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Owners Generally Do Not Have the Right to Approve the Annual Budget

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Q:        Do condominium owners have a say in approving the annual budget? (D.J. via e-mail)

A:        Unit owners do not have the right to adopt or approve a proposed budget as a matter of law. The association’s bylaws will address how the budget is adopted, which is usually by the board. Some condominium documents, particularly older documents, require unit owner approval to adopt the budget. Such a provision is, in my opinion, lawful (though not recommended).

Section 718.112(2)(e) of the Florida Condominium Act, provides that any meeting where the proposed annual budget will be considered shall be open to all unit owners. Notice of the meeting must be provided to all unit owners 14 days in advance, along with a copy of the proposed budget. Owners also have the right to speak at board meetings regarding all designated agenda items.

The statute does provide unit owners with a process to propose an alternative annual budget under certain circumstances, typically when assessments exceed the prior year’s by more than 115%, excluding assessments for reserves and non-recurring items. Also, owners do have some say in the budget process, even where the bylaws give the board the authority to adopt the budget. Specifically, a board cannot adopt a budget without “fully funded” reserves unless a majority of the unit owners voting at a meeting have authorized a waiver or reduction of reserve funding.

Q:        My condominium association has a rule stating that records inspections are held at our management company’s office. I thought records inspections had to take place at our community. Is this rule correct? (W.D. via e-mail)

A:        Section 718.111(12)(b) of the Florida Condominium Act provides that associations must make official records available for inspection within forty-five miles of the condominium property, or within the same county.

The statute also permits associations to adopt reasonable rules regarding the frequency, time, location, notice, and manner of official record inspections. This would include the board adopting a rule establishing where the records inspections are to be held.

There are similar provisions regarding official records inspections in the homeowners’ association and cooperative statutes.

Therefore, if your management company’s office is in the same county, or within forty-five miles of your condominium, and that is where the records are kept or the board’s rule specifies where they are to be inspected, this is a proper requirement.

Q:        I am board member in a homeowners’ association. We received a letter from an owner asking a number of questions about proposed renovations to our clubhouse. Are we legally obligated to respond? (Z.W. via e-mail)

A:        No. While all associations should endeavor to reasonably address legitimate inquiries from members, there is no statutory obligation to do so.

On the other hand, the condominium statute states that an association must provide a “substantive response” within a certain time frame after receiving a unit owner’s written “inquiry,” if sent by certified mail. If the association fails to respond, it will be prevented from recovering attorneys’ fees and costs in any subsequent litigation, administrative proceeding, or arbitration that arises from the inquiry, even if it wins the case.

Q:        Does notice of a homeowners’ association board meeting with an attorney require an agenda to be posted? (W.C. via e-mail)

A:        No. The Florida Homeowners’ Association Act does not require posting of an agenda for any board meeting, only posting notice. I do believe that a notice should be posted, even for properly closed meetings of the board with legal counsel.

In the condominium setting, notice and an agenda must be posted 48 hours in advance of board meetings. Again, I recommend posting a notice even for permissible closed meetings with association counsel. The state agency which enforces the condominium law has made at least one ruling to this effect.

The agenda for closed board meetings should be prepared or reviewed by the association’s attorney to avoid the risk of inadvertent waiver of the attorney-client privilege.

Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. Send questions to Joe Adams by e-mail to jadams@beckerlawyers.com. Past editions may be viewed at floridacondohoalawblog.com.

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