An article titled “Managing the Business of Your Association” written by our very own Jane Bolin, founding partner of PeytonBolin, PL, was featured in the KW Property Management & Consulting Newsletter!
Click here to read the full article or check out an excerpt below:
Managing the Business of Your Association– A Basic Overview
Traditionally, individuals who agree to serve on the Board of Directors for their association, whether as a result of their passion for their community or at the persuasion of others, rarely view their service for what it is – a collective effort on the part of three to seven individuals to manage a business with annual revenues between fifty thousand and three million dollars. Being that an association is a business, this article is being written to provide board members, current and prospective, with a solid foundation for understanding the fundamentals of running this type of corporation.
Let's begin with the basics. The association is incorporated in the state of Florida as a not-for-profit business, therefore, the articles of incorporation have been filed as a legal document with the state, and they outline the business structure of the community. How the business of the association should be run, or in other words, how the association board conducts business, is normally outlined in the bylaws. The bylaws are often found as an exhibit to the Declaration of Covenants and Restrictions. Most bylaws contain quorum requirements, meeting notice provisions, and election information, however; it is important to note that Florida Statutes may control in these areas rendering the bylaws moot, and the opinion of any attorney may be necessary to protect the Board of Directors and the association.
The contract that governs everyone who purchases in the community, and often times their guests and invitees, is the Declaration of Covenants and Restrictions sometimes known as “CCR's” or the “Dec.” The declaration contains the rights and restrictions that run with the land meaning that these rights and restrictions are applicable to all owners regardless of how they acquired the property. Often times, the declaration will include pet restrictions, screening provisions, sale approval provisions, and architectural restrictions among others.
A good starting point as a member of the Board of Directors is to verify that you have a recorded copy of the declaration and any amendments to the declaration. The copy you were provided at closing or by a friendly neighbor may or may not be the recorded copy. Why does recordation matter? Only recorded covenants and restrictions are enforceable. You can locate your recorded declaration in the public records of the county in which you purchased the property, or by contacting the public records office or clerk of court.
It is from the enforceable covenants and restrictions that the association is granted the ability to craft rules and regulations of the community. It is important to note that the rules and regulations are not recorded, and can change from time to time or from board to board. The rules and regulations are clarifications of the rights and restrictions. For example, the declaration may have a two pet provision but nothing about where the owner may walk the animals. The rules and regulations can provide this guidance.
Beyond the articles, bylaws, declaration, and rules, there are Florida statutes that mandate and limit the association's authority. Additionally, Florida administrative code 61-B, arbitration decisions, and case law provide guidance in the day-to-day matters that the board manages in a community association.
Now this all may seem like a lot of information, and indeed, it is. There is a reason most associations hire competent managers and lawyers. The landscape is vast. But the most important thing to remember is that the board is running a business. Don't approach board memberships like a social activity or simply a volunteer position.
Start with the foundation. Figure out what governs your association by locating the documents that are specific to your community, and then turn your attention to running the business of your association.