FCAP Community

Published December 2018 

       Florida Community Association Professionals’ (FCAP) training is offered on two levels. Level one consists of courses meeting Florida’s continuing education requirements for CAMs, and level two is the Florida Advanced CAM Studies (FACS) course. For further information about the more than 50 online continuing education classes available or to pursue the Certified Florida Community Association Manager (CFCAM) designation, please visit www.fcapgroup.com/membership/education-training/.

Marcy L. Kravit, CMCA, AMS, PCAM, CFCAM

CAM to CAM

Marcy L. Kravit, CMCA, AMS, PCAM, CFCAM
AKAM ON-SITE Managing Director
FCAP Education and Training Coordinator

BOARD OF DIRECTORS’ CODE OF CONDUCT, ROLE, RESPONSIBILITIES, AND GOVERNANCE, PART III

Editor’s Note: Part I was published in the October issue of FLCAJ and can be accessed at www.fcapgroup.com/flcaj/flcaj-articles/fcap-community-october-2018/. Part II was published in the November issue of FLCAJ.  Part III is the conclusion of this series and addresses board action and operations and fiduciary obligations.

Board Action and Operations

A number of fundamental principles govern board action:

• The board must act as a group at a board meeting—not as individuals—and work as a team.
• Board members must maintain a positive and professional attitude toward fellow members and toward employees so as to maintain morale and promote efficient employee performance.
• Board members should refrain from harassing, intimidating, or publicly making derogatory remarks about fellow board members, association members, guests, employees, developers, or the manager.
• The board can delegate authority to act to others (such as the officers and managing agent) but cannot delegate responsibility for actions taken (or not taken).
• The board has a fiduciary duty to the owners it represents to act in the owners’ best interests.
• Following the correct procedure may be more important for a board at times than making the right decision.
• Board inaction may create more liability than board action (i.e., doing nothing but talking about a problem may get the board into more trouble than doing something that turns out to be wrong).
• Board action which complies with the governing documents and the law will usually be upheld as long as the board acts reasonably and in good faith.
• The owners elect the directors. Directors serve at the discretion of the membership and may be recalled at any time without cause.
• The president and manager are authorized to contact legal counsel. Board members are not to contact the association attorney without prior authorization from the president.
• Directors must listen to the wants and needs of the residents; no personal agendas. Think about what is in the best interests of the association.
• Directors must represent the total community, not any special interest group, and use their influence to enhance the reputation of the association and maintain mutual respect between members of the association, management, and the board of directors.
• Board members should prepare for, attend, and actively participate in all board meetings. Accept the responsibilities, commitment, dedication, loyalty, and time involved as an individual serving on a board of directors.
• Support the manager and management team in doing the best job possible.
• Praise and recognize the positive efforts of staff, contractors, committee members, fellow board members, and management.
• Do not request management to perform duties outside their scope of work that would jeopardize their license.
• Follow the chain of command. Refrain from giving direction to employees unless the president has given authorization. Do not give direction to the staff; this is management’s role. Act as an advisory to management. Allow management to manage. It is unnecessary to spend countless hours in the management office. If you have a good manager, you should only need to attend a board meeting and vote on the issues at hand.
• Understand your financials, budget, and reserves. Two signatures should be required from the board members on checks.
• Board members monitor the overall financial health of their association by reviewing annual and monthly financial reports. As part of their fiduciary responsibility, board members are actively involved in making sure that the community has the money it needs to operate. The board ensures that budgets are planned, proposed, and followed so that adequate financial resources exist to operate and properly maintain and provide the necessary services to the association.
• Internal controls—establish an amount of money to spend for repairs/bid requirements.
• Always be aware of the safety and well-being of all owners.
• Think and be objective regarding the issues, needs, and wants of the majority of the community; i.e., don’t oppose refurbishing the card room just because you don’t use it.
• Education is the key to every industry and should be considered for the association’s directors and management. Join CAI and professional industry organizations such as FCAP and obtain industry publications, and seek information regarding the Florida DBPR, new legislation, and local industry.

Fiduciary Obligations

• Represent the highest level of responsibility under the law. The board will be held to the same standards that apply to a guardian or person who has custodial care of someone else or someone else’s money. Webster’s Dictionary defines fiduciary as “holding something in trust for another,” which translates to acting in good faith for the benefit of the membership. If you could have known, you should have known. Accept and seek advice from experts in their respective fields. Don’t assume; take it one step further to seek counsel. Better to spend the money to obtain the information you need now than to set yourself up for potentially spending a lot of money down the road on litigation.
• Board members must exercise due care and fiduciary care in all dealings with the association and its interests. This includes careful review of financial matters, preparation, reading and review of minutes, and attention to issues that are of concern to the association.
• Set uniform guidelines and policies for rules enforcement with no favoritism; allow management to carry out the enforcement uniformly without micromanaging. As board members, appoint committee members to make suggestions and recommendations. The committees, if properly formed, can contribute and help expedite the association’s business.

Conflicts of Interest

• Do not waive late fees or make other exceptions to rules for friends.
• Disclose personal affiliations and abstain from voting to prevent a conflict of interest. This would include family members in bidding for financial gain.
• Conflicts arise when a board of director with knowledge acquired from serving on the board takes a business opportunity that is available to the association. Example: bidding on a foreclosure without disclosing it to the board of directors.
• All board members vote, including the president, unless it is a financial conflict of interest.
• A board member engaged in the practice of another profession shall not perform such other services for the association while serving as a board member, if the performance of such services is likely to result in a conflict of interest, real or perceived.

Confidentiality

• Board members are required to demonstrate professionalism, good judgment, and care and should avoid unauthorized or inadvertent disclosures of confidential information. For example, directors should refrain from leaving confidential information contained in documents or on computer screens in plain view.
• Board members are not to disclose information related to closed meetings and information pending board action.
• Resign from the board if you find you can no longer maintain this agreement to serve.

     A wide variety of interests and agendas lead to differing attitudes toward involvement in the community’s business affairs. Board members must share the responsibility in holding the key to the bright health of the community. Together they can provide direction in guiding the association in a positive manner. Respect, recognition, consideration, and appreciation can go a long way toward a professional, well-run community. With the right approach, all parties will display enthusiasm, respect, and skills in satisfying their need in facing the challenges and establishing a successful association. The ideal board is one that can work together toward the common goal of protecting and enhancing the association.

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Betsy Barbieux, CAM, CFCAM

Because You Asked
By Betsy Barbieux, CAM, CFCAM

Betsy,
     Our five-member board is operating with three board members, and two of the three are always hanging out together, possibly discussing board business. Are they conducting unauthorized board meetings since they are two of three members on the board? Please advise.                
-Paul

Paul,
     If you are saying that your documents require five board members but only three seats are filled, your quorum is still three, which means all three are required to conduct business at a meeting. There is nothing that prohibits two board members from discussing business on a five-member board.            
-Betsy

Betsy,
     If a homeowner is in violation of the bylaws of the community—for example, having chickens in the back yard when no poultry is allowed—do we need proof of this such as a picture, or can the board of directors send a letter based on a homeowner just seeing the violation?            
-Sue

Sue,
     I have personally discovered that nothing goes well without a date and time-stamped picture! Otherwise, I don’t find any statute that specifically addresses it. The board should create policies for how/when to notify owners of violations; timeframes allowed for correction; and, when the manager has done all he or she can do to compel compliance, the point for the manager to turn the matter over to the board for action. That action will either be a fine and/or suspension of common area use rights. In some counties, farm animals such as poultry are not allowed within the city limits. So, you might check with your city or county code compliance and let them be the bad guy.
-Betsy

Betsy,
     I have a problem at my condominium, and I was wondering if you can help. First, I informed my board members that we cannot have three or more board members meeting to discuss association business. We have five board members. They challenged me on this and stated that they needed to see the statute that says three or more board members cannot have a meeting without it being posted on an agenda as a board meeting.
     My management company also told them the same thing, but they insist that the statute does not exist. I tried looking it up but was unsuccessful. Can you look it up and send it to me please? Thank you so much for all your help.
-Jackie

Jackie,
     It is as plain as day. . .
     Section 718.112(2)(c) Board of administration meetings.—Meetings of the board of administration at which a quorum of the members is present are open to all unit owners. Members of the board of administration may use e-mail as a means of communication but may not cast a vote on an association matter via e-mail. A unit owner may tape record or videotape the meetings. The right to attend such meetings includes the right to speak at such meetings with reference to all designated agenda items. The division shall adopt reasonable rules governing the tape recording and videotaping of the meeting. The association may adopt written reasonable rules governing the frequency, duration, and manner of unit owner statements.  
-Betsy

Retention of Records
By Patricia Rogers
www.goldcoastschools.com

Many times, it seems managers are creating records, filing records, looking for records, or providing records. This segment will examine a manager’s role in handling the records.

Manager’s Responsibility for Records

A manager shall not withhold possession of any original books, records, accounts, funds, or other property of a community association when requested by the community association to deliver any of these to the association upon reasonable notice. Reasonable notice shall extend no later than 10 business days after receipt of a written request from the association, except for financial records, for which 20 business days are allowed. This applies regardless of any contractual or other dispute between the licensee and the community association, or between the registrant and the community association. It is considered gross misconduct, as provided by Section 468.436(2), F.S., for a licensee or registrant to violate the provisions of this subsection.

A manager shall not deny access to association records, to inspect or photocopy the same, to a person entitled to such by law, to the extent and under the procedures set forth in the applicable law.  A manager shall not create false records or alter records of a community association or of the manager except in such cases where an alteration is permitted by law (e.g., correction of minutes per direction given at a meeting at which minutes are submitted for approval). A manager shall not, to the extent he’s charged with the responsibility of maintaining records, fail to maintain his records, and records of any applicable community association, in accordance with the laws and documents.