Condo Q&A: Money Budgeted but a Big Project Can’t Wait
Boards have a few options for necessary quick repairs. Also: Can a board charge an owner $10K for violating the governing documents?
STUART, Fla. – Question: Our condominium association (I am on the board) already included a line item in this year’s annual budget for a new roof for one of the condominium buildings. However, the roof is in desperate need of replacement, and we want to have it replaced immediately. We cannot wait until all of the assessments are collected throughout the rest of this year to have the work done.
What are our options to get the roof replaced now? Could we pass a special assessment and then reduce the monthly assessments for the remainder of the year? – D.G., Sewall’s Point
Answer: Assuming that your association included the roof replacement as a line item this year for the full amount of the roof replacement, due to the seemingly immediate need for it, and the roof replacement was not just included in the reserves, you cannot pass a special assessment for the same expense, as then you would be collecting twice as much as is necessary by the time you collected all of the regular assessments for the year.
However, you do have some other options. One option is if the association has segregated reserves for other items unrelated to the roof, the association may use the money in the reserves for other purposes; but in order to do so, you will need to get the approval of a majority of the members who attend a meeting of the members where quorum is attained.
A second option is that if the association has pooled reserves and there are reserves for the roof included therein, the association may use the full amount of those reserves for the roof without the need for a vote of the owners.
As a third option, the association can also try to obtain a loan to cover the up-front cost, and then pay it back over time using the regular assessments that will be collected for the roof as stated in the budget. Note that you may need to include additional monies in next year’s budget or pass a small special assessment to cover the costs of obtaining the loan and any interest that accrues against the money that is borrowed.
Note that you will first need to check your governing documents to determine whether a vote of the membership is required in order to borrow money. If there are no restrictions requiring a vote of the membership, the board is permitted to borrow money with a vote of the board.
Question: My association’s board wants to fine an owner $10,000 for a violation of the governing documents. Is there any law or rule that caps the amount of a fine? – G.S., Stuart
Answer: If your association is a condominium, then a $10,000 fine is prohibited by 718.303 Fla. Stat. which limits the maximum fine that the association can levy to $100 per violation and up to $1,000 in the aggregate for a continuing violation.
However, based on the context of your question, I am assuming that your association is an HOA. In that case, then 720.305 Fla. Stat. provides that “a fine may not exceed $1,000 in the aggregate unless otherwise provided in the governing documents.”
If your association’s governing documents give the association the authority to levy fines larger than $1,000, that does not necessarily mean that the association can issue exorbitant fines in any amount they please.
The aforementioned statute still requires that the amount of the fine must be reasonable, so the question is whether a $10,000 fine is reasonable under the circumstances in this case. Note that large fines like what you mention have been approved as reasonable by Florida courts in the past.
Many factors are considered by the court such as home values and consistency of the association in applying such fines, among other factors. On the other hand, courts have also struck down fines in lower amounts if they determined that the amount was arbitrary or capricious, or that the association was selectively applying such large fines against only some of the owners but not others.
Whether or not a $10,000 fine is reasonable for your association will require more facts as outlined above, so we recommend that you discuss this issue with a Florida licensed attorney who practices community association law.
Avi S. Tryson, Esq., is Partner of the Law Firm Goede, Adamczyk, DeBoest & Cross. 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.
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