It has always been the obligation of Board members to serve for the benefit of the entire community. Doing so requires that they carry out their duties in good faith with the care of ordinarily prudent people. To safeguard and promote the welfare of the community, The Condominium Act provides for personal liability if a director or officer breaches their duty and as a result there is a violation of criminal law, an improper personal benefit or their act “constitutes recklessness or an act or omission that was in bad faith, with malicious purpose, or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.” §718.111(1)(d), Fla. Stats. That does not however stop claims that Board members act in their own self-interest rather than for the community as a whole. As a result many communities adopt a Code of Conduct to further promote confidence amongst the members. The Code serves as a specific promise on the part of Board members to serve the community and not their self-interest.
Conflicts of interest are a huge bone of contention between members and the Board. In 2017 the Legislature added a new section to The Condominium Act (§718.3027) aimed at providing full disclosures whenever a transaction or contract could be reasonably construed to be a conflict of interest. It could be said that §718.3027 is directed not at avoiding conflicts of interest but rather at ensuring that conflicts are properly disclosed and that the proper votes are taken to permit an otherwise beneficial agreement to come into existence even if a Board member could receive a benefit from that contract. In light of the new provision, communities rifled with allegations of improper conduct or those with an existing Code of Conduct should consider an updated promise from their Board and Committee members. The new Code of Conduct should incorporate the provisions of §718.3027 as well as other legislative changes which took effect in 2017 such as those prohibiting a Board member from purchasing a unit at an association’s foreclosure. The Code of Conduct should also incorporate the expanded understanding of the relationship between the Board Member and the company with whom the association will contract given the 2017 changes reference relationships by blood or marriage up to the third degree of consanguinity which covers more people than just parents, children and spouses.
The goal of a Code of Conduct is to promote knowledge and awareness on the part of the Board as to what it truly means to comply with the fiduciary duty of the office while also provide members a sense of comfort that the Board is, as it should be, working for the benefit of the entire community.
Written by Marilyn Perez-Martinez and originally posted on FL Condo HOA Law Blog