It’s that time of year again — number crunching time.  Time to figure out if everyone is going to be paying a little more next year in their monthly or quarterly assessments.  Here are some things to keep in mind:

  1. In a condo — when the budget is mailed to the owners, the budget must show the reserves as fully funded.  If the Board is going to give the owners the right to waive the funding of full reserves, the Board can also show what the budget would look like with partial funding of reserves or a complete waiver of reserves.  But in any event, everyone must be shown a budget with fully funded reserves.  Notice that I said “IF” the Board is going to give the owners the right to waive full funding of reserves.  There is nothing in the statute that requires the Board to give the owners this choice.  So, for all intents and purposes, if a Board wants fully funded reserves, they get them.  Sure, the owners would have a right to call a meeting and vote them down later, but I have never seen that happen.
  2. In case you haven’t heard, there is a foreclosure crisis here in Florida.  That means you should include a line item in your budget for “bad debt.”  This is a figure that equals the amount of money you are not likely to receive from the unit owners in assessments, because their homes are in some form of collection.  It gets added back into your budget, so that at the end of the year, you actually collect all of the money necessary to pay the association’s bills.  If you don’t include a line item for bad debt, there is a likelihood that at the end of the year, you will run short and have to pass a dreaded special assessment.
  3. In an HOA – reserves must be included in your budget if the developer placed them in the budget while the developer maintained control of the community, if the owners previously voted for reserves, or if the Board simply wants reserve funding in the budget.  If done solely by a board vote, the board cannot exceed any limitations on the amount of the budget as reflected in the governing documents, if any.
  4. If your association has a huge surplus at the end of the year, it is not automatically allowable to transfer that surplus into a reserve account.  Suppose the owners have voted against the funding of reserves?  Those monies should either be returned to the owners or credited against next year’s future assessments.
  5. Despite the fact that your association is a not for profit Florida corporation, you are still required to file a federal tax return.   I am amazed at how many associations have not filed returns for years on end.
  6. Remember to give proper notice of the budget meeting to the owners.  14 day advance notice for a condominium.  In a HOA – notice is determined by your governing documents.
  7. As I said, reserves can be waived by the owners.  However, if not waived properly at a meeting of the owners, the budget with fully funded reserves goes into effect – LIKE IT OR NOT.

Often times, the budget meeting unfortunately turns into a shouting match.  It really shouldn’t.  The Board’s job is to simply pass a budget that ensures he bills get paid as they come due.  Nothing more, nothing less.

So, I wish for all you this year significant decreases in your assessments, smaller bills for your windstorm insurance, 100% collection of assessments from your owners and to be litigation free.  Well maybe not litigation free……..

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