QUORUMS

QUORUMS:

WHAT ARE THEY AND WHAT HAPPENS IF YOU DON’T HAVE ONE?(INCLUDING THE FAILURE TO HAVE THE REQUIRED NUMBER OF BOARD MEMBERS)

    As a result of the last e-Lawyer relating to elections of condominium board members, we received several follow-up questions generally relating to the concept of 'quorums'. This edition will therefore address various aspects of that concept and its interrelationship with other corporate concepts.

I. DEFINITIONS:

    According to Black’s Law Dictionary, the word 'quorum' is defined as follows:

quorum, n. The minimum number of members (usu. a majority) who must be present for a body to transact business or take a vote.

and the word 'majority' is defined as follows:

majority, n. A number that is more than half of a total; a group of more than 50 percent.

II. WHAT IS A QUORUM FOR MEMBERS’ MEETINGS:

A. HOA’S:

    Section 720.306(1)(a), Florida Statutes, establishes the quorum requirements for homeowners’ association members’ meetings using the following language:

(a) Unless a lower number is provided in the bylaws, the percentage of voting interests required to constitute a quorum at a meeting of the members shall be 30 percent of the total voting interests.....

    Accordingly, to determine your quorum requirement, you must first look to your individual bylaws. If the quorum requirement contained in that document is 30 percent or less (e.g. 10%), you will use that number. If, on the other hand, the quorum requirement is more than 30% (e.g. 66%) you will default to the statutory requirement of 30%.

    Please note, that special quorum requirements may be provided for in the governing documents (e.g. special quorum for special assessment votes) or in other statutes (e.g. special provisions for recall votes). Care must be exercised to insure that these special requirements have been analyzed.

B. CONDOMINIUMS:

    Section 718.112(2)(b)1, Florida Statutes, establishes the quorum requirements for condominium association members’ meetings using the following language:

1. Unless a lower number is provided in the bylaws, the percentage of voting interests required to constitute a quorum at a meeting of the members shall be a majority of the voting interests....

    Accordingly, to determine your quorum requirement, you must first look to your individual bylaws. If the quorum requirement contained in that document is a majority or less (e.g. 10%), you will use that number. If, on the other hand, the quorum requirement is more than a majority (e.g. 66%) you will default to the statutory requirement and use a majority.

    Please note, that special quorum requirements may be provided for in the governing documents (e.g. special quorum for special assessment votes) or in other condominium statutes (e.g. no quorum required for board elections and special provisions for recall votes). Care must be exercised to insure that these special requirements have been analyzed.

III. WHAT HAPPENS IF YOU DON’T ESTABLISH A QUORUM AT MEMBERS’ MEETINGS:

A. HOA’S:

    If you are unable to establish a quorum at a members’ meeting, no official corporate actions can be taken other than a vote to adjourn the meeting to a later date in the hopes that a quorum can then be established. (See Section 720.306(5) for the notice requirements for such adjournments.)

B. CONDOMINIUMS:

    Same as above except you would look to Chapter 617 and your own documents to determine the notice requirements for such adjournments.

IV. WHAT IS A QUORUM FOR BOARD MEETINGS:

A. HOA’S:

    Chapter 720 does not directly address this issue, therefore, we must look to Chapter 617 (Florida Not-For-Profit Corporate Act). Here we find the following pronouncement:

617.0824 Quorum and voting. --

(1) Unless the articles of incorporation or the bylaws require a different number, a quorum of a board of directors consists of a majority of the number of directors prescribed by the articles of incorporation or the bylaws.

(2) The articles of incorporation may authorize a quorum of a board of directors to consist of less than a majority but no fewer than one-third of the proscribed number of directors determined under the articles of incorporation or the bylaws.

(3) If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors unless the articles of incorporation or the bylaws require the vote of a greater number of directors.

    Accordingly, to determine the quorum requirements for your HOA board meetings, you must review your individual articles of incorporation and/or bylaws and use the standard provided for therein. However, please always remember that the quorum may never be less than one-third of the total number of required (not necessarily presently serving) directors.

    If they are silent, your quorum will be a majority of the total number of directors required by your documents.

B. CONDOMINIUMS:

    Same as above.

V. WHAT HAPPENS IF YOU OCCASIONALLY FAIL TO ESTABLISH A QUORUM AT BOARD MEETINGS:

A. HOA’S:

    As with members’ meetings, if you are unable to establish a quorum at a board meeting, no official corporate acts can be taken other than a vote to adjourn the meeting to a later date in the hopes that a quorum can then be established. (See Section 617.0820(2) for the notice requirements for such adjournments.)

    The periodic failure to establish a quorum is typically insignificant; however, if it happens on a regular basis something should be done. Thankfully, Florida law provides valuable assistance by permitting board members to attend by telephone so long as certain limited rules are met. (See Section 617.0824(4) for such requirements.)

B. CONDOMINIUMS:

    Same, except that the standards for telephone participation for condominiums is found at Section 718.112(2)(b)5.

VI. WHAT HAPPENS WHEN TOO FEW DIRECTORS ARE ACTUALLY SERVING TO ESTABLISH A QUORUM AT BOARD MEETINGS:

A. HOA’S:

    Unlike the occasional failure to establish a quorum, the impossibility of establishing a quorum is a very significant problem. For instance, what happens if:

1. You have a seven (7) person board;

2. Your documents provide that a majority of the required board members is a quorum (i.e. four (4) members);

3. Only three (3) persons remain on the board as a result of written resignations, persons selling and moving thereby losing their legal right to serve on the board, failure to elect sufficient numbers of board members, etc; and

4. Those three (3) board members fail or refuse to appoint at least one (1) other board member.

When faced with this fact pattern, the following provisions found in Chapter 617 and Chapter 720 come into play:

1. Section 617.0809(1) provides that vacancies occurring on a board may be filled by the affirmative vote of the majority of the remaining directors, even though the remaining directors constitute less than a quorum, or by the sole remaining director, as the case may be, or, if the vacancy is not so filled or if no director remains, by the members or, on the application of any person, by the circuit court of the county where the registered office of the corporation is located; and

2. Section 720.305(4) provides that, if an association fails to fill vacancies sufficient to constitute a quorum as established in the bylaws, any member can ask a judge to appoint a receiver to operate the association.

Accordingly, the following actions should occur:

1. The three (3) board members should first be asked to appoint four (4) more members or set an election to elect four (4) more members;

2. If they refuse or fail to do so, the members should ask the board to at least appoint one (1) more board member so that a quorum will be possible;

3. If they refuse or fail to do so, then the members should:

a. File a court action asking that a receiver be appointed or,

b. Recall the three (3) board members and elect new board members who will act responsibly; or

c. File a court action requiring the board to comply with state law and the documents.

Thankfully, it will be a rare instance when the above circumstances reach the extreme results outlined above.

B. CONDOMINIUMS:

    Same as above, except that Section 718.112(2)(d)8 would apply instead of Section 617.0809(1) and Section 718.11124 would apply instead of Section 720.305(4)

 

The firm of Taylor & Carls, P.A., with offices located in Maitland, Melbourne and Daytona Beach, Florida, was founded in 1981 and has practiced in the area of community association law since that date. This edition prepared by Robert L. Taylor, a partner of Taylor & Carls, P.A. The information contained in The Association e-Lawyer should not be acted upon without professional legal advice.



©2004 Taylor & Carls, P.A. All Rights Reserved.

The firm can be reached at 407-660-1040.

 
 
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