IV. Condominium Financial Information

Annual Budget

64. The new budget that I received shows only a total dollar amount. When I questioned the board they responded that they’re not required to provide unit owners with a detailed budget. Is this true?
65. Who adopts the annual budget, unit owners or the board of directors?
66. What is the difference between a capital expenditure and deferred maintenance?
67. I am a first-time condominium unit owner. How do I know where my association’s money is being spent?
68. What happens to excess funds of the association?
69. Am I entitled to a copy of our associations’ previous budgets?

Reserves

70. What reserve accounts are condominiums required to maintain?
71. Can the board use money from our reserve fund to pay for unexpected repairs to the common elements not covered by the reserve fund?
72. May a reserve account be used for purposes other than that for which it was originally intended?
73. In an association that funds reserves, if unit owners write one check to pay their shares of assessments and the association deposits these checks into the association’s operating account, is this considered commingling?

Assessments: Regular and Special

74. What is the difference between a regular assessment and a special assessment?
75. How are special assessments approved?
76. Can a board charge interest on assessment fees even if it is not provided for in the declaration?
77. Can a board suspend a unit owners’ voting rights because the unit owner is late in paying assessments?
78. Can a board raise our assessment fees by 15 percent of last year’s assessment?
79. Our board is proposing that unit owners pay assessment fees twice a year rather than monthly as it has been done in the past. Can the board require this?
80. Our board has given notice of a board meeting to decide whether excess funds from a special assessment will be returned to unit owners or be used to defray future assessments. Does the board have the authority to use the monies to defray future assessments?
81. If I win a lawsuit against the association, can I recover attorney fees and assessment fees that I paid the association to defend the lawsuit?
82. In an association that funds reserves, if unit owners write one check to pay their shares of assessments and the association deposits these checks into their operating account, is this considered commingling?
83. If a board forecloses on a unit for unpaid assessments, does the board have to give notice?
84. Our board recently sent a letter to all unit owners stating that we are responsible for paying the unpaid assessments on a unit that the association foreclosed upon and obtained title to. Can the board require that all unit owners pay these fees?
85. Does the association have to accept my check for late assessments?

Liens/Foreclosure

86. Can the board put a lien on an owner’s unit if the owner doesn’t pay a fine?
87. I would like to know if an association can purchase a unit that has been foreclosed?
88. If a board forecloses on a unit for unpaid assessments, does the board have to give notice?
89. Our board recently sent a letter to all unit owners stating that we are responsible for paying the unpaid assessments on a unit that the association foreclosed upon and obtained title to. Can the board require all unit owners pay these fees?

Financial Reporting

90. When does the association have to provide me with a financial report, and how do I know that they are providing me with the correct report?

Miscellaneous Use of Association Funds

91. Can the board of administration use association funds to purchase gifts for board members?


64. The new budget that I received shows only a total dollar amount. When I questioned the board they responded that they’re not required to provide unit owners with a detailed budget. Is this true? The board must provide the unit owners with a detailed itemization of the proposed annual budget. The proposed annual budget of common expenses shall be detailed, and shall show the amounts budgeted by account and expense classifications. The proposed annual budget shall also include reserve accounts for capital expenditures and deferred maintenance. These accounts shall include 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.

65. Who adopts the annual budget, unit owners or the board of directors? Chapters 718 and 719, Florida Statutes, set forth the minimum noticing requirements of meetings to consider an association’s annual budget, however, they do not specify whether the unit owners or the board must approve the annual budget. An annual budget must be adopted in accordance with the association’s bylaws.

66. What is the difference between a capital expenditure and deferred maintenance? “Capital expenditure” is defined as any expenditure of funds for: a) the purchase of an asset whose useful life is greater than one year in length; or b) the replacement of an asset whose useful life is greater than one year in length; or c) the addition to an asset that extends the useful life of the previously existing asset for a period of greater than one year in length.
”Deferred maintenance” is defined as any maintenance or repair that: a) will be performed less frequently than yearly; and b) will result in maintaining the useful life of an asset.

67. I am a first-time condominium unit owner. How do I know where my association’s money is being spent? Associations are required to prepare a financial report or financial statements for the preceding fiscal year. Unit owners are entitled to receive a copy of the report or statements from the association. Also, the records of the association shall be made available to a unit owner within 5 working days after receipt of written request by the board or its designee. The right to inspect the records includes the right to make of obtain copies.

68. What happens to excess funds of the association? Chapters 718 and 719, Florida Statutes, do not specifically address what happens to excess funds of the association. The Condominium Act provides that unit owners own the common surplus in the same shares as their ownership interest in the common elements. Further, upon the completion of the specific purpose or purposes of a special assessment, any excess funds will be considered common surplus, and may, at the discretion of the board, either be returned to the unit owners or applied as a credit toward future assessments.

69. Am I entitled to a copy of our associations’ previous budgets? The association shall maintain accounting records for the association for at least seven years. Further, the official records of the association shall be made available to a unit owner within five working days after the receipt of a written request by the board or its designee. The right to inspect the records includes the right to make or obtain copies, at the reasonable expense, if any, of the association member.

70. What reserve accounts are condominiums required to maintain? In addition to annual operating expenses, the proposed 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 reserve accounts must be fully funded unless a majority of the voting interests present in person or by limited proxy at a duly called meeting of the association vote to provide no reserves or less reserves than required.

71. Can the board use money from our reserve fund to pay for unexpected repairs to the common elements not covered by the reserve fund? Reserve funds and any interest accruing shall remain in the reserve account for authorized reserve expenditures, unless their use for other purposes is approved in advance by a vote of the majority of the voting interests present at a duly called meeting of the association.

72. May a reserve account be used for purposes other than that for which it was originally intended? Reserve funds and any interest accruing thereon shall remain in the reserve account or accounts, and shall be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a duly called meeting of the association.

73. In an association that funds reserves, if unit owners write one check to pay their shares of assessments and the association deposits these checks into the association’s operating account, is this considered commingling? Associations that collect operating and reserve assessments as a single payment shall not be considered to have commingled the funds provided the reserve portion of the payment is transferred to a separate reserve account, or accounts, within 30 calendar days from the date such funds were deposited.

74. What is the difference between a regular assessment and a special assessment? An assessment is a share of the funds required from unit owners for the payment of common expenses of the association. Special assessments are assessments levied against unit owners other than the assessment required by the annual budget.

75. How are special assessments approved? Chapters 718 and 719, Florida Statutes, provide minimum noticing requirements for meetings to consider special assessments, however, they do not address whether unit owners or the board must approve special assessments. Special assessments should be approved in accordance with the association’s documents. Just like regular assessments for the payment of common expenses, special assessments should also be levied in the proportions or percentages provided in the association documents.

76. Can a board charge interest on assessment fees even if it is not provided for in the declaration? Assessments and installments on them that are not paid when due, bear interest at the rate provided in the association documents, from the due date until paid. If a rate is not provided in the documents, interest shall accrue at the rate of 18 percent per year.

77. Can a board suspend a unit owners’ voting rights because the unit owner is late in paying assessments? The voting rights appertaining thereto shall pass with the unit. Chapters 718 or 719, Florida Statutes, do not provide for the voting rights of a member to be withheld if he or she is late paying their assessments.

78. Can a board raise our assessment fees by 15 percent of last year’s assessment? Assessments shall be made against unit owners in an amount which is not less than that required to provide funds in advance for payment of all the anticipated current operating expenses and for all the unpaid operating expenses previously occurred. Therefore, assessments may increase greater than 15 percent above the previous year. However, if an adopted budget requires assessments that exceed 115 percent of assessments for the previous fiscal year, 10 percent of the unit owners may petition for a unit owner meeting in order to adopt an alternative budget.

79. Our board is proposing that unit owners pay assessment fees twice a year rather than monthly as it has been done in the past. Can the board require this? Chapters 718 and 719, Florida Statutes, require assessments be made against units not less frequently than quarterly.

80. Our board has given notice of a board meeting to decide whether excess funds from a special assessment will be returned to unit owners or be used to defray future assessments. Does the board have the authority to use the monies to defray future assessments? Funds collected from a special assessment shall only be used for the specific purpose(s) it was collected for. However, upon completion of such specific purpose(s), any excess funds will be considered common surplus, and for condominiums, may, at the discretion of the board, either be returned to the unit owners or applied as a credit toward future assessments.

81. If I win a lawsuit against the association, can I recover attorney fees and assessment fees that I paid the association to defend the lawsuit? A unit owner prevailing in an action between the association and the unit owner, in addition to recovering reasonable attorney’s fees, may recover additional amounts as determined by the court to be necessary to reimburse the unit owner for his share of assessments levied by the association to fund its litigation expenses.

82. In an association that funds reserves, if unit owners write one check to pay their shares of assessments and the association deposits these checks into the association’s operating account, is this considered commingling? Associations that collect operating and reserve assessments as a single payment shall not be considered to have commingled the funds provided the reserve portion of the payment is transferred to a separate reserve account, or accounts, within 30 calendar days from the date such funds were deposited.

83. If a board forecloses on a unit for unpaid assessments, does the board have to give notice? No foreclosure judgment may be entered until at least 30 days after the condominium association gives written notice to the unit owner of its intention to foreclose its lien to collect the unpaid assessments. If this notice is not given at least 30 days before the foreclosure action is filed, and if the unpaid assessments, including those coming due after the claim of the lien is recorded, are paid before the entry of a final judgment of foreclosure, the association shall not recover attorney’s fees or costs. For cooperative associations, notice requirements are not specifically addressed in Chapter 719, Florida Statutes, however, liens may be foreclosed by manner as foreclosure of a mortgage on real property.

84. Our board recently sent a letter to all unit owners stating that we are responsible for paying the unpaid assessments on a unit that the association foreclosed upon and obtained title to. Can the board require that all unit owners pay these fees? If any unpaid share of common expenses or assessments is extinguished by foreclosure of a superior lien or by a deed in lieu of foreclosure thereof, the unpaid share of common expenses or assessments are collectable from all unit owners in the condominium or cooperative in which the unit is located.

85. Does the association have to accept my check for late assessments? An association shall accept all payments for assessments, including those that are late. However, any late payment received by the association must be applied to any interest accrued, then to any administrative late fees, then to any costs or reasonable attorney’s fees incurred in collection, and then to the delinquent assessment.

86. Can the board put a lien on an owner’s unit if the owner doesn’t pay a fine? If the association documents provide, the association may levy reasonable fines against a unit for the failure to comply with any provision of the documents. However, no fine can become a lien against a unit.

87. I would like to know if an association can purchase a unit that has been foreclosed? There shall be no limitation on the association’s right to purchase a unit at a foreclosure sale resulting from the association’s foreclosure of its lien for unpaid assessments. The association’s board has the power, unless prohibited by the declaration, articles of incorporation or bylaws, to purchase units in the condominium and to acquire and hold, lease, mortgage and convey them.

88. If a board forecloses on a unit for unpaid assessments, does the board have to give notice? No foreclosure judgment may be entered until at least 30 days after the condominium association gives written notice to the unit owner of its intention to foreclose its lien to collect the unpaid assessments. If this notice is not given at least 30 days before the foreclosure action is filed, and if the unpaid assessments, including those coming due after the claim of the lien is recorded, are paid before the entry of a final judgment of foreclosure, the association shall not recover attorney’s fees or costs. For cooperative associations, notice requirements are not specifically addressed in Chapter 719, Florida Statutes, however, liens may be foreclosed by manner as foreclosure of a mortgage on real property.

89. Our board recently sent a letter to all unit owners stating that we are responsible for paying the unpaid assessments on a unit that the association foreclosed upon and obtained title to. Can the board require all unit owners pay these fees? If any unpaid share of common expenses or assessments is extinguished by foreclosure of a superior lien or by a deed in lieu of foreclosure thereof, the unpaid share of common expenses or assessments are collectable from all unit owners in the condominium or cooperative in which the unit is located.

90. When does the association have to provide me with a financial report, and how do I know that they are providing me with the correct report? Condominium associations must mail or hand deliver to each unit owner a copy of the financial report or a notice that a copy of the financial report will mailed or hand delivered, without charge, upon receipt of a written request from the unit owner within 21 days after the final financial report is completed, but not later than 120 days after the end of the fiscal year or other date as provided in the bylaws. Cooperative associations must mail or furnish by personal delivery to each unit owner a financial report of actual receipts and expenditures for the previous year within 60 days following the end of the fiscal year or on such date as provided in the bylaws or a complete set of financial statement for the preceding fiscal year within 90 days of the end of the fiscal year or on such date as provided in the bylaws. A condominium association that operates less than 50 units or a cooperative association that operates 50 or fewer units, regardless of the association’s annual revenues, shall prepare a report of cash receipts and expenditures. Also, an association with total annual revenues of less than $100,000 shall prepare a report of cash receipts and expenditures. Associations other than the above shall prepare a complete set of financial statements as follows: 1. An association with total annual revenues of $100,000 or more, but less than $200,000, shall prepare compiled financial statements. 2. An association with total annual revenues of at least $200,000 or more, but less than $400,000, shall prepare reviewed financial statements. 3. An association with total annual revenues of $400,000 or more shall prepare audited financial statements.

91. Can the board of administration use association funds to purchase gifts for board members? The purchase of gifts for board members or anyone else from association funds is not a valid common expense unless the association bylaws provide for such to be a common expense.

The above information is from the Florida Department of Business & Professional Regulation and represents general legal advice. Since the law is continually changing, some provisions may be out of date. It is always best to consult an attorney about your legal rights and responsibilities regarding your particular case. Please Contact Us by using the Quick Contact form, calling us at (904) 823-3333 or (386) 366-4848, or by email at info@jacksonlawgroup.com.