By Betsy Barbieux, CAM, CFCAM™ / Published June 2017
There are certain concepts and practices in community association management that are essential for managers and board members. That is, they are the necessary, basic, defining, fundamental, prerequisite nuts and bolts.
The first fundamental piece of knowledge is the purpose of a community association. The primary purpose of the community association is to protect the property and its value by defining and providing for the maintenance of the common elements and property, declaring the responsibilities of both the association and individual owners, and establishing the restrictions on owners’ use rights.
The statutes and the governing documents will give the board of directors the responsibility for operating the association. This overarching mission statement should be the purpose for every board meeting.
In order to pay for the maintenance and operations of the community, the statutes give the association the power to levy assessments on individual owners. An assessment is the amount of money a unit or parcel owner pays for their share of the expen-ses of the community association. The statutes allow the association to file an assessment lien against the unit or parcel if unpaid.
Second, all community associations are corporations organized under the laws of the state of Florida, either under Chapter 607, Florida For Profit Corporate Act, or under Chapter 617, Florida Not for Profit Corporate Act. During the incorporation process, it is determined by the developer what type community association the corporation will be. There are three choices:
Florida Not for Profit Corporate Act is not the same as a non-profit charitable organization created under IRS 501(c)(3).
Most community associations in Florida are organized as not-for-profit corporations. This type of corporation does not distribute any part of its income or surplus to members as a dividend or return on their investment. This is often called a “common interest” group/corporation or, in our case, a “common interest realty corporation.”
Third, the statutes hold officers and directors personally liable for their actions on behalf of the association. Personally liable means that if a director or an officer is found to be in breach of their fiduciary duty, their personal assets are at risk in the event of damages awarded by a court.
The law presumes a fiduciary relationship exists, where trust and confidence are imposed on the officers and directors who are charged to act in good faith and with due care and diligence in the best interest of the members regardless of costs. The law also presumes knowledge of their duties and responsibilities upon acceptance of the position. Volunteers or unpaid officers and directors are not relieved of their fiduciary relationship and duty.
The insurance industry provides an insurance policy to protect the personal assets of the directors and officers. It is known as Directors and Officers Liability Policy, or a D&O Policy. It protects officers and directors from personal liability for actions on behalf of the association.
This policy protects officers and directors under specified circumstances:
Fourth, there are three different types of common interest groups or community associations.
The unit owner receives a deed that specifies his unit number as well as an undivided share in all the common elements of the association. Ownership includes anything inside the air space of the unit. All the owners own the common elements jointly. There is no deed in the name of the association; it owns nothing but is responsible for the insurance and maintenance.
Title to all the real estate is owned by the corporation; there is one deed. Each shareholder receives a Shareholder’s Certificate as evidence of their capital contribution to the corporation. Their share entitles them to sign a proprietary lease with the corporation for the exclusive use of the air space for their unit or pad.
Each parcel owner receives a deed to his lot/real estate (the dirt). Everything on that lot or parcel (dirt) is owned by the parcel owner, inside and out. The association has a deed (to the dirt) evidencing its ownership in all (the dirt under) the common/shared property.
Fifth, your manager is required to be licensed! If your community has more than 10 units or homes or more than $100,000 budget, and your manager or management company receives remuneration (which could be something other than cash, and note there is no minimum amount) and is performing any one of the following (per Florida Statutes, Chapter 468.431), the manager must be licensed.
A person who performs clerical or ministerial functions under the direct supervision and control of a licensed manager or who is charged only with performing the maintenance of a community association and who does not assist in any of the management services described in this subsection is not required to be licensed under this part.
Whether you are a manager or board member, the Essentials are vital. There should be no doubt in your mind what they. The importance of knowing and understanding the Essentials of community association management cannot be overstated. Managers and board members should take advantage of all learning opportunities. You can never know enough about this vast industry! You can and should always learn something new!
Betsy Barbieux, CAM, CFCAM
Florida CAM Schools
Betsy Barbieux, CAM, CFCAM, guides managers, board members, and service providers in handling daily operations of their communities while at the same time dealing with different communication styles, difficult personalities, and conflict. Effective communication and efficient management are her goals. Since 1999, Betsy has educated thousands of managers, directors, and service providers. She is your trainer for life! Betsy is the author of Boardmanship, a columnist in the Florida Community Association Journal, and a member of the Regulatory Council for Community Association Managers. For more information, contact Betsy@FloridaCAMSchools.com, (352) 326-8365, or www.FloridaCAMSchools.com.