Dashboard

Find us on...

Dashboard

Login using...

New Search X

Condo Association Budgets in Florida: What to look out for

Posted by Denise Stewart on Wednesday, April 4th, 2018 at 10:34pm.

By: Melissa & Denise Stewart

 

Condo Association Budgets in Florida are governed by Chapter 718 of the Florida Statutes.

The first question that we are often asked is are there any rules or regulations governing Condominium Associations and their budgets? The answer is YES, and the law is Chapter 718 of the Florida Statutes, and it is very specific as it relates to budgets, and the process in which budgets are developed, which items need to be accounted for, what reserves are required, and even what to do if budget increases are necessary.

These are the requirements by Statute:

(f) Annual budget.

1. The proposed annual budget of estimated revenues and expenses must be detailed and must show the amounts budgeted by accounts and expense classifications, including, at a minimum, any applicable expenses listed in s. 718.504(21). A multicondominium association shall adopt a separate budget of common expenses for each condominium the association operates and shall adopt a separate budget of common expenses for the association. In addition, if the association maintains limited common elements with the cost to be shared only by those entitled to use the limited common elements as provided for in s. 718.113(1), the budget or a schedule attached to it must show the amount budgeted for this maintenance. If, after turnover of control of the association to the unit owners, any of the expenses listed in s. 718.504(21) are not applicable, they need not be listed.
2.a. In addition to annual operating expenses, the budget must include reserve accounts for capital expenditures and deferred maintenance. These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. The amount to be reserved must be computed using a formula based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance. This subsection does not apply to an adopted budget in which the members of an association have determined, by a majority vote at a duly called meeting of the association, to provide no reserves or less reserves than required by this subsection.

And these are the Budget Items that are required by statute:

(c) The estimated items of expenses of the condominium and the association, except as excluded under paragraph (b), including, but not limited to, the following items, which shall be stated as an association expense collectible by assessments or as unit owners’ expenses payable to persons other than the association:
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.
2. Expenses for a unit owner:
a. Rent for the unit, if subject to a lease.
b. Rent payable by the unit owner directly to the lessor or agent under any recreational lease or lease for the use of commonly used facilities, which use and payment is a mandatory condition of ownership and is not included in the common expense or assessments for common maintenance paid by the unit owners to the association.
 

The next question that we are always asked is "Can the Association raise the budget to any amount, or is there a law that will prevent this?"

There are special rules relation to this very point, and the statutes cover if the Association is going to raise your assessments by more than 15% OF WHAT THEY WERE IN THE PREVIOUS YEAR. tHE STATUTE IS AS FOLLOWS:

2.a. If a board adopts in any fiscal year an annual budget which requires assessments against unit owners which exceed 115 percent of assessments for the preceding fiscal year, the board shall conduct a special meeting of the unit owners to consider a substitute budget if the board receives, within 21 days after adoption of the annual budget, a written request for a special meeting from at least 10 percent of all voting interests. The special meeting shall be conducted within 60 days after adoption of the annual budget. At least 14 days prior to such special meeting, the board shall hand deliver to each unit owner, or mail to each unit owner at the address last furnished to the association, a notice of the meeting. An officer or manager of the association, or other person providing notice of such meeting shall execute an affidavit evidencing compliance with this notice requirement, and such affidavit shall be filed among the official records of the association. Unit owners may consider and adopt a substitute budget at the special meeting. A substitute budget is adopted if approved by a majority of all voting interests unless the bylaws require adoption by a greater percentage of voting interests. If there is not a quorum at the special meeting or a substitute budget is not adopted, the annual budget previously adopted by the board shall take effect as scheduled.
b. Any determination of whether assessments exceed 115 percent of assessments for the prior fiscal year shall exclude any authorized provision for reasonable reserves for repair or replacement of the condominium property, anticipated expenses of the association which the board does not expect to be incurred on a regular or annual basis, or assessments for betterments to the condominium property.
c. If the developer controls the board, assessments shall not exceed 115 percent of assessments for the prior fiscal year unless approved by a majority of all voting interests.
(f) Annual budget.
1. The proposed annual budget of estimated revenues and expenses must be detailed and must show the amounts budgeted by accounts and expense classifications, including, at a minimum, any applicable expenses listed in s. 718.504(21). A multicondominium association shall adopt a separate budget of common expenses for each condominium the association operates and shall adopt a separate budget of common expenses for the association. In addition, if the association maintains limited common elements with the cost to be shared only by those entitled to use the limited common elements as provided for in s. 718.113(1), the budget or a schedule attached to it must show the amount budgeted for this maintenance. If, after turnover of control of the association to the unit owners, any of the expenses listed in s. 718.504(21) are not applicable, they need not be listed.

 

As you can see, ther rules governing budgets are very specific and complicated. The best thing to do if you think that you may have a problem, is to ask the Board of Directors (or the President of the Association) to speak to the Attorney for the Association. Otherwise, you may have to hire your own attorney to inquire into any issues that you see... 

 

Leave a Comment