Insurance Proceeds Should Be Bonded

Nov 15, 2023 | Associations, Insurance, Law, Q&A, Residents

Q: My condominium association is in the process of renewing its insurance policies and our insurance agent advised that we needed a fidelity bond policy with a higher limit for the coming year because of the insurance proceeds the association received following Hurricane Ian. Why would we need higher limits on our fidelity bond? (W.K, via e-mail)

A: Section 718.111(11)(h) of the Florida Condominium Act states that every condominium association shall maintain insurance or a “fidelity bond” on all persons who control or disburse funds of the association. The statute goes on to state that the policy or bond must cover “the maximum funds that will be in the custody of the association or its management agent at any one time.”

While most associations have a general understanding of the amount funds will be in its possession at any given time, if your condominium association is in receipt of significant insurance proceeds, the association should increase the limits on its fidelity bond or other relevant insurance policy to ensure that the association is fully protected.

For homeowners’ associations, Section 720.3033(5) of the Florida Homeowners’ Association Act also states that a homeowners’ association must maintain insurance or fidelity bonds for all persons who control or disburse the funds of the homeowners’ association. The Homeowners’ Association Act states that the insurance policy or fidelity bond must cover the maximum amount of funds that will be in the custody of the association or its management agent at any one time. However, the association may, through a majority vote of the members present at a meeting, waive the requirement to obtain such insurance policy or fidelity bond and this vote must be taken on an annual basis. There is no such waiver vote permitted in the condominium statute.

Q: I recently received a notice from our homeowners’ association manager that the upcoming monthly board of directors’ meeting was canceled “due to there not being a quorum of board members.” What does that mean? (S.A., via e-mail)

A: A board “meeting” is generally defined as any “gathering” of a “quorum” of the board members gathered to “conduct association business.”

Board members may participate in board meetings in person, by telephone with speaker phone at meeting site, or by remote video means. A “quorum” of the board is almost always described in the association’s bylaws as a majority of the directors.

It appears that at least a quorum of your directors were unable to attend or participate in the regularly scheduled monthly meeting, and it was therefore cancelled.

Q: Can you please clarify if a homeowners’ association needs to have an agenda with the notice of a board of directors meeting posted prior to the meeting? (M.S., via e-mail)

A: The Florida Homeowners’ Association Act requires 48 hours posted notice of a board of directors’ meeting, except in an emergency. Additional notice may be required under the community governing documents. Further, board meetings regarding special assessments or rules governing parcel use must be posted 14 days in advance and personally provided to each owner.

A new Florida law takes effect on October 1, 2023, that will also require the posted notice to specifically identify the agenda items.

Q: In a condominium with residential and commercial units, can a commercial unit owner veto amendments to the condominium documents (M.K., via e-mail)?

A: No. In a mixed-use condominium (a condominium association consisting of both residential and nonresidential units), Section 718.404(1) of the Florida Condominium Act provides that the condominium documents may not provide that the owner of any commercial unit has the authority to veto amendments to the declaration, articles of incorporation, bylaws, or rules and regulations of the condominium association.

This change was enacted July 1, 2007. Although this provision is stated to apply retroactively, the Florida Supreme Court held that retroactive application is unconstitutional.


Originally posted on Written by Joseph E. Adams of Becker & Poliakoff, P.A.,