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Dear Poles,
We are a multi-condominium association comprised of eight separate associations. Six of the eight separate associations consist of similar buildings, each with 32 units. These six associations are considering merging into one. If we were to synchronize their reserves, fund balances and service fees (ie the same values), what would it take to merge them?
They all have the same statutes. All six condominium declarations are very similar or can be made similar and require a 75% vote of the owners to amend. The Condominium Act suggests that associations can be incorporated with less than 100% of the owners’ votes, but since their proportional share of the total costs will change, will that dictate 100% approval from all 192 owners? Their declarations do not appear to specify voting approval to change the proportions or percentages by which owners share common expenses.
Signature, PS
Dear PS,
You use the term “association” in different ways in your question, but I think you mean that there is one association (the organization charged with managing and maintaining the property) that manages the eight condominiums. Six of the eight condominiums, which are basically identical, would like to merge into one condominium so that they share costs.
I think unfortunately that would be next to impossible. As you noted elsewhere in your letter, Florida State Section 718.110. provides that no amendment to the declaration may (among other things) change the ownership of a unit or change the share or percentage by which a unit owner shares in the common expenses of the condominium and owns the common surplus without 100% approval of the unit owners and all owners of record. This is unlikely to happen except in the smallest condominiums. In fact, you will need to terminate five of the six condominiums and amend the declaration of the sixth to integrate all other properties and units. The common elements of a condominium are jointly and severally owned by the individual unit owners, so you not only change the respective ownership, but also the shares of the common expenses of all the units. So I think this triggers the 100% approval rule and any single rejection will prevent the merger.
You are already a multi-condominium association, and I believe that in this situation, this is the best you can achieve in terms of cost savings and operating costs.
Dear Poles,
We have a unit owner who is not a board member who has prepared the association’s budget for the past several years. By doing this work, this person gained access to the association’s financial resources. My question is, can the board, by majority vote, appoint this non-board person as an officer (eg CFO), giving him official status and providing him with D&O insurance coverage? The bylaws suggest this is possible, and our bylaws seem to confirm this, stating that “The Board of Directors shall from time to time elect such other officers and determine their powers and duties as the Board shall deem necessary or expedient for the management of the affairs of the Association. Officers should not be unit holders.’
I understand that an officer who is not a director of the board of directors has no voting rights and that only directors elected to office by the unitholders may vote on matters brought before the board of directors.
Signature, PS
Dear PS,
Two for one this week because you submitted another great question! You are absolutely correct – there is nothing in state law that requires directors or officers to be unit owners. In general, the governing documents determine whether directors and/or officers must be unit owners. Most (but not all) governing documents state that directors must be members of the association (or sometimes the spouse of a member); but the vast majority allow some or all officers to be non-owners (most often the president must be a director, but generally there is no restriction on other officers). You may suggest making this person “financial officer”, but note that unless otherwise prohibited, you can also simply make this person treasurer. Note that large public corporations usually have separate directors and officers, and it is only a matter of common practice and convenience that most condominium boards use only directors as officers. In fact, depending on the bylaws, the association could even employ a person as treasurer; such as an accountant or other person skilled in finance. This is a rarely used right, but a potential boon for smaller associations that need a well-trained person to oversee certain officer tasks. This is something I see more often in country clubs where the club leader is sometimes a director or officer.
You should be aware that most D&O insurance policies cover volunteers as well as officers and directors, so it’s possible that this person is covered by your insurance as is.
Ryan Poliakoff, 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 Polyakov, a pioneer of the community legal industry, tireless advocate, author of treatises, books and hundreds of articles. Ryan Polyakov and Gary Polyakov are co-authors of New Neighborhoods—The Consumer’s Guide to Condominiums, Co-Op and HOA Living. Send your questions to condocolumn@gmail.com. Don’t forget to include your location.
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