1. The Florida Condominium Act and the Florida HOA Act require association board members to disclose conflicts of interest.
2. If an association wants to enter into a contract with a board member or a business entity in which a board member has a financial interest, the board must follow certain procedures and disclosures.
3. The process and voting procedures for disclosure are the same for both condo associations and HOAs, including compliance with the Florida Not For Profit Corporation Act and the requirement for an affirmative vote of two-thirds of the directors present. – The existence of a contract or transaction must be brought up for a vote at the next regular or special meeting of the members.
– The contract or transaction may be canceled by a majority vote of the members present.
– The association is only liable for the reasonable value of the goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages, or other form of penalty for such cancellation.
– The relationship or interest presenting the director(s) conflict must be disclosed to the entire board of directors or the committee responsible for approving the contract or transaction by a vote.
– The conflict-of-interest transaction must receive the affirmative vote of a majority of directors who have no conflicting relationship or interest, and may not be authorized, approved, or ratified by a single director.
– The presence of, or vote cast by, a director having the conflict of interest does not affect the validity of the approving vote made by the other non-interested directors.
– The relationship or interest presenting the director(s) conflict must be disclosed to the members entitled to vote on such a contract or transaction, if any, and the members approve it by either vote or written consent.
– The conflict-of-interest transaction is approved if it receives the affirmative vote of the majority of the voting interests entitled to vote, but the director(s) who has the conflicting relationship or interest may not vote along with the members.
– Or, the contract or transaction must be determined to be fair and reasonable as to the association at the time it is authorized by the board, a committee, or the members. 1. Disclosures must be made to the appropriate parties to avoid contracts being void or voidable due to an interested director or a business entity in which a director has a financial interest.
2. Accurate records of compliance with disclosure and voting requirements must be kept in the written minutes of the meeting and maintained in the association’s official records.
3. Notice and agenda requirements for related board and member meetings must be strictly followed to validate actions taken at those meetings.
https://www.jimersonfirm.com/blog/2015/02/florida-community-associations-board-member-conflict-interest/
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