Update: Has Florida Law Changed for When Nobody Runs for Office?
In a September 2012 HOAleader.com article, we discussed state laws and offered tips for proceeding when nobody runs for the board. One of our Florida experts noted that under Florida laws governing HOAs, the problem solves itself because board members serve until their replacement is selected.
Florida laws have been revised, and a reader has asked if provisions allowing owners to head to court to petition to have a receiver appointed when a board can’t be constituted change our 2012 advice. Here a Florida expert explains the status of Florida law, and other experts discuss the laws in other states.
What our expert said
Here’s a little background. A reader asked what happens when nobody runs for the board. One of our experts, Matthew Zifrony, who advises homeowners and condo associations at Tripp Scott, a Ft. Lauderdale law firm, and who’s also served as the president of a 3,000—home association, explained Florida law:
“The way it works in Florida, in the HOA setting, you serve until your replacement is elected,” said Zifrony. “I live in a community where there are seven board members, and if at our upcoming election nobody asks to run, all seven board members will stay on. In the condo setting, you have to send out forms where people submit their name to run for office. If there aren’t enough names submitted, all get elected to the board. Then they’d collectively decide whom to appoint to the remaining open board seats.”
One of our readers is perhaps worried he’ll be in a bind since his governing documents have a two-year term restriction, and six of seven board members—he’s the seventh—complete their term soon. He contacted us and asked if revisions to Florida law that took effect July 1, 2013, change how the process works in Florida. The answer is no.
Is the Law Different?
If our reader finds himself the sole owner willing to serve as a board member, here’s how he can proceed.
“In Florida for condos, HOA, and co-ops law, directors serve for their term and until their successor is duly elected, says Christopher J. Shields, a partner at Pavese Law Firm in Ft. Myers, Fla., who’s represented associations for decades. “If nobody’s willing to serve, those people who are on the board continue to serve. But if those board members resign or if everyone on the board resigns, any unit owner can file a petition in a Florida circuit court to have a receiver appointed. Then a receiver’s duties are to operate or supervise the association, and his primary duties are toconduct an election.
“Any time the board acts, it has to have a quorum of the board,” adds Shields. “If it’s a five-member board, it needs three members on the board to act. But there’s one area under Florida law that allows less than a quorum to act. Let’s say you have three people on the board, and two resign. That sole remaining board member has the authority to fill the vacancies so the board can be fully constituted. But let’s assume everybody resigns or nobody’s willing to run, and there are no board members present either qualified or appointed. Then any member of the association can file a petition in the circuit court to have a receiver appointed.”
This happens from time to time, says Shields, and he averts the crisis with a little straight talk to owners. “The way I sell it is that I remind those people that we do need to have a board,” he explains. “I tell them, ‘If you don’t have an election, you don’t have people willing to serve, or the current ones resign, any member can file a petition to have a receiver appointed. And that receiver’s going to be paid out of the association’s coffers.’
“When I explain that, the response is usually along the lines of, ‘I guess this is going to be more expensive. Then I’m willing to put my name in the hat and run for office,'” adds Shields. “When they see they have to pay both a management company and the receiver’s fee, all of the sudden you have people on the board not going to resign, or you have people saying they’re willing to serve on the board. People come to their senses and say, ‘What’s the most cost effective way to operate?’ And that’s to have them serve on the board.
“In my 30 years of practice, I’ve never seen where a petition has been filed. Cooler heads have prevailed,” says Shields. “To avoid the extra cost, owners will go ahead and serve.”
Receivers Possible But Rare
It’s also very rare to get to that last-resort option in other states. There’s no specific provision in California’s common interest development act providing for a receivership, explains James R. McCormick Jr., a partner at Peters & Freedman LLP in Encinitas, Calif., who represents associations. “But you could look at it from a general law standpoint and get someone appointed,” he says. “There has to be someone with standing who can file the petition. And if that’s an owner, why doesn’t that person just serve? It’s much cheaper for the board and the community entirely.”
Massachusetts law also doesn’t specifically allow owners to petition for a receiver when a board can’t be filled, says Robert Galvin, a partner at Davis, Malm & D’Agostine PC in Boston who specializes in representing condos and co-ops. But it’s still possible.
Galvin tries to avoid that by writing realistic governing documents. “When I prepare condo documents, if it’s a large condo, I usually provide that the quorum is 25 percent and that the board members are elected by a plurality of votes,” he says. “Often, instead of that, you see the documents say the quorum is 51 percent, and the board members have to be elected by vote of at least 51 percent, and a lot of times you can’t get that 51 percent. People move into condos because they don’t want to be involved with the management of the building. So it’s hard to get a quorum, and it’s hard to get that 51 percent.”
The good news is that nearly every set of Massachusetts governing documents has a provision like the one Zifrony described in Florida. “In almost all cases, the condo documents provide that the board serves until the next election or until their successors are elected,” says Galvin. “So you wouldn’t be in a situation where you wouldn’t have any trustees [board members are called trustees in Massachusetts]. But it occasionally does happen in a building with a 51 percent quorum requirement. In that case, you could go to court and get a receiver appointed. But usually when that situation happens, the owners find a way to muddle through and then eventually get enough owners to run. It’s not a big problem, but it can occur in Massachusetts.”