Live in a home governed by a condominium, co-op orhomeowner's association? Have questions about what they can and cannot do? Ryan Poliakoff, an attorney and author based in Boca Raton, has answers.
Question: The president of our board, without anyone’s knowledge, negotiated a deal with a neighboring school to build a parking garage in back of our building, where the school would have full use of the second story. He even signed a letter of intent with them to move forward with the project.
From my understanding, the board did not approve of this, and the residents were not aware of it, either. To me it feels like this behavior is really crossing a line. The building will still need to vote, but it seems these negotiations set the tone and in my opinion
are not favorable to our building. Does a president of a board have this power? I would love to hear your perspective on this. Signed, D.C.
Dear D.C.,
The good news is that a typical letter of intent is not legally binding. It’s just a document laying out the intentions of the parties. I’ve never been a big fan of them for that reason — at best they are a document that lays out deal terms for future negotiations, but the idea of signing them as if they were a contract seems somewhat pointless, as they don’t really bind anyone to anything.
Now, with that said, a carelessly drafted letter of intent can be binding, and to that extent what the president did was reckless.
There is a legal concept called “apparent authority” where a party is entitled to rely on promises made by someone who appears to have the authority to bind an entity, even if that person was never actually granted the authority to take such action. And in extreme circumstances, the agent can even be held personally liable for the cost of the promise. So, this president could theoretically be on the hook for the cost of his unauthorized promise.
While I suspect this president thought he was doing something for everyone’s benefit, the president of a community association does not have any particular power to make unilateral decisions on the association’s behalf, and while I would not have a problems with an officer beginning preliminary discussions on projects like this, nothing should have been signed unless the board had signed off, and then only after careful review, and making sure the other party had full knowledge of any other approvals that might be needed.
Plus, it should go without saying that any large contract should be reviewed by the association’s attorney.
I agree with you that this project is unlikely to be able to go forward without significant owner approval. First, it sounds as if you are in a condominium, and this would be a material alteration. But also, depending on who will own the ultimate structure this could affect owner appurtenances and possibly even require 100% approval. So, it’s particularly important that the association’s attorney reviews this project and provides an opinion as to whether it could even work; not to mention to provide comments on the obvious liability issues with non-residents having extensive access to and use of the property.
My guess is that this is unlikely to get owner approval, but on the other hand, if the school is agreeing to build the garage at its cost and perhaps even pay a rental fee on a long-term basis, there could be significant practical and financial benefits — so I wouldn’t rule anything out.
Question: The condominium board for a property I own recently approved an assessment for a major needed repair. They held all the appropriate board meetings. However, when they mailed out the coupon books, they included a letter titled "Notice of the Special Assessment." Although the letter includes lines for date and signature, those lines are blank. Does this affect the legality of the assessment? Signed. C.B.
Dear C.B.,
Assuming everything else was done correctly, I would not be particularly concerned. The important steps are that a notice and agenda of the meeting where the assessment was passed was sent out by mail and posting on the property at least 14 days in advance, and that the agenda stated the estimated amount and the purpose of the assessment.
Assuming that part was taken care of, this “Notice of the Special Assessment” was not a legal notice, but just a courtesy notice sent to owners to inform them how much they were obligated to pay. So, the fact that it wasn’t signed or dated shouldn’t be relevant.
But, if there’s any questions about whether the procedure used to pass the assessment was proper, it’s always a good idea to check with counsel. You don’t want to mess up any assessment procedure, because if you do, it may create problems when you try to collect from non-paying owners.
Ryan Poliakoff, a partner at Poliakoff Backer, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. Ryan Poliakoff and Gary Poliakoff are co-authors of "New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living." Email your questions to condocolumn@gmail.com. Please be sure to include your location.
This article originally appeared on Palm Beach Post: Can a board president sign deals without approval?
