Q&A: Changing the Rules to Your Advantage

Q. Can a board member vote on a change in rules that will directly benefit him or her? For example, the board member is an investor with more than ten units and needs more parking spaces for tenants; therefore he/she moves to vote to change the rule allowing more spaces and placing him/her in an advantageous position to other residents.               

                                   —Is This Allowed?

A. “Not all issues that benefit an individual director fall into the category that requires the individual to abstain from voting on the issue,” says attorney Robert Kaye of the firm Kaye Bender Rembaum, which has offices in Pompano Beach and Palm Beach Gardens. “In general terms, when an association is considering an issue that will have a direct financial benefit to a member of the board, that individual member will have a conflict of interest that will typically preclude him or her from voting on the issue. If, however, the benefit to the individual director is not one which has a direct financial benefit, the individual can vote on the matter. An example of a situation that will benefit the individual director is when that person has presented a contract to the association to provide certain goods or services to the association for pay. In this instance, the individual is required to make a full disclosure of the conflict and abstain from voting. Florida law has a specific procedure in handling certain director conflicts and legislation adopted in 2017 prohibits board members in condominiums from being service providers to the association while serving on the board.

“In the example provided, the change in policy that limits the number of parking spaces to one which provides a greater number likely falls into the situation which would not preclude the director from voting. The policy will apply to all owners in the same fashion and will not, in and of itself, provide the director with a direct financial benefit. In situations when board members are owners, many of the decisions that are made will benefit the individual directors, while not being an impermissible conflict. For example, if the board is deciding to adopt a budget with a lower monthly assessment charge, each of the directors will benefit from this change, but not in a manner that is a prohibited conflict of interest, as all other members receive the same benefit.” 

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  • But what if homeowners are affected differently by their vote? ie. Boating community, 101 home owners, 71 boat docks that need to be replaced costing approximately 2 million dollars. BOD votes that non doc owners only pay 3200 and doc owners pay 17 thousand. All homeowners benefit from the water access to the Intracoastal and ocean with home values and opportunities to own boats, rent slips, day docs, fish and walk on docks, etc. Docks are open to any homeowner. Only 2 of the BOD own docks so they befit from the lower cost. Several people in the community own a home but rent a dock, so will only pay 3200 and yet benefit from the boating community. Is that a conflict?