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Subject: How contingency fund
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Author Messages
NormaB3
(Florida)

Posts:4


11/09/2020 4:54 PM  
I belong to a HOA in Florida. We have a budget set for 2021 and a reserve fund in place. Our general account has an average monthly balance of approximately 100,000. Our monthly HOA fees more than adequately cover our monthly expenses. Our President refuses to spend any of our excess monthly monies on outstanding bills stating the law says we must keep 60% of our cash flow on hand in case of emergency. She claims this is the law. We claim it is suggested not law. I would like the opinion of any one who is aware of any such law.
Thank you.
GeorgeS21
(Florida)

Posts:3411


11/09/2020 7:11 PM  
Do not know of this.
TimB4
(Virginia)

Posts:17026


11/09/2020 9:41 PM  
please provide the statute and section number.
DouglasK1
(Florida)

Posts:1542


11/10/2020 6:05 AM  
Never heard of this. I would ask the president to cite the specific law.

Escaped former treasurer and director of a self managed association.
SheliaH
(Indiana)

Posts:3577


11/10/2020 9:29 AM  
The president is only one vote - how does the rest of the board feel about this? If the amount of excess money is enough to pay off the outstanding bills and perhaps keep two months' worth of expenses as your contingency fund, I see no reason not to put it to use.

If she can't come up with a statute or something from your documents, outvote her and perhaps establish a policy setting up a formal contingency fund with rules on when it's to be tapped. Anything beyond two months' worth of expenses could be placed in the reserve fund. You live in Florida and given hurricanes and what not, it's probably a good idea to have a very healthy reserve so you can avoid special assessments.
AugustinD


Posts:4421


11/10/2020 9:43 AM  
Posted By NormaB3 on 11/09/2020 4:54 PM
Our President refuses to spend any of our excess monthly monies on outstanding bills stating the law says we must keep 60% of our cash flow on hand in case of emergency.
-- Is this a condominium or non-condominium?

-- I find nothing in FS 718 or FS 720 relating to this point.

-- I wonder if the President has in mind reserve funding. What is the status of your HOA's reserve account? Reserves are a big issue and there might be something to what the President says, whilst the rest of the Board is unaware of some of the requirements of Florida statutes on the matter.

Here are the laws your HOA president, abetted by complacent board directors, may be violating:

-- Refusing to honor contracts with vendors.

-- Acting ultra vires (meaning she is making decisions that only the Board by majority vote can make)


GenoS
(Florida)

Posts:4158


11/10/2020 1:15 PM  
Posted By NormaB3 on 11/09/2020 4:54 PM
She claims this is the law. We claim it is suggested not law. I would like the opinion of any one who is aware of any such law.

Print out a copy of FS 720 and ask her to highlight the section that backs up her position. Ask for a citation to any law and be prepared to wait. There is no such law. At best, it's a suggestion. Anther suggestion is to keep 2-3 months of operating funds in the "operating" account.
JohnC46
(South Carolina)

Posts:10130


11/10/2020 2:42 PM  
Norma

I know nothing of the 60% rule but you are in FL which can be pretty funky about associations.

You say there is a Reserve but you say nothing about is it properly funded based on a professional Reserve Study. Maybe the extra per month is needed to properly fund the Reserve. Do not judge so harshly until you have all your facts together.
NormaB3
(Florida)

Posts:4


11/10/2020 3:25 PM  
Thank you all for your timely responses.our reserves are fully funded. This helps a lot.
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