Q&A: Is an owner vote needed before we can borrow money and special assess?
Editor’s note: Attorneys at Goede, DeBoest & Cross respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, civil litigation, estate planning and commercial transactions.
Q: Our condominium association is considering entering into a loan to fund repairs to our condominium property from Hurricane Ian. We are intending on paying off the loan with a special assessment against all the owners in the condominium. There are some owners who have said that we cannot do this without a unit owner vote. Is a unit owner vote required before we can borrow money and special assess?
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A: Whether the association is required to obtain a membership vote to borrow money depends on the language in the association’s governing documents. An association’s right to borrow money is usually found in its Articles of Incorporation. If a membership vote is required, the provision in the Articles will specifically state the required membership approval threshold in order to borrow money. However, I also recommend reviewing the Declaration of Condominium to determine whether the right to borrow money and an accompanying membership vote component is discussed. If it is not discussed in the Declaration and no membership vote component is required in the Articles, I would review the Bylaws to make sure it is also not discussed. Absent a membership vote requirement to borrow money in any of these documents, the Board of Directors is authorized to borrow money via a Board vote.
Whether the association is required to obtain a membership vote to assess a special assessment also depends on the language of the governing documents. The requirement for membership approval of a special assessment is usually found in the Bylaws. If a membership vote is required, the provision in the Bylaws will specifically state the required membership approval threshold in order to assess a special assessment. However, I also recommend reviewing the Declaration of Condominium to determine whether the right to special assess and an accompanying membership vote component is discussed. If it is not discussed in the Declaration and no membership vote component is required in the Bylaws, I would review the Articles to make sure it is also not discussed. Absent a membership vote requirement to borrow money in any of these documents, the Board of Directors is authorized to borrow money via a Board vote. Absent a membership vote requirement to special assess in any of these documents, the Board of Directors is authorized to special assess via a Board vote. I recommend that you speak with your legal counsel about this situation more fully to ensure that your condominium association is fulfilling not only the requirements in the governing documents but also the bank’s requirements.
Destiny Goede, Esq., is an Attorney at the Law Firm Goede, DeBoest & Cross. Visit www.gadclaw.com or to ask questions about your issues for future columns, send your inquiry to: question@gadclaw.com. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.
This article originally appeared on Treasure Coast Newspapers: Q&A: Is an owner vote needed before we can borrow money and special assess?
