With annual budget season rolling around, it is important to remember the procedures that must be followed by a condominium association in order to properly pass a budget in accordance with Chapter 718 of the Florida Statutes (Condominium Act). Section 718.112(2)(e) of the Florida Statutes provides that “[a]ny meeting at which a proposed annual budget of an association will be considered by the board or unit owners shall be open to all unit owners. At least 14 days prior to such a meeting, the board shall hand deliver to each unit owner, mail to each unit owner at the address last furnished to the association by the unit owner, or electronically transmit to the location furnished by the unit owner for that purpose a notice of such meeting and a copy of the proposed annual budget.”
A properly prepared budget will include detailed estimated revenues and expenses, and must show the amounts budgeted by accounts and expense classifications. In addition to annual operating expenses, the budget must include reserve accounts for capital expenditures and deferred maintenance, which 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 for any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000.00. The funding of reserves may be waived or reduced, but only after proper membership is approval is obtained pursuant to Section 718.112(2)(f)2.-4. of the Florida Statutes.
The association is encouraged to contact counsel in order to discuss any specific questions regarding the formulation and approval of an annual budget that is in compliance with the association’s governing documents and applicable governing law and rules.