CAN THE BOARD SPEND YOUR MONEY ON ANYTHING THEY WANT?

I always get lots of e-mails from people complaining that the Board is spending their monies wildly and out of control, for things they don’t want, don’t need and for which there was no mention in the association’s budget.

 

As we know, the Board must pass a budget to pay the association’s “common expenses.” The Florida Condominium Act states:

 

718.115 Common expenses and common surplus.—

(1)(a) Common expenses include the expenses of the operation, maintenance, repair, replacement, or protection of the common elements and association property, costs of carrying out the powers and duties of the association, and any other expense, whether or not included in the foregoing, designated as common expense by this chapter, the declaration, the documents creating the association, or the bylaws. Common expenses also include reasonable transportation services, insurance for directors and officers, road maintenance and operation expenses, in-house communications, and security services, which are reasonably related to the general benefit of the unit owners even if such expenses do not attach to the common elements or property of the condominium. However, such common expenses must either have been services or items provided on or after the date control of the association is transferred from the developer to the unit owners or must be services or items provided for in the condominium documents or bylaws.

 

For Homeowner Associations, the statute says:

720.303 (6) BUDGETS.—

(a) The association shall prepare an annual budget that sets out the annual operating expenses.

 

The Condominium Act goes even further and specifically indicates what items MUST appear in the association’s budget:

 

 

 

 

1. Expenses for the association and condominium:

a. Administration of the association.

b. Management fees.

c. Maintenance.

d. Rent for recreational and other commonly used facilities.

e. Taxes upon association property.

f. Taxes upon leased areas.

g. Insurance.

h. Security provisions.

i. Other expenses.

j. Operating capital.

k. Reserves.

l. Fees payable to the division.

 

Not to be a scrooge, but year after year I always get asked about the Board’s right to dip into the operating account to give Christmas bonuses to association employees.  Unfortunately, the answer is that, unless the association is contractually obligated to pay these employees a gift or year end bonus, and this amount is included in the budget, the association cannot use the members’ funds for such a purpose.

Not surprisingly then, is this information found on the Division’s own website:

  1. Can the board of administration use association funds to purchase gifts for condominium or cooperative board members?

 

The purchase of gifts for board members from association funds is not a valid common expense, unless the condominium declaration, articles of incorporation or bylaws of the association or cooperative governing documents provide for such to be a common expense.

 

Condominium:  Section 718.115(1)(a), Florida Statutes

Cooperative:  Section 719.107(1)(a), Florida Statutes

 

So, the bottom line is that if your about to cut a check from the association’s operating account, make sure that it is for a true “common expense” and meets one of the above categories before signing.  And at Christmas time, do what we did in the co-op I grew up in in Brooklyn.  One person goes around collecting money from everyone for all of the employees.  Those who contribute get their name on the Christmas card that is given to the staff.  Those who didn’t contribute ran the risk of no heat or hot water in the winter or extended wait times when service was needed in their apartment.  I guess down here though, staff would need to know how to turn off the a/c.

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