Florida Courts Continue To Support Community Associations' Use of Business Judgment
Updated: Mar 9, 2022
A recent decision by Florida's 3rd District Court of Appeals doubles down on community associations' ability to rely on "business judgment" when making management decisions affecting their communities.
In Florida, the "the business judgment rule" protects protects companies and directors from liability based on management and other corporate decisions which are within the scope of their authority and made in good faith. Florida courts have consistently extended the rule's protection to homeowners associations and their boards.
New Horizon's Condominium Association, Inc. v. Robert Harding, et al., 47 Fla. L. Weekly D491b (Fla. 3rd DCA 2022) continues that trend, supporting an association's right to assert business judgment protections on annual budgeting issues. The case further stands for the proposition that business judgment protection is so ingrained in the law that a community association can rely on the rule even under circumstances where it does not raise "business judgment" as an affirmative defense in its pleadings.
Notwithstanding the substantial protections afforded to Florida associations under the business judgment rule, boards must approach each decision consistently, with appropriate care, circumspection and deference to the requirements of their communities governing documents. When in doubt or when, as is often the case, those governing documents are less than clear, outside help and guidance should be sought - particularly on issues of legal and financial consequence.
The lawyers at Tilden & Prohidney have been providing affordable and prompt advice to association boards for more than two decades. We would be happy to serve as your sounding board and legal advisor on important decisions affecting your community.