By Attorney S. Kyla Thomson
Q. My condominium has to take out a loan to pay for some infrastructure repairs. The Board is currently discussing how to pay for the loan – either via special assessment or building the payments into the budget and making the payments part of the quarterly assessments that we pay. Do the members get any say in this? What about a membership vote when it comes to taking out a loan? – J.R., Marco Island
A. First, let talk about borrowing funds on behalf of the Association. In order to find out if a membership vote is required, you will need to review the governing documents for your condominium. These are the Declaration of Condominium, the Articles of Incorporation, and the Bylaws. If there is a membership vote requirement for borrowing funds on behalf of the Association, it will very likely be in the Declaration of Condominium or the Articles of Incorporation. If there is no membership vote requirement for borrowing funds, then the Board of Directors, at a Board meeting, can vote to borrow funds. Now that the Board has voted to borrow the funds, how is the association going to pay for the loan? The Board can either special assess its members or it can build the payments into the budget and make the payments part of the quarterly assessments payable by the owners. If the association opts to special assess, it will need to review the governing documents again to determine whether there is a membership vote requirement for special assessments. If there is a membership vote requirement, then the Board will need to obtain the required approval before special assessing. If there is no membership vote requirement, then the Board may special assessment at a special Board meeting. This means that the Board must post and mail a 14-day notice of a special Board meeting to the association members. The Board’s other option is to build the payments into the budget and make the payments part of the quarterly assessments payable by the owners. In a condominium, a Board is required to adopt a budget at a special Board meeting. As stated above, this means that the Board must post and mail a 14-day notice of a special Board meeting to the association members. It must also include a copy of the proposed budget, including the reserves budget. At the special Board meeting, the Board adopts the budget. That being said, if the resulting assessments exceed 115% of the assessments from the preceding fiscal year and if the Board receives a request for a member’s meeting from at least 10% of the members within 60 days of adoption of the budget, the Board must hold a member’s meeting in order for the members to vote on an alternate budget.
If it has not already done so, I recommend that the association consult its legal counsel on this matter as there may be more specific requirements in the association’s governing documents of which I am not aware.
Q. I just sent my HOA Board an official records request. I can verify that they received it two days ago. Is there Florida law on when they have to provide me access to the documents that I am requesting to see. – C.D., Naples
A. Section 720.303(5), Florida Statutes is the Florida law you are seeking. It requires the association to provide you with access to its official records within 10 business days after the receipt of the official records request. Note that the Florida Statutes only requires that the association provide you with access to the official records. It does not require the association to go through its records and locate all of the records you are requesting. Additionally, the Florida Statutes does allow association to establish rules and regulations regarding official records requests governing the frequency, time, location, notice, records to be inspected, and manner of inspection. As such, I also recommend that you confirm with the association whether it has established rules and regulations regarding official records requests.
Q. My condominium association needs to borrow from its reserve funds to pay for an unanticipated expense that is not already on the reserve budget. What do we need to do to make this happen? – R.R., Naples
A. Your condominium association will need to schedule a membership meeting to obtain approval from the members before the Board of Directors can approval the use of reserve funds for a purpose other than the purposes for which the reserves were intended. In order to hold a member’s meeting, the association must post and mail a 14-day notice to the members providing notice of the member’s meeting. If the association is using a limited proxy to obtain votes from owners who will not be present at the member’s meeting, Section 718.112(2)(f)(4), Florida Statutes requires the limited proxy to contain, in capitalized, bold letters in a font size larger than any others, the following language: 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.
At the member’s meeting, the association must obtain the approval of a majority of the owners voting, in person or by limited proxy, at a duly called meeting of the association where a quorum has been obtained. If you have further questions about this process, I strongly recommend that you consult with your association’s legal counsel.