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Condo Q&A: Does a President Have the Authority to Approve Work?

“It’s in the budget” doesn’t necessarily mean “the president can sign a contract.” Also: If we had no quorum for an election, do we have to reschedule this year?

STUART, Fla. – Question: Our board adopted a budget for 2021, and it included a sizeable line item for landscaping improvements. The landscape committee is already getting a new landscape vendor mobilized to start in January. We asked whether the board approved the new landscape contract, and the president just responded that he had the authority to approve the work because it was in the budget. Is this true? – T.E., Stuart

Answer: Not exactly. Although it is true that the association’s budget is required to include anticipated expenses and revenues, the budget is not the same thing as a contract to actually spend the money.

In some situations, the budget is scheduled to spend dollars already engaged through an existing contract. For example, you may have a 10-year cable agreement and the budget includes monies for the bulk cable agreement. That agreement was presumably already approved by the board, and therefore the board does not need to meet every year to both budget for the bulk cable fees and authorize the payment of the bulk cable fees.

Conversely, you indicated that a new landscape vendor was engaged to install the new landscaping. This means there must be a new contract. A new contract with a new vendor includes many terms in addition to cost, and all of these provisions are in the board’s jurisdiction. In other words, the board needs to consider and vote on a new contract with a new vendor even though the money has already been budgeted to be spent. As part of the board’s exercise of business judgment, it needs to consider all of the other contractual rights and responsibilities such as insurance, indemnification, termination and dispute resolution.

In sum, budgeting to spend money is not the same as actually having the authority to spend it under a new contractual relationship. That new contractual relationship must be approved by the board unless there is a formal delegation of authority to the president, management or another individual before the contract is negotiated and signed.

Question: We held a 2020 Annual Meeting for our homeowners’ association and could not get a quorum despite trying our best to use electronic voting and proxies. There were four candidates running for three board positions. Are we required to try again to have the election? – A.R., Treasure Coast

Answer: No, you are not. Chapter 720 provides that unless your governing documents provide otherwise, the election occurs at a meeting. If you don’t obtain a quorum of the membership, you can’t open the meeting, and thus you can’t get to the election on the agenda. There is nothing in the statute that requires the association to try again this year.

As a result, the directors that were sitting for 2020 would remain on the board as holdover directors – and this is true even if none of those directors were the four directors running for the board this year. A directors’ term essentially ends at the annual meeting at which his or her successor is elected, and thus you need a meeting with a quorum for the term to actually end.

Note that this is a different analysis if 1) the association had a procedure for accepting nominations in advance of the meeting; and 2) there were only one, two or three directors running for the three positions. If this is true, the statute actually provides that the candidates take their seats at the scheduled annual meeting because there were the same or fewer candidates than open positions subject to election. In other words, an election was not required and therefore it does not matter if a quorum was obtained at the annual meeting.

I would recommend you consult your attorney to review the bylaws and determine if there are any special provisions in your governing documents that would impact the above analysis. For example, in a condominium, which is different from a homeowners association in the above analysis, the election would be valid so long as 20% of the voting interests participate in the election even if a quorum is not attained. Some homeowners’ associations have adopted these same requirements, and thus you should review your governing documents to determine how to best move forward.

Steven J. Adamczyk Esq., is a shareholder of the law firm Goede, Adamczyk, DeBoest & Cross, PLLC. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

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