BocaNews, Condo & HOA Law

Boca News Q&A | July 1, 2020

Editor’s note: Attorneys at Goede, Adamczyk, DeBoest & Cross respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, civil litigation, estate planning and commercial transactions.

Who is the primary enforcement authority for the association, the Board of Directors or the management company?

R.L. Coconut Creek, FL

A: Both Chapter 718 and 720, Florida Statutes, state that the power of administration of condominium associations and homeowners’ associations, respectively, is given to a board of directors. You will need to review your governing documents in order to determine the specific powers which are granted to the board of your association, but enforcement of the governing documents of the association is typically vested in the board. A management company may be hired by the board to assist with enforcement by taking care of administrative tasks such as sending violations letters. Note, however, that the management company serves at the pleasure of the board to take certain steps in furtherance of the board’s enforcement of the association’s governing documents and other rules and regulations.

Q: I live in a small condominium building that recently had an unexpected significant expenditure in replacing one of the HVAC units for the building. We paid for the expense out of the operating funds of the association, but that has left us without any funds left for ongoing operating expenses. Many unit owners would prefer that rather than passing a special assessment to make up the difference in the operating account, that the board use money that we have in our reserves and allocate that to the cost of the HVAC replacement, even though it was not reserved for that purpose. The board is refusing to hold a meeting to consider using the reserves. I have two questions: (1) is the association allowed to use reserves for a purpose other than what they were reserved for? (2) is it possible for the unit owners to force the board to hold a meeting to discuss it?

J.B., Miami Beach, FL

A: There is not a general answer to your questions which is applicable to all condominium associations, because the governing documents of your association may have provisions that carry requirements that are in addition to what is prescribed by statute. However, the following are the relevant provisions of the Florida Condominium Act, Chapter 718, Florida Statutes.

(1) Pursuant to Section 718.112(f)(3), Florida Statutes, “Reserve funds and any interest accruing thereon shall remain in the reserve account or accounts, and may 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.” So, the association can hold a special meeting of the members to consider and vote on using the reserves for another purpose. The meeting will need to be properly noticed fourteen (14) days in advance, and a quorum of the members of the association will need to be present in person or by proxy. A majority of the members voting at the meeting will need to vote in favor, unless your governing docs require a greater percentage. Please also note that pursuant to Section 718.112(f)(4), Florida Statutes, special language must be stated in the proxies that will be used for the meeting. The Statute states, “Proxy questions relating to waiving or reducing the funding of reserves or using existing reserve funds for purposes other than purposes for which the reserves were intended must contain the following statement in capitalized, bold letters in a font size larger than any other used on the face of the proxy ballot: WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.”

(2) As to whether the unit owners can force the board to hold a meeting, Section 718.112(2)(c)(1), Florida Statutes, states “If 20 percent of the voting interests petition the board to address an item of business, the board, within 60 days after receipt of the petition, shall place the item on the agenda at its next regular board meeting or at a special meeting called for that purpose.” Note that the purpose of this provision is to force the board to hold a board meeting, not a member meeting (the Statute does not have such a provision to force a member meeting other than a petition to challenge an election or contest a budget). Therefore, you will need to review your governing documents to determine if there is a provision that allows the members to force the board to hold a member meeting.

 

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Avi S. Tryson, Esq., is Partner of the Law Firm Goede, Adamczyk, DeBoest & Cross. Visit www.gadclaw.com or to ask questions about your issues for future columns, send your inquiry to: question@gadclaw.com. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.