be amended by the affirmative vote of two-thirds of the eligible voting interests of the association subject to the following:

1. All amendments offered for official recording must be submitted as contained within the covenants and restrictions in their entirety.

 

2. Within 12 months of enactment of this subsection all duly registered covenants and restrictions must be complete and set forth in plain, easily understandable English. Unless a lower number is provided in the bylaws, the percentage of voting interests required to constitute a quorum at a meeting of the members shall be 30 percent of the total voting interests. Unless otherwise provided in this chapter or in the articles of incorporation or bylaws, decisions that require a vote of the members must be made by the concurrence of at least a majority of the voting interests present, in person or by proxy, at a meeting at which a quorum has been attained.

(b)  Unless otherwise provided in the governing documents or required by law, and other than those matters set forth in paragraph (c), any governing document of an association may be amended by the affirmative vote of two-thirds of the voting interests of the association.

 

(b)  (c)  Unless otherwise provided in the governing documents as originally recorded or permitted by this chapter or chapter 617, a An amendment may not materially and adversely alter the proportionate voting interest appurtenant to a parcel or increase the proportion or percentage by which a parcel shares in the common expenses of the association unless the record parcel owner and all record owners of liens on the parcels join in the execution of the amendment. For purposes of this section, a change in quorum requirements is not an alteration of voting interests. The merger or consolidation of one or more associations under a plan of merger or consolidation under chapter 607 or chapter 617 shall not be considered a material or adverse alteration of the proportionate voting interest appurtenant to a parcel.

  

(c) An amendment restricting owners' rights relating to the rental of homes applies only to parcel owners who consent to the amendment and to parcel owners who purchase their parcels after the effective date of that amendment.

  

(2)  ANNUAL MEETING.--The association shall hold a meeting of its members annually for the transaction of any and all proper business at a time, date, and place stated in, or fixed in accordance with, the bylaws. The election of directors, if one is required to be held, must be held at, or in conjunction with, the annual meeting or as provided in the governing documents. If the bylaws are silent as to the location, the meeting shall be held within 45 miles of the community property.

  

(3)  SPECIAL MEETINGS.--Special meetings must be held when called by the board of directors or, unless a different percentage is stated in the governing documents, by at least 10 percent of the total eligible voting interests of the association. Business conducted at a special meeting is limited to the purposes described in the notice and the agenda of the meeting.

  

(4)  CONTENT OF NOTICE.-- Unless law or the governing documents require otherwise, n Notice of an annual meeting need not include a description of the purpose or purposes for which the meeting is called. Notice of a special meeting must include an agenda and a description of the purpose or purposes for which the meeting is called.

   

(5)  NOTICE OF MEETINGS.--The bylaws shall provide for giving notice to members of all member meetings, and if they do not do so shall be deemed to provide the following: The association shall give all parcel owners and members actual notice of all membership meetings, which shall be mailed, delivered, or electronically transmitted to the members not less than 14 days prior to the meeting. Evidence of compliance with this 14-day notice shall be made by an affidavit executed by the person providing the notice and filed upon execution among the official records of the association. In addition to mailing, delivering, or electronically transmitting the notice of any meeting, the association may, by reasonable rule, adopt a procedure for conspicuously posting and repeatedly broadcasting the notice and the agenda on a closed-circuit cable television system serving the association. When broadcast notice is provided, the notice and agenda must be broadcast in a manner and for a sufficient continuous length of time so as to allow an average reader to observe the notice and read and comprehend the entire content of the notice and the agenda.

  

(6)  RIGHT TO SPEAK.--Members and parcel owners have the right to attend all membership meetings and to speak at any meeting with reference to any all items opened for discussion and/or included on the agenda. Notwithstanding any provision to the contrary in the governing documents or any rules adopted by the board or by the membership, a A member and a parcel owner have the right to speak at least once for at least 3 minutes on each agenda any item. , provided that the member or parcel owner submits a written request to speak prior to the meeting. The association may adopt written reasonable rules governing the frequency, duration, and other manner of member and parcel owner statements, which rules must be consistent with this subsection.

  

(7)  ADJOURNMENT.-- Unless the bylaws require otherwise, a Adjournment of an annual or special meeting to a different date, time, or place must be announced at that meeting before an adjournment is taken, or notice must be given of the new date, time, or place pursuant to s. 720.303(2). Any business that might have been transacted on the original date of the meeting may be transacted at the adjourned meeting. If a new record date for the adjourned meeting is or must be fixed under s. 617.0707, notice of the adjourned meeting must be given to persons who are entitled to vote and are members as of the new record date but were not members as of the previous record date.

  

(8)  PROXY VOTING.--The members have the right, unless otherwise provided in this subsection or in the governing documents, to vote in person or by proxy. To be valid, a proxy must be dated, must state the date, time, and place of the meeting for which it was given, and must be signed by the authorized person who executed the proxy. A proxy is effective only for the specific meeting for which it was originally given, as the meeting may lawfully be adjourned and reconvened from time to time, and automatically expires 90 days after the date of the meeting for which it was originally given. A proxy is revocable at any time at the pleasure of the person who executes it. If the proxy form expressly so provides, any proxy holder may appoint, in writing, a substitute to act in his or her place.

 

(8) PROXY VOTING --

1. Members may not vote by general proxy, but may vote by limited proxies substantially conforming to a limited proxy form. No voting interest or consent right allocated to a lot owned by the association shall be exercised or considered for any purpose, whether for a quorum, an election, or otherwise. Limited proxies and general proxies may be used to establish a quorum. Limited proxies shall be used for votes taken to waive or reduce reserves in accordance with 720.303(6); for votes taken to waive the financial reporting requirements of s. 720.303(7); for votes taken to amend the declaration pursuant to subparagraph (1); for votes taken to amend the articles of incorporation or bylaws pursuant to this section; and for any other matter for which this chapter requires or permits a vote of the parcel owners. General proxies may be used for other matters for which limited proxies are not required, and may also be used in voting for nonsubstantive changes to items for which a limited proxy is required and given. Notwithstanding the provisions of this subparagraph, unit owners may vote in person at unit owner meetings.

 

2.  Any proxy given shall be effective only for the specific meeting for which originally given and any lawfully adjourned meetings thereof. In no event shall any proxy be valid for a period longer than 90 days after the date of the first meeting for which it was given. Every proxy is revocable at any time at the pleasure of the unit owner executing it.

  

(9)  ELECTIONS AND BOARD MEMBERS ELIGIBILITY

Elections of directors must be conducted in accordance with the procedures set forth in the governing documents of the association. All members of the association shall be eligible to serve on the board of directors, and a member may nominate himself or herself as a candidate for the board at a meeting where the election is to be held. Except as otherwise provided in the governing documents, boards of directors must be elected by a plurality of the votes cast by eligible voters. Any election dispute between a member and an association must be submitted to mandatory binding arbitration with the division. Such proceedings shall be conducted in the manner provided by s. 718.1255 and the procedural rules adopted by the division.

 

1. Notwithstanding any covenant, articles of incorporation or bylaws to the contrary, no association shall opt out of these election procedures. An association of 10 or fewer parcels may, by the affirmative vote of a majority of the total eligible voting interests, provide for different voting and election procedures in its bylaws, which vote may be by a proxy specifically delineating the different voting and election procedures. The different voting and election procedures may provide for elections to be conducted by limited or general proxy.

 

2. Notwithstanding any covenant, articles of incorporation or bylaws to the contrary, only natural persons who are unit owners as defined in 720.301(10) may be board members. “Record owner of legal title" means a parcel owner whose title to the parcel can be determined from the public records of the county where the parcel is located. As used in this section the term natural person includes any natural person serving as a trustee of a trust recognized by and within the scope (736.0102) of the Florida Trust Code (Chapter 736). As used in this section, natural person excludes any artificial person.

     

3. Unless the bylaws provide otherwise, a vacancy on the board caused by the expiration of a director's term shall be filled by electing a new board member, and the election shall be by secret ballot; however, if the number of vacancies equals or exceeds the number of candidates, no election is required. The terms of all members of the board shall expire at the annual meeting. All board members must stand for election at the next annual election meeting. In the event that the bylaws permit staggered terms of no more than 2 years and after reaffirmation of this provision by approval of a majority of the total eligible voting interests, the association board members may serve 2-year staggered terms. If no person is interested in or demonstrates an intention to run for the position of a board member whose term has expired according to the provisions of this subparagraph, such board member whose term has expired shall be automatically reappointed to the board of administration and need not stand for reelection. In a homeowners' association of more than 10 parcels, coowners of a parcel may not serve as members of the board of directors at the same time unless they own more than one parcel or unless there are not enough eligible candidates to fill the vacancies on the board at the time of the vacancy. Any parcel owner desiring to be a candidate for board membership shall comply with subparagraph 2. A person who is delinquent in the payment of regular assessments as provided in paragraph (a), is not eligible for board membership. A person who has been convicted of any felony in this state or in a United States District or Territorial Court, or who has been convicted of any offense in another jurisdiction that would be considered a felony if committed in this state, is not eligible for board membership unless such felon's civil rights have been restored for a period of no less than 5 years as of the date on which such person seeks election to the board. The validity of an action by the board is not affected if it is later determined that a member of the board is ineligible for board membership due to having been convicted of a felony.

 

(a)  Director or officer delinquencies. -- A director or officer more than 90 days delinquent in the payment of regular assessments shall be deemed to have abandoned the office, creating a vacancy in the office to be filled according to law.

 

(b)  Director or officer offenses. -- A director or officer charged with a felony theft or embezzlement offense involving the association's funds or property shall be removed from office, creating a vacancy in the office to be filled according to law. While such director or officer has such criminal charge pending, he or she may not be appointed or elected to a position as a director or officer. However, should the charges be resolved without a finding of guilt, the director or officer shall be reinstated for the remainder of his or her term of office, if any.

 

(c) Within 90 days after being elected or appointed to the board, each newly elected or appointed director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members. In lieu of this written certification, the newly elected or appointed director may submit a certificate of satisfactory completion of the educational curriculum administered by a division-approved condominium education provider. A director who fails to timely file the written certification or educational certificate is suspended from service on the board until he or she complies with this sub subparagraph. The board may temporarily fill the vacancy during the period of suspension. The secretary shall cause the association to retain a director’s written certification or educational certificate for inspection by the members for 5 years after a director’s election. Failure to have such written certification or educational certificate on file does not affect the validity of any action.

 

4.  The members of the board shall be elected by written ballot or voting machine. Proxies shall in no event be used in electing the board, either in general elections or elections to fill vacancies caused by recall, resignation, or otherwise, unless otherwise provided in this chapter. Not less than 60 days before a scheduled election, the association shall mail, deliver, or electronically transmit, whether by separate association mailing or included in another association mailing, delivery, or transmission, including regularly published newsletters, to each parcel owner entitled to a vote, a first notice of the date of the election. This provision will be enforced by the Division of Florida Condominiums, Homeowners' Associations Timeshares, and Mobile Homes. Any parcel owner or other eligible person desiring to be a candidate for the board must give written notice to the association not less than 40 days before a scheduled election. Together with the written notice and agenda as set forth in paragraph 2., the association shall mail, deliver, or electronically transmit a second notice of the election to all parcel owners entitled to vote therein, together with a ballot which shall list all candidates. Upon request of a candidate, the association shall include an information sheet, no larger than 81/2 inches by 11 inches, which must be furnished by the candidate not less than 35 days before the election, along with the signed certification form provided for in this subparagraph, to be included with the mailing, delivery, or transmission of the ballot, with the costs of mailing, delivery, or electronic transmission and copying to be borne by the association. The association is not liable for the contents of the information sheets prepared by the candidates. In order to reduce costs, the association may print or duplicate the information sheets on both sides of the paper. The division shall by rule establish voting procedures consistent with the provisions contained herein, including rules establishing procedures for giving notice by electronic transmission and rules providing for the secrecy of ballots. Elections shall be decided by a plurality of those ballots cast. There shall be no quorum requirement; however, at least 20 percent of the eligible voting interests must vote in order to have a valid election of members of the board. Once it is determined that at least 20 percent of the eligible voting interests have voted, the invalidity of any individual ballot shall not affect the validity of the election. No parcel owner shall permit any other person to vote his or her ballot, and any such ballots improperly cast shall be deemed invalid. A parcel owner who needs assistance in casting the ballot for the reasons stated in s. 101.051 may obtain assistance in casting the ballot. The regular election shall occur on the date of the annual meeting. Notwithstanding the provisions of this subparagraph, an election is not required unless more candidates file notices of intent to run or are nominated than board vacancies exist.


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