By the time you read this week’s column, most of the condominium, HOA and cooperative communities in Florida will have assessed their damage from Hurricane Irma, and nearly everyone will have some type of loss at their property — whether it’s simply landscaping damage, or more serious issues with roofs and mechanical equipment. I strongly recommend that you allow your attorney to review all significant contracts. The moderate amount of money that you will spend in attorney time will more than cover itself in the event of a dispute over a large contract.
Many boards or managers will be tempted to enter into quick emergency contracts for large items (particularly roofing repairs), and they may sign a contract without any legal review — only to find down the road that they have very few rights and remedies in the event that a contractor skips out with their deposit, or simply does not do acceptable work. It will cost far more to fight over a bad contract later on than to pay your lawyer to make sure you start with a good contract in the first place.
Question: We live in a large senior community governed by an HOA. The board of directors has suddenly decided that they are personally responsible for auto accidents in our community, and they want to spend upwards of $30,000 to add traffic monitoring devices and/or speed reduction devices (such as humps) in an effort to prevent accidents.
We have had approximately six accidents in the 15 years of our community’s existence — all due to driver negligence. Our main road is clearly marked in several places with a 30 mph speed limit. All side streets have stop signs prior to entering our main road.
Many of us are confused as to how the HOA board would be personally liable for accidents caused by a driver’s negligence, or why the board would think they may be liable. Certainly, it appears that the community has done its required diligence in making its rules and regulations obvious to drivers. — S.G.
Answer: While I can’t comment on whether or not it would be a reasonable use of your association’s funds to add speed monitoring or restricting devices to reduce the risk of accidents, I can say that it is very unlikely that a board member would be found personally liable for an accident in the community. First, Chapter 617, the Florida Not For Profit Corporation Act, offers significant protections to directors and officers of many community associations.
Section 617.0834, Fla. Stat., provides that an officer or a director of certain types of not-for-profit corporations is not personally liable for monetary damages to any person for any action or failure to take action, unless the officer or director breached his or her duties to the association, and unless that breach was either a criminal violation, a transaction by which the officer or director derived an improper personal benefit, or an act that was reckless (an act in conscious disregard of a risk) or was committed in bad faith or with malicious purpose. In addition, there is case law in Florida stating that, absent fraud, self-dealing or betrayal of trust, directors of associations are not personally liable for the decisions they make in their capacity as directors.
Also, your homeowner’s association likely carries directors and officers insurance to help cover the costs of defending a lawsuit brought against the directors as individuals, and the directors would also be entitled to certain types of indemnity from the association.
For all of these reasons, it doesn’t make sense to add speed-reduction devices simply out of a fear for personal liability. Instead, if the board wants to add speed-reduction devices, it should do so simply because it feels that’s what’s best for the community. Note that speed humps might very well be considered material alterations, and so you should check your governing documents to see if material alterations must first be approved by the membership. Also, many communities limit the ability of the board to spend money on capital improvements without a membership vote.
Ryan Poliakoff is a co-author of “New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living” and a partner at Backer Aboud Poliakoff & Foelster, LLP. Email questions to email@example.com. Please include your hometown.