Florida Law · Governance · Director Duties

Florida Director Conflict of Interest: §§ 718.3027 and 720.3033 Explained

Florida law is unusually specific about how directors must handle conflicts of interest — with parallel statutes for condominiums and HOAs, an agenda-and-attachment requirement, a two-thirds approval threshold, and a member-cancellation right that few boards anticipate when the issue first surfaces.

The Bottom Line

Florida community-association law treats director conflicts of interest more prescriptively than most states. Two parallel statutes — § 718.3027 for condominium associations and § 720.3033 for homeowners associations — require directors and officers (and, importantly, their relatives) to disclose any activity that may reasonably be construed to be a conflict of interest. For condominium associations, the proposed activity must be listed on the meeting agenda with all related contracts and transactional documents attached; the association must comply with Chapter 617’s related-party transaction framework; and approval requires a two-thirds affirmative vote of all other directors present. For HOAs, the parallel framework requires disclosure at least 14 days before voting on the issue or entering the contract, with developer-appointed directors and officers required to disclose their developer relationship annually. In both contexts, the existence of the contract or transaction must be disclosed to members at the next meeting, and members may cancel the contract by majority vote of those present. The framework is strict, well-defined, and frequently misunderstood — making it one of the most common sources of post-transaction member complaints.

Operational Context: Why Florida Imposes a Specific Framework

Director conflict-of-interest concerns are universal in community associations. A director who owns a landscaping company bids on the maintenance contract; the spouse of a director sells the association property and casualty insurance; the brother of a director is the contractor renovating the lobby. These transactions are not inherently improper — community associations frequently benefit from director networks — but they require structured disclosure and approval to avoid the appearance (and reality) of self-dealing.

Generic nonprofit-corporation law (Florida Chapter 617) provides a general related-party-transaction framework. The Florida community-association statutes layer on top of that framework with specific procedural requirements that are tighter than the general nonprofit standard and more detailed than what most directors anticipate. The result is that Florida directors operating from general fiduciary intuition — even well-intentioned ones — routinely make procedural errors that produce member complaints, contract challenges, or DBPR investigations.

What Counts as a Conflict of Interest

Both § 718.3027 and § 720.3033 use the phrase “any activity that may reasonably be construed to be a conflict of interest.” The statutes also identify specific categories where conflict is rebuttably presumed:

• A director, officer, or relative enters into a contract for goods or services with the association.
• A director, officer, or relative holds an interest in a corporation, LLC, partnership, LLP, or other business entity that conducts business with the association or proposes to do so.

“Relative” under § 718.3027 is defined as “a relative within the third degree of consanguinity by blood or marriage.” In practical terms, this reaches parents, children, siblings, spouses, grandparents, grandchildren, in-laws, aunts, uncles, nieces, nephews, and the equivalent step- and half-relations. The reach is intentionally broad — the legislature recognized that conflict-of-interest concerns extend beyond the director’s direct economic interest to close family relationships.

The Condominium Framework Under § 718.3027

For condominium associations, the procedure is highly structured:

Step 1: Identify and Disclose the Conflict

The director, officer, or relative proposing the conflict activity must disclose it to the board. The statute requires that the proposed activity be listed on the meeting agenda for the meeting at which it will be considered.

Step 2: Attach All Contracts and Transactional Documents

All contracts and transactional documents related to the proposed activity must be attached to the meeting agenda. This is a distinctive feature of the Florida condominium framework — the documents themselves must be part of the meeting record before deliberation begins.

Step 3: Comply with Chapter 617’s Related-Party Transaction Rules

The association must comply with the requirements of Florida Statutes § 617.0832 (the nonprofit-corporation related-party transaction provisions). The disclosures required by § 617.0832 must be entered into the written minutes of the meeting.

Step 4: Approval by Two-Thirds Vote of All Other Directors Present

Approval of the contract or other transaction requires an affirmative vote of two-thirds of all other directors present — that is, two-thirds of the directors excluding the conflicted director(s) and counting only those present at the meeting. The conflicted director should ordinarily abstain (and is not counted in the denominator).

Step 5: Member Disclosure

At the next regular or special meeting of the members, the existence of the contract or other transaction must be disclosed to the members.

Step 6: Member Cancellation Right

Upon motion of any member, the contract or transaction must be brought up for a vote and may be cancelled by a majority vote of members present.

The HOA Framework Under § 720.3033

For homeowners associations, the framework is parallel but with somewhat different timing and detail:

14-Day Advance Disclosure

Directors and officers must disclose any conflict-of-interest activity to the association at least 14 days before voting on an issue or entering into a contract that is the subject of the conflict. This is a substantive scheduling change: the conflict must be on the table well in advance of the action.

Developer-Appointed Director and Officer Disclosure

Directors and officers appointed by the developer must annually disclose their relationship to the developer. They must also disclose any other activity that may reasonably be construed to be a conflict of interest under the general rule.

Related-Party Contract Procedure

If the association enters into a contract or other transaction with any of its directors, or with a corporation, firm, association (other than an affiliated HOA), or other entity in which an association director is also a director or officer or is financially interested, the board must approve the contract or transaction by an affirmative vote of two-thirds of the directors present. At the next regular or special meeting of the members, the existence of the contract or transaction must be disclosed to the members.

No General Member Cancellation Right

Unlike § 718.3027, the HOA framework under § 720.3033 does not explicitly provide a member-cancellation right by majority vote at the next member meeting. The disclosure obligation is the same; the member remedy is structured differently. Members may challenge non-compliance through other statutory and equitable remedies.

Side-by-Side: § 718.3027 (Condo) vs. § 720.3033 (HOA)

How the Framework Interacts with Chapter 617 (Nonprofit Corporation Code)

Florida community associations are typically organized as nonprofit corporations under Chapter 617. § 617.0832 supplies the general related-party transaction framework, which permits such transactions if (a) material facts are disclosed and a majority of disinterested directors authorize the transaction in good faith, (b) the facts are disclosed and the members approve, or (c) the transaction is fair and reasonable to the corporation when entered into.

The community-association statutes (§ 718.3027 and § 720.3033) layer additional, stricter requirements on top of § 617.0832. Where the general statute and the specific statute differ, the specific statute prevails. In practice, this means a Florida condominium or HOA board cannot rely on Chapter 617’s general framework alone; it must comply with the specific community-association requirements.

Why This Matters

Procedural defects invalidate transactions. A vendor contract approved without proper disclosure can be voided by member action (in the condominium context) or successfully challenged by member litigation (in the HOA context). The vendor — often a director-affiliated business — can find itself unable to enforce its own contract.

Personal exposure is real. A director who participates in a related-party transaction without complying with the statute can be exposed to fiduciary claims, statutory damages, and removal from the board. D&O coverage typically excludes intentional misconduct, and self-dealing claims are at the harder edge of coverage even when not intentional.

Relative-disclosure obligations surprise directors. The third-degree-of-consanguinity reach catches relationships that directors often do not consider. A director’s sister-in-law’s LLC bidding on the pool contract is within scope; the director frequently does not realize it until disclosure is challenged after the fact.

Member cancellation rights are real and exercised. The § 718.3027 member-cancellation framework has been invoked by owners challenging condominium-board contracts at the next member meeting. The contract that survived board approval can be cancelled by majority of members present — an outcome that catches both boards and vendors by surprise.

Best-Practice Guidance

1. Adopt a written conflict-of-interest policy.

The board should adopt — and re-affirm annually — a written conflict-of-interest policy that incorporates § 718.3027 (or § 720.3033), defines “relative,” identifies the disclosure procedure, and specifies the approval process and member-disclosure obligation.

2. Use a standardized annual disclosure form.

Every director and officer should complete an annual conflict-of-interest disclosure form identifying any business interests, vendor relationships, family business interests, and other circumstances that could give rise to a conflict. Developer-appointed officers should additionally disclose the developer relationship.

3. Disclose early and on the agenda.

The condominium framework is explicit: the proposed activity goes on the meeting agenda with all transactional documents attached. The HOA framework requires 14-day advance disclosure. Both standards reward boards that surface conflicts well before deliberation, not in the last 30 seconds before the vote.

4. Have the conflicted director abstain.

The conflicted director should ordinarily abstain from the vote. The two-thirds threshold for § 718.3027 is calculated on “all other directors present” — the conflicted director is not part of the denominator. Recording the abstention in the minutes is structurally important.

5. Document the disclosure and approval in minutes.

The minutes should reflect (a) the disclosure, (b) the documents attached or referenced, (c) compliance with § 617.0832 (where applicable), (d) the vote and the count of present directors who approved, and (e) the planned member disclosure at the next member meeting.

6. Disclose to members at the next member meeting — without prompting.

Both statutes require disclosure to members at the next meeting. The disclosure should be on the agenda, with the contract or transaction summary in the meeting materials. The board that proactively discloses preempts the member-action mechanic; the board that waits to be called out invites the cancellation motion.

7. Engage counsel for novel or significant transactions.

Counsel involvement adds modest cost; the avoided cost of voided contracts, member litigation, or DBPR action is substantial. For any related-party transaction above a defined dollar threshold, route through counsel before approval.

Common Mistakes & Pitfalls

Actionable Takeaways

1. Adopt or refresh a written conflict-of-interest policy that mirrors § 718.3027 or § 720.3033 as applicable.
2. Require every director and officer to complete an annual conflict-of-interest disclosure form.
3. For condominium boards: ensure related-party matters are listed on the agenda with all contracts and transactional documents attached.
4. For HOA boards: ensure related-party matters are disclosed at least 14 days before any vote or contract execution.
5. Have the conflicted director abstain; record the abstention in the minutes; verify the vote count satisfies the two-thirds threshold of remaining directors.
6. Calendar the member-meeting disclosure for the next regular or special member meeting after the transaction is approved.
7. For developer-appointed HOA officers: ensure annual developer-relationship disclosure is filed.
8. For significant related-party transactions, route through counsel before board approval.
9. Maintain the conflict-of-interest file in the association’s official records: policy, annual disclosure forms, contract documents, minutes, member-meeting agenda, member-disclosure record.
10. Review the policy and update the disclosure forms each year as part of the annual governance cycle.

Related CIC-SC Resources

• Florida Chapter 718 — Condominium Act Overview for Board Members
• Florida Condominium Board Election Process Under § 718.112(2)(d)
• Developer Turnover Inspection Checklist
• Declarant Control Period — What It Means and When It Ends
• Vendor RFP Template — General Maintenance and Janitorial
• Management Company Performance Review Guide and Scorecard
• The Business Judgment Rule — How It Protects HOA Boards
• Directors & Officers (D&O) Insurance — What It Covers and What It Doesn’t

References & Sources

1. Common Interest Community Standards Council, Fundamentals of Association Management — chapter on Director Duties and Florida-Specific Disclosure Obligations.
2. Florida Statutes § 718.3027 — Conflicts of interest; condominium associations.
3. Florida Statutes § 720.3033 — Officers and directors; conflicts of interest; HOA associations.
4. Florida Statutes § 617.0832 — Director conflicts of interest; nonprofit corporation general framework.
5. Florida Statutes § 718.112(2)(d) — Election framework (companion governance provision).
6. Florida Statutes § 720.303 — HOA powers and duties (broader framework for § 720.3033).
7. Florida HB 913 (2025) — refinements to condominium disclosure and transparency framework; effective July 1, 2025.
8. Florida DBPR, Division of Florida Condominiums, Timeshares, and Mobile Homes — published guidance on related-party transactions.
9. Florida Administrative Code Chapter 61B — DBPR rules implementing Chapter 718.

Tags: § 718.3027 · § 720.3033 · conflict of interest · related-party transaction · two-thirds vote · third degree of consanguinity · member cancellation · developer disclosure · Chapter 617 · director duties

CICSC publishes this article for educational and informational purposes only. It is not legal, tax, accounting, engineering, insurance, or financial advice and does not establish an attorney-client relationship. Statutory references and operational frameworks are intended to support informed governance, not to substitute for advice from qualified legal counsel and other professional advisors familiar with your jurisdiction and your association's facts. CICSC, its authors, and its members assume no liability for actions taken in reliance on this content.