Question: Our condominium association recently hired a new manager. She tells us that we should set up our reserve accounts in a “pool”. Can you explain what this means to us? J.E. (via e-mail) Answer: “Cash flow” funding of condominium reserves, sometimes also referred to as the “pooling” method of reserve funding, has been around… Continue Reading
It goes without saying that every association must adopt a budget each year reflecting the estimated income and expenditures of the association. The Florida Administrative Code requires the budget adopted by the Board of Directors to contain some basic features. The budget must contain the beginning and ending dates. Adopting a budget for the “2015”… Continue Reading
Question: We own a unit in a condominium association and this year our assessments increased significantly. I was told that the Condominium Act did not allow boards to increase assessments more than ten percent per year without an owner vote. Is this correct? J.C. (via e-mail) Answer: No. Section 718.112(2)(e)2.a., Florida Statutes, provides that if… Continue Reading
Question: Our homeowners’ association has not adopted a budget for 2014. Our budget year is the calendar year and the budget was supposed to be in place by January 1, 2014. Our manager has stated that the budget is the same as last year and the assessments just carry over. Is the association allowed to… Continue Reading
Question: I have asked our association board for information regarding the wages paid to our employees. They tell me that such information is protected and it is illegal for them to provide it. Is this correct? N.F. (via e-mail) Answer: No, in my opinion, that is not correct. The statute for both condominium and homeowners’… Continue Reading
The legislature is concerned about the quality of water delivered to end users in this state. While water rates have increased (in some cases significantly) over the past few years, apparently those increases do not translate to better water quality. The bill is designed to create additional water standards and allow customers to petition to… Continue Reading
Question: I am in the process of selling my condominium unit and want to know if it is appropriate for me to request that the buyer refund me my portion of the reserve funds I have paid at the time of closing? Is this something that is covered in the condominium statute? J.D. (via e-mail)… Continue Reading
Last year we featured an article in our Community Update publication explaining how to evaluate whether certain expenses are appropriate in community associations. The term “expenses” is probably defined in your Condo/HOA documents and it is likely that that definition encompasses expenses that seem to go beyond the strict statutory definitions. Section 718.115, Florida Statutes… Continue Reading
According to recent reports, more than 1.2 million worthless checks enter the banking system every day in the United States. Check fraud losses account for more than 20 billion dollars per year and the number of cases is increasing by approximately 25% each year. I know from my own experience with community associations that fraud,… Continue Reading
Question: Is it legal for a condominium association to establish a reserve account for “uninsured losses?” Are these reserves limited to deductibles, or can they include losses that are not insured? S.K. (via e-mail) Answer: In response to your first question, it is legal to establish a “reserve” account for uninsured losses. There may be… Continue Reading
Question: Our condominium association sends the owners monthly budget reports, including year-to-date expenditures and comparisons with previous years’ expenditures. Some of our owners are leery about what we see. Can we demand an independent audit? If so, what is the procedure? D.B. (via e-mail) Answer: First, I would say that a condominium association routinely providing… Continue Reading
Condo & HOA directors must follow statutory, regulatory and documentary provisions when adopting the association’s annual budget.
Borrowing money is an avenue open to many Associations. In order to ensure the best loan possible for the Association, certain clauses in the Agreement and Promissory Note must scrutinized.
Question: Our board of directors has been talking about switching over to “pooled” reserves. Can you explain what this means? L.A. (via e-mail) Answer: The concept of funding condominium reserves through the “pooling” method, sometimes also known as the “cash flow” method, came into vogue about seven years ago. The Florida Condominium Act requires an association to… Continue Reading