Many associations have the authority under their governing documents to scrutinize proposed leasing and sales transactions and to issue an approval or denial in connection with same.
Boards are often advised that it is safer to simply say that an application was "denied" without going into the details surrounding that denial. If the property owner wishes to know the reason for the denial and pursues it legally then yes, the board will have to capitulate and provide that reason.
One school of prevailing thought remains that providing reasons for a denial could fuel unnecessary legal fights. Naturally, the other side of that debate demands transparency and the reasons that the board is exercising its authority to deny when screening renters and purchasers.
Broward County has recently proposed a new ordinance which would require all Broward County condominium, cooperative and homeowners' associations to give a specific reason in writing for the denial of an application for purchase or rent. All Broward County associations must also give written notice to the Board of County Commissioners of the status of all pending applications to rent or purchase a dwelling!
There is a public hearing scheduled for Tuesday, September 10, 2013 which will start at 10:00 am in the Commission Chambers on the 4th Floor of the Governmental Center located at 115 S. Andrews Ave, Ft. Lauderdale, FL. Since this proposed ordinance references the Human Rights Act, one can safely surmise that the Broward County Commissioners suspect most reasons for denial are discriminatory. If that is not their suspicion, they are surely likely to increase discrimination filings nevertheless as a result of this ordinance being passed. If you are a Broward County board member or if you manage a Broward County community association, it is important that you attend this meeting and let the Commissioners know how impractical it may be for your board to advise them about the status of every pending sales and leasing application you receive. It would also be nice to ask the Commissioners what public purpose is being served by the implementation of this ordinance.
If you live in another county in Florida, this proposed ordinance should still be of concern to you as often counties look to each other and borrow liberally from each other when creating ordinances.
For those of you who may be thinking that there is a preemption issue for this ordinance with state law, there is nothing in the shared ownership statutes which protects a board's right to silence on the reason for denying an application for sale or purchase. There may be some association documents which specify that articulating a reason for denial is not necessary but, in my opinion, the local ordinance would likely trump that documentary provision.
This proposed ordinance may have wide-ranging impact on the manner in which association approvals must be handled.