Yearly Budget Meeting; Something Missing?

It is time, once again, for the yearly budget to be approved for the following year. This includes determining the yearly maintenance fee that is assessed to all unit owners (and then divided into equal monthly payments). As part of the process, the BOD is required to determine what the buildings' reserve amounts should be. Each building is then allowed the opportunity to vote to reject the proposed reserves for their building. All this is part of the law in Florida, as shown in an earlier post.

The BOD sent out the flyers shown above. However, in past years the BOD also sent out proxy ballots so that unit owners could submit their votes to reject the proposal without having actually to attend the budget meeting. It seems that the proxy ballots did not get sent out this time. Does that mean that in order to reject the proposed monthly payment of $410 in favor of the lessor payment of $260 each building has to have a majority of their owners show up at the meeting?


Florida Statutes Chapter 718.112(1)(f)2:
2. In addition to annual operating expenses, the budget shall include reserve accounts for capital expenditures and deferred maintenance. These accounts shall 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 for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000. The amount to be reserved shall be computed by means of a formula which is 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. However, prior to turnover of control of an association by a developer to unit owners other than a developer pursuant to s. 718.301, the developer may vote to waive the reserves or reduce the funding of reserves for the first 2 fiscal years of the association's operation, beginning with the fiscal year in which the initial declaration is recorded, after which time reserves may be waived or reduced only upon the vote of a majority of all nondeveloper voting interests voting in person or by limited proxy at a duly called meeting of the association. If a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves, and no such result is achieved or a quorum is not attained, the reserves as included in the budget shall go into effect. After the turnover, the developer may vote its voting interest to waive or reduce the funding of reserves.

~12 Jan 2010~ At the BOD meeting to ratify the annual budget, held on 1/11/2010, the BOD indicated that the proxy ballots were soon to be mailed out to owners and that there was to be a subsequent meeting to determine each buildings' vote on reserve funding.

Can "Dead-Beats" Use Common Area Facilities?

The following article was found on the Sun Sentinel's Condo Law section. It is about denying use of the common area to association members that do not pay their fair share of the common area maintenance fees.

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Should "Mrs. Smith" be able to use the pool if she hasn't paid her maintenance in a year?

Posted by Donna DiMaggio Berger, Esq. on August 25, 2009 08:30 AM

Hardly a day goes by that I am not contacted by a client asking whether or not certain common area and recreational use rights can be shut off for a chronically delinquent owner. The frustration that these board members, paying unit owners and property managers express is easy to understand. It must be difficult to share a spot by the pool with a neighbor who hasn't paid maintenance in nearly two years!

One of the reasons many people buy in common interest ownership communities is the recreational amenities that most people couldn't afford without a budget shared by many. Over time, people tend to forget all of the amenities that initially drew them to a particular community: tennis court, pool, clubhouse, guard gate, etc. When non-paying owners continue to use these facilities without contributing to their expenses and upkeep, the rest of the community naturally does a double take.

If you live in a homeowners' association, Chapter 720 does give the board the authority to suspend a delinquent owner's use rights and voting rights if the proper authority is provided in the declaration or bylaws. Many HOA's have amended their documents over the last few years to take advantage of this signficant tool.

Unfortunately, no such right exists for condominium boards. Last year, my firm drafted language for inclusion in two bills which would have given condominium boards the similar right to suspend use rights for delinquent owners. Sadly, that bill and every other community association bill failed.

When I am asked by a condominium board if they can make "Mrs. Smith" use the visitor entrance at the gate, stop her from using the pool or shut off her cable, I point them to Section 718.106 (3) of the Condominium Act which clearly states that a unit owner is "entitled to use the common elements in accordance with the purposes for which they are intended but no use may hinder or encroach unpon the lawful rights of other owners." At the time this language was written, the drafters could not have foreseen our current foreclosure crisis and the fact that it is not equitable to give such unfettered rights to owners who might not have paid their fair share of common expenses for quite some time.

The language we drafted last year will return next session. Please make sure your condominium communities support such change loudly and early. There is no justifiable reason that HOA boards should have this useful tool while condominium boards are deprived of same.

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Unit Owner Asks, Why Are We Paying Neighbors' Fees?

Doug Mattson sent the following in an email, along with permission to post it here.

Q: "In Bldg #23 we have an amount of $69 being added to our maintenance for "unpaid accounts". This is the first year I've ever seen a charge for this in my 9 years living here.

"Why are we paying this? Is this something that all unit owners are paying or just our building? Will we be reimbursed when the money is collected from the owner?

"I know when someone sells or refinances, they have to bring all of the current all of fees owed. It seems that we should not be paying for someone else's dues, especially when it seems they are going to collect twice for it.

"Is anyone else paying these extra fees on top of their maintenance? I don't know about anyone else, but a $270 a month maintenance fee is pretty steep. Especially when you consider what we are getting for that...non-working sprinklers, damage on the building that doesn't get repaired, etc...

"I'd be interested to know other unit owners input on this and whether they are getting the same fees."

I will answer your questions to the best of my knowledge and from my own experience, and also invite anyone with more or better knowledge to email me or make a comment on this post.

A: I am in building #35 and we pay $283/month because of a "Bad/Uncollectable Debt" that our building has incurred. The management office has told me that approximately 50% of the 47 TAJ condominiums (each building is its own condominium) are paying additional fees. In many or most of those cases the extra expenses are due to non-payment of monthly maintenance fees by some owners.

The management office assured me that when the money is collected from those delinquent owners, it is appropriately credited to those who have paid. In the cases where money has been recovered already, that money has been refunded or credited against future expenses, I was told.

The reason we have to pay the added expense is because we are collectively responsible, with our building co-owners, to the whole TAJ Association. When our neighbors do not contribute their fair share then that money must come from somewhere else until legal actions have the time to compel payment. About a year ago we made a transition from one accounting firm to another. At that time the system for tracking delinquencies did not function as smoothly as it should have. Consequently, the deficit amount has grown to the point that currently there are more than 50 owners who are delinquent in paying their monthly maintenance, I was told. I was also told that the attorney is now taking action in each of those cases. It serves as a reminder of years past when delinquencies were largely ignored and therefore they grew to a tremendous amount and had a bad effect on the community's overall property value. The lesson learned is that, regrettably, some owners will not pay their maintenance unless they are legally compelled to pay it.


Doug Mattson envió el siguiente en un email, junto con el permiso al post-it aquí.

Q: " En el edificio #23 tenemos una cantidad de $69 que son agregados a nuestro mantenimiento para el " accounts" sin pagar;. Éste es el primer año que he visto nunca una carga para esto en mis 9 años que vivía aquí.

" ¿Por qué estamos pagando esto? ¿Es este algo que todos los dueños de la unidad están pagando o apenas nuestro edificio? ¿Nos reembolsarán cuando el dinero se recoge del dueño?

" Sé cuándo alguien vende o financia de nuevo, ellos tengo que traer toda la corriente toda de los honorarios debidos. Parece que no debemos pagar algún otro deudas, especialmente cuando parece van a recoger dos veces para él.

" ¿Es cualquier persona que paga estos honorarios adicionales encima de su mantenimiento? No sé sobre cualquier persona, pero $270 un honorario del mantenimiento del mes es bastante escarpados. Especialmente cuando consideras lo que estamos consiguiendo para ése… a regaderas festivas, daño en el edificio que no consigue reparado, etc….

" Estaría interesado conocer a otros dueños de la unidad entrados en esto y si están consiguiendo el mismo fees."

Contestaré a tus preguntas al mejor de mi conocimiento y de mi propia experiencia, y también invito a cualquier persona con más o un mejor conocimiento que me envíe por correo electrónico o haga un comentario en este poste.

A: Estoy en el edificio #35 y pagamos $283/month debido a un " Debt" malo/incobrable; que nuestro edificio ha incurrido en. La oficina de la gerencia me tiene dicho que que los aproximadamente 50% de los 47 condominios de TAJ (cada edificio es su propio condominio) están pagando honorarios adicionales. En muchos o la mayor parte de esos casos los costos adicionales son debido al no pago de los honorarios mensuales del mantenimiento de algunos dueños.

La oficina de la gerencia me aseguró que cuando el dinero se recoge de esos dueños delincuentes, está acreditada apropiadamente a las que han pagado. En los casos donde el dinero se ha recuperado ya, se ha consolidado ese dinero o acreditado contra los costos futuros, me dijeron.

La razón que tenemos que pagar el costo agregado es porque somos colectivamente responsables, con nuestros co-owners del edificio, a la asociación entera de TAJ. Cuando nuestros vecinos no contribuyen su parte justa entonces que el dinero debe venir de en alguna parte hasta que las demandas legales tengan la época de obligar el pago. Alrededor de hace un año hicimos una transición a partir de una empresa de contabilidad a otra. En aquel momento el sistema para las delincuencias de seguimiento no funcionó tan suavemente como debe tener. Por lo tanto, la cantidad del déficit ha venido el punto que hay actual más de dijeron 50 dueños que son delincuentes en pagar su mantenimiento mensual, yo. También me dijeron que el abogado ahora está tomando medidas en cada uno de esos casos. Sirven como recordatorio del pasado de los años en que las delincuencias fueron no hechas caso en gran parte y por lo tanto vinieron una cantidad enorme y tenían un maÌ�n efecto en el valor de una propiedad total de la comunidad. La lección docta es que, deplorable, algunos dueños no pagarán su mantenimiento a menos que a os obliguen legalmente que lo paguen.