Q: My husband and I are new to condominium life and we're finding some things to be a little different than when we owned and maintained our family home up north. For example, we made our own decisions about when to replace the roof and how to pay for it. Sometimes we saved for a few years if we knew big expenses like that were coming. How the budgets are done by the condominium association here is a mystery to us. How does it work?
A: As with most issues relating to condominiums associations, Florida Statute 718 applies. You, as an owner, do have some say as to how much money is saved for future expenses in that although reserves (savings) are mandated, there are several ways to go about reserving and some associations chose to waive reserves altogether.
The process starts with the board or a committee and the board and your management company, if you have one, developing a proposed budget. This is based upon past experience, useful life of expensive items like the roof and condition of the overall property. Ongoing maintenance costs and other operating expenses like salaries, landscaping expenses and management fees are also considered.
The proposed budget is a draft of the financial plan. It does not become the final budget until it is formally adopted as indicated in the bylaws.
The proposed budget must contain all the reserve expense classifications required by the Condo-minium Act, including provisions for fully funding. The proposed budget cannot anticipate that reserves will be waived by the membership or that they will provide for less than adequate reserves. The proposed budget only becomes the final budget after the formal adoption process.
The process for adopting the budget is also set out in Florida statute. Written notice of the annual meeting and copies of the proposed budget that will be reviewed at the meeting must be hand-delivered, mailed or electronically transmitted to the unit owners at least 14 days before the meeting. The written notice must provide the time and place of the meeting and must clearly state that the purpose of the meeting is for the consideration of the annual budget. An official of the association or the association manager must provide an affidavit that notice of the meeting was properly given and this affidavit must be maintained as part of the official records of the association.
There are several ways that budgets may be adopted, depending upon the association documents. When the bylaws or the declaration of condominium permit, the budget may be adopted by the board. If this budget is not permitted to be adopted by the board, it must be adopted by the membership. There are rules regarding the protocol of the meeting and many other elements of the entire process that are considered.
You are right. This process is not as simple as managing the financial issues of your northern home but the process is straight forward and the guidelines are clear.
Attorney Sylvia Heldreth is a certified specialist in real estate law. Her office is located at 1215 Miramar St., Cape Coral.
This article is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.