Q: Recently, my condominium association authorized a major construction project. The contract for the work is several million dollars in value. The board of directors voted to move forward with their preferred contractor and authorize the president to sign. Isn’t this the type of contract that must be voted on by the owners? (O.V., via e-mail)
A: Probably not. The Florida Condominium Act provides that the association may contract to exercise its powers it powers and duties. Most condominium documents provide that the board of directors acts on behalf of the association, except where a membership vote is specifically required either by law or the condominium documents.
Some condominium documents require unit owner approval prior to adopting an assessment in excess of a certain amount. If a special assessment is required and the documents require that to be approved, then a vote would be required, but not for the contract itself.
If the work involves material alterations or substantial additions to the common elements or association-owned real property, most declarations of condominium will require owner approval if the dollar amount of the contract exceeds a specific level. Conversely, if the work does not involve material alterations or substantial additions or if the cost does not exceed a dollar limit stated in the documents, then no owner vote is required. Certain material alterations or substantial additions, regardless of cost, can be authorized by the board if the work constitutes “necessary maintenance,” as that term has been defined in Florida appeals court decisions.
Section 718.3026 of the Florida Condominium Act requires most contracts to be subject to competitive bidding when the value of the contract exceeds five percent of the total annual budget of the association, including reserves. There is no requirement that the association select the lowest bid, only that “competitive bids” be obtained, which means at least two bids.
The rules for homeowners’ associations are similar. However, the Florida Homeowners’ Association Act establishes the competitive bidding threshold at ten percent of the association’s annual budget, and there is no statutory regulation on material alterations or substantial additions, that issue will be guided solely by the provisions of the governing documents.
Q: Recently, my condominium association held its election for directors, and some questions came up about how to treat certain ballots. Several ballots were returned in the proper signed outer envelopes. However, some ballots were not enclosed in an unsigned inner envelope, they were just loose in the outer envelope. In other cases, the voter also signed their ballot. Questions came up as to whether such ballots should be counted. What is the answer? (W.K., via e-mail)
A: The Florida Condominium Act provides that the election of directors must be by secret ballot and further provides that the Division of Florida Condominiums, Timeshares, and Mobile Homes shall adopt rules consistent with the statute for the election of directors.
Pursuant to the Division rules, the secret ballot for the election of directors is to be placed inside an unsigned inner envelope, and the inner envelope is to be placed inside a larger outer envelope. The outer envelope is to be sealed and signed by the unit owner. This process ensures the secrecy of the unit owner’s ballot when the ballots are counted. However, it is not uncommon for owners to fail to place their ballots inside the unsigned inner envelope or to mark the ballot, otherwise indicating who the unit owner voter was.
There are arbitration decisions issued by the Division that have found that when such ballots are received by the association and are received inside valid signed outer envelopes, ballots may be counted. While the unit owner is entitled to secrecy if they fail to protect the secrecy of their vote by failing to place the ballot inside an inner envelope properly, it waives their secrecy but does not invalidate the ballot. The association should review specific questions regarding the validity of a ballot with its attorney.
Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. Send questions to Joe Adams by e-mail to jadams@beckerlawyers.com. Past editions may be viewed at floridacondohoalawblog.com.