Q. I live in a complex of five condominiums and one master association that operates as adult condominiums. I am a director on one of the association boards but not on the master board. It has come to our attention that one of the presidents, a real estate broker, is using money from his condominium’s reserve funds to assist new buyers in his building. I am aware that a reserve fund can only be used for specific items and feel that he is improperly using reserves to help new buyers to his building. In talking with people in that building, they are not aware of the use of reserve funds for this project. It seems that not only is this illegal but lowers the value of our property. Can you provide us with directions to take steps to correct this improper use of reserves?
My first reaction was that you must be kidding. If the president is taking funds from the reserves without the board’s and members’ authorization, you have a serious criminal situation. The fact that the members in his association do not know is even worse. From your question, it appears that he is profiting from the action and that is also a crime. If you have proof, then you need to report the matter to proper authorities including the state attorney, the real estate commission and the division of condominiums. Keep in mind that you need proof and not speculation. I would also inform other directors of this condominium and demand that they correct the issue by electing a new president and cutting him off from the association’s funds and reserves. The owners of the condominium must be noticed of the misuse of the funds and it would be their right to recall the director and the other directors if they are part of the problem.Q. The president of our condominium was hired to manage our condominium. Management functions include the day-to-day operations, the financial, and the legal matters of our association. Is there not a conflict or interest with this situation? How do we owners know that his actions and decisions on association matters are not tainted by his desire to please his employer?
Let me first address FS 468.432, the statute that regulates management. There is nothing in this statute that conflicts with the president acting as the manager as long as the manager is properly licensed (CAM). However, it does open up several ethical questions. You do have safeguards built into the operations but it is up to the members to keep the board and management honest; “trust but verify.” All matters and all business must be approved by the board of directors. Offices, including president, have duties assigned by the document and instruction by the board. Management has similar duties.
I hope you understand the difference between responsibilities and duties. Thus, if the president is licensed as a CAM, he can perform only the duties assigned by the board. If he is making a decision as president, it must be approved by the board of directors. I would encourage the manager to resign as a director and officer and only act as the manager. To remain as both president and manager opens the door to concerns by the members. You have a solution to elect a new board at the next election. Then it can address the situation and select a new president and if they like, a new manager.Q. Our large condominium has a diverse group of owners; many of them are in residence a few months a year. As with any large group, there are many social and economic interests. Owners’ needs and desires have an outlet in board meetings, but the meeting is somewhat limited, or even obsolete. Most owners are not here for board meetings and issues that affect our lifestyles, annual assessments and monthly dues are communicated in ways that really do not tap into how the majority of owners really feels or wants. Several owners want to start an online discussion group limited to owners. We would like to use the discussion group to query our group to obtain members’ opinions and attitudes about practical condominium issues including proposed policy, budgetary, capital improvement and assessments priorities. The discussion group would also be a focal point for communicating social events and practical tips on good contractors and related information. While association board members would be welcome to join our group, they would in no way represent the condominium association, board or management. We already have the emails of many owner. Can you offer guidance to us in this process?
M.M., Hallandale Beach
I do not like the idea except as a method to communicate and distribute information. The key reason is that the board of directors is elected to operate and maintain the association. There is nothing wrong with members writing to the board with their thoughts. But the board meeting is not the place to bring up new ideas. Most decisions made by the board are directed by the documents and statutes, so members’ new input is out of place at the meetings. Budget items are somewhat fixed on how they are calculated and outside opinions have little impact on the values to be calculated. Reserve budgets are directed by statute and are not measured by opinions but a set of specific formulas.
Maybe you should request that the board create an advisory committee and a social committee to provide guidance to the board and members. Keep in mind that the board has a set of requirements and usually those do not include socials or members’ benefits. You elect the directors to operate and maintain the association. If you are not happy with the board, vote in a new one next election. But be aware that a new board will be obligated to follow the statutes and documents the same as the previous board.