Special Assessments & Reserve Funds

Started by SusannaM • 14 replies • 1605 views

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SusannaM (Florida)
Posts: 366

Posted:

I've done a search here but didn't bring up anything, which it's odd. I'm sure this topic has been covered before.

Here in FL our Statutes are pretty much our "bible." If developer fails to set up a Reserve Fund, board has the obligation to submit proposal and vote to membership. A Special Assessment is yet another matter. It requires calling a Special Meeting of the HOA. Both funds can be used for capital expenditures. My community will need a special assessment proposal no later than mid 2009. Once extensive road work outside our entrance is completed by City we must replace a 1/4 mile long, 8 ft. tall fence that's falling apart. This HOA does no even have a Reserve Fund to begin with.

Your thoughts.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Susanna,
OUCH!!! And that is why we have Reserve Funds. I just looked at the whole chapter on Reserves. You can easily understand what it's requirements are. But as usual, a vote must be taken by the membership to establish them.

SusannaM (Florida)
Posts: 366

Posted:

Yes indeed. Ideally, the new fence will be built to withstand time, the elements, hurricane force winds, etc. etc. In other words, it will have to be brick, concrete, wood, or, a combination of all three.

As far as Special Assesment HOA Meetings, I think FL 720 states that HOA/Board has to mail details of proposal 14 days prior to meeting. So far in this community the board just posts a notice of monthly Board Meeting in our message board at the entrance, and on our website. To my knowledge, they have never mailed this type notice to homeowners.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Susanna,
One of my rental associations does it that way. All meetings are on the 2nd Tuesday of every month. No problem posting as it is in the newsletter, at the gate on a bulletin board and on a nice framed hanging near the office door. The only thing that they are required to change is the agenda, which is simply done. That way they are covered from someone calling them on not posting meetings.

SusannaM (Florida)
Posts: 366

Posted:

We have an excellent website so I don't see the need to mail monthly notices. Agenda and approved Minutes are posted there. Mailing approved budget with following year's invoice is fine with me. I agree that Special Assessment and Annual Meetings require different handling.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Susanna,
Even tho we live in the electronic, cyber world, provisions must be made for those members who cannot or do not use computers. We had a documents co-chair who did not use a computer so everything had to have paper copies. We must not leave behind those who are not geeks and every association has them.

SusannaM (Florida)
Posts: 366

Posted:

I agree but residents are not blind. We have a huge message board at the entrance, and still they don't show up. Mailing monthly notices will NOT change their attitude towards this board. A well organized, proactive, friendly board may do the trick. Appointing Committees would also help. We have none at the moment.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Susanna,
No, I never implied that monthly notices should be mailed and I would never believe in that to be done. You are right, even if you sent limos to each home to pick up the members, they still would not show up. Apathy, the HOA's worst nightmare.

GeraldT4
Posts: 1,022

Posted:

Quote:

Posted By SusannaM on 10/07/2008 8:35 AM
I've done a search here but didn't bring up anything, which it's odd. I'm sure this topic has been covered before.

Here in FL our Statutes are pretty much our "bible." If developer fails to set up a Reserve Fund, board has the obligation to submit proposal and vote to membership. A Special Assessment is yet another matter. It requires calling a Special Meeting of the HOA. Both funds can be used for capital expenditures. My community will need a special assessment proposal no later than mid 2009. Once extensive road work outside our entrance is completed by City we must replace a 1/4 mile long, 8 ft. tall fence that's falling apart. This HOA does no even have a Reserve Fund to begin with.

Your thoughts.

SusannaM,

If developer fails to set up a Reserve Fund immediately after the first maintenance/monthly fee is collected from the owner, AND if a Reserve Fund is required, than the amount not collected for each owner at the date of conveyance should be demanded from the Association from the developer in Transition negotiations.

If a Reserve Fund is required, relying on a vote of what may be unknowledgeable/fickle owners may be risky to collect the amount necessary to replace and or repair the common elements of the association.

SusannaM (Florida)
Posts: 366

Posted:

GeraldT, well, I just got back from an HOA meeting where board approved 2009 budget. To my surprise Prop Mgr. said that our HOA is not required a Reserve Fund per se. However, a 2008 surplus will be put into a CD as "emergency or contingency" funds. Transition from developer apparently happened 4 yrs. ago. I did not know that to be true. Since then different board members have done very little for the HOA. FL Statutes mandates that a paragraph be added to annual financial reports as follows:

"If the budget of the association does not provide for reserve accounts governed by this subsection and the assoc. is responsible for the repair and maintenance of capital improvements that may result in a special assessment if reserves are not provided, each financial report for the preceding fiscal year required by subsection (7) shall contain the following statement in conspicuous type: the budget of the assoc. does not provide for reserve accounts for capital expenditures and deferred maintenance that may result in special assessments. Owners may elect to provide for reserve accounts pursuant to the provisions of section 720.303(6), Florida Statutes, upon the approval of not less than a majority of the total voting interests of the assoc. "

SusannaM (Florida)
Posts: 366

Posted:

DonnaS, where are you???

SusanW1 (Michigan)
Posts: 5,202

Posted:

Susanna - so there you are: there is no reserve fund, they never set one up - so they will NOW have to pay with a special assessment.

Guess they wanted the chicken then instead of the egg later.

You can amend your documents to establish a Reserve Fund with a majority vote of the Members. But that's not going to help with the special assessment need, now.

SusannaM (Florida)
Posts: 366

Posted:

Yes, SusanW, that's the reality. Treasurer threw a fit last night 'cause he wanted a fence for the park and he got away with it. He lives across the street from me and he makes me sick.

BeverlyB3 (Florida)
Posts: 1

Posted:

Can someone please tell me if in the state of Florida you can utilize the reserve funds for something other than its intended use?
I live in a 5 year old condominium community.
We have several thousand dollars set aside for barrel tile roofs which have a 40 year life span. We desperately need gutters to redirect the water away from our units to prevent further water damage.
The board of directors is proposing an assessment. In this economy the homeowners feel it's highly objectionable.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Bev- the Reserve Fund plan should be re-evaluated about every 3 to 5 years. If you have to move ahead on the gutter replacement and stretch out (or reduce) the deposits in the tile roof fund, so be it. Maybe the tiles will last even longer, if you do a good visual inspection.

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