This interactive FL Community Association Manager Continuing Education contains 15 hours of continuing education. To complete click the Complete Your CE button at the top right of the screen.
FLORIDA 2024 Community Association Manager Continuing Education
Elite Learning
COMPLETE YOUR CE BY THE SEPTEMBER 30 DEADLINE
Includes mandatory topics required for license renewal.
ELITELEARNING.COM/BOOK Complete this book online with book code: CAMFL1524 15-hour Continuing Education Package $129 00
What’s Inside
THIS COURSE FULFILLS THE REQUIREMENT FOR INSURANCE AND FINANCIAL MANAGEMENT Chapter 1: Fundamentals of Financial Management (Mandatory) [3 CE Hours] In this course, we discuss several of the many aspects of financial management in community associations. It includes topics like financial records, unbudgeted expenses and they may be funded by the association. We discuss in limited detail the board of directors’ responsibility when considering special assessments, investment of funds, transferring funds, and borrowing money on behalf of the association. We also discuss the collection of monies owed by members to the association, and available remedies. We reference provisions of the Florida Residential Landlord and Tenant Act that are applicable to associations that collect rent from members’ tenants. Additionally, we explain estoppel requirements and allowable fees; accrual, cash, and fund accounting. Finally, we describe the financial reporting requirements. THIS COURSE FULFILLS THE REQUIREMENT FOR HUMAN RESOURCES Chapter 2: Human Resource Management Systems and Development (Mandatory) 15 [3 CE Hours] 1 In this course, we examine human resources management and information. We identify components of a human resources program and describes contents of an employee handbook. We also discuss job descriptions and review governmental requirements in hiring, training, supervising, and terminating employees. We examine performance planning and evaluation and discuss a progressive disciplinary system. We also briefly consider communications and customer relations within a community association. This course is divided into two parts: Part 1 outlines the essentials and effectiveness of a human resource management system; Part 2 outlines employment governance issues. THIS COURSE FULFILLS THE REQUIREMENT FOR LEGAL UPDATES Chapter 3: Legal Update 2023-2024 (Mandatory) 25 [3 CE Hours] We designed this course to summarize and explore issues and concerns that were signed into law and affect community associations during the regular and special Florida legislation sessions in 2022, and the regular session in 2023. See the Chart of Florida Legislation for a full list of laws covered in this course. Throughout the course, text with a line through it indicates information that was changed or deleted; text that is underlined indicates information that was added by legislature THIS COURSE FULFILLS THE REQUIREMENT FOR OPERATION OF THE COMMUNITY ASSOCIATION’S PHYSICAL PROPERTY Chapter 4: Maintenance Responsibilities of a Community Association (Mandatory) 44 [3 CE Hours] In this course, we provide an overview of a community association’s maintenance functions, responsibilities, and the role of the board of directors and CAM. The focus is the day-to-day operations of the physical property. We define the five recognized types of maintenance, and briefly discuss how managers and maintenance supervisors should manage maintenance responsibilities. Examples include a maintenance form and a breakdown of an effective work-order system as well as a summary of emergency management responsibilities. Other physical property operations covered in this course include statutory requirements for pool maintenance, fire safety, elevator service, pest control, security services, construction matters, such as painting, repaving, and roofing. Lastly, we briefly review the construction lien law and defects statute as they apply to community associations. THIS COURSE FULFILLS THE ELECTIVE REQUIREMENT Chapter 5: Who’s Moving In (Elective) 61 [3 CE Hours] This course is designed to explore issues and concerns related to controlling membership and residency in community associations. It describes the process of amending the governing documents to authorize screening and create reasonable criteria for screening of prospective new owners and tenants. It explores the legal and judicial barriers, especially as applied to protected classes of persons, as well as the biases and misunderstandings of directors and committee members that can emerge in the process of deciding who can and cannot move in. The course employs, for part of its substance, a narrative based on a fictional homeowners’ association, its screening committee members, president, owners, attorney, and applicants. Final Examination Answer Sheet 76
©2024: All Rights Reserved. Materials may not be reproduced without the expressed written permission or consent of Colibri Healthcare, LLC. The materials presented in this course are meant to provide the consumer with general information on the topics covered. The information provided was prepared by professionals with practical knowledge in the areas covered. It is not meant to provide medical, legal or professional services advice. Colibri Healthcare, LLC recommends that you consult a medical, legal or professional services expert licensed in your state. Colibri Healthcare, LLC has made all reasonable efforts to ensure that all content provided in this course is accurate and up to date at the time of printing, but does not represent or warrant that it will apply to your situation or circumstances and assumes no liability from reliance on these materials. i COMMUNITY ASSOCIATION MANAGERS CONTINUING EDUCATION Book Code: CAMFL1524
What are the requirements for license renewal? License Expires CE Hours Required Frequently Asked Questions
Mandatory Subjects
3 hours of legal update 3 hours of insurance and financial management 3 hours of the operation of the association’s physical property 3 hours of human resources
15 (All hours are allowed through home study)
Licenses expire September 30 of the even year
Course Title
CE Hours Price Course Code
Chapter 1: Fundamentals of Financial Management (Mandatory)
3
$30.00 CAMFL03FM
Chapter 2: Human Resource Management Systems and Development (Mandatory)
3
$30.00 CAMFL03HR
Chapter 3: Legal Update 2023-2024 (Mandatory)
3
$30.00 CAMFL03LU
Chapter 4: Maintenance Responsibilities of a Community Association (Mandatory)
3
$30.00 CAMFL03MR
Chapter 5: Who’s Moving In
3
$30.00 CAMFL03WM
Best Value - Save $21.00 - All 15 Hours
15 $129.00 CAMFL1524
How do I complete this course and receive my certificate of completion? See the following page for step by step instructions to complete and receive your certificate. Are you a Florida board-approved provider? Colibri Healthcare, LLC is an approved Continuing Education Provider by the Florida Regulatory Council of Community Association Managers (Provider #0008051). Are my credit hours reported to the Florida board? Yes, your course will be processed the same day we receive it and electronically reported to the Department of Business and Professional Regulation within one business day. Is my information secure? Yes! We use SSL encryption, and we never share your information with third-parties. We are also rated A+ by the National Better Business Bureau. What if I still have questions? What are your business hours? No problem, we have several options for you to choose from! Online at EliteLearning.com/CAM you will see our robust FAQ section that answers many of your questions, simply click FAQs at the top of the page, e-mail us at office@elitelearning.com, or call us toll free at 1-888-857-6920, Monday - Friday 9:00 am - 6:00 pm, Saturday 10:00 am - 4:00 pm EST. Important information for licensees: Always check your state’s board website to determine the number of hours required for renewal, mandatory topics (as these are subject to change), and the amount that may be completed through home-study. Also, make sure that you notify the board of any changes of address. It is important that your most current address is on file. Disclosures Resolution of conflict of interest Colibri Healthcare, LLC implemented mechanisms prior to the planning and implementation of the continuing education activity, to identify and resolve conflicts of interest for all individuals in a position to control content of the course activity. Sponsorship/commercial support and non-endorsement It is the policy of Colibri Healthcare, LLC not to accept commercial support. Furthermore, commercial interests are prohibited from distributing or providing access to this activity to learners.
Licensing board contact information:
Division of Professions | Department of Business and Professional Regulation Regulatory Council of Community Association Managers 2601 Blair Stone Road | Tallahassee, FL 32399 | Phone: (850) 487-1395 | Fax: (850) 488-8040 Website: http://www.myfloridalicense.com/DBPR/community-association-managers-and-firms/
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Book Code: CAMFL1524
COMMUNITY ASSOCIATION MANAGERS CONTINUING EDUCATION
How To Complete This Book For Credit
Please read these instructions before proceeding.
• Go to EliteLearning.com/Book and enter code CAMFL1524 in the book code box, then click GO . • Proceed to your exam. If you already have an account, sign in with your username and password. If you do not have an account, you’ll be able to create one now. • Follow the online instructions to complete your exam and finalize your purchase. Upon completion, you’ll receive access to your completion certificate. ONLINE FASTEST AND EASIEST!
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Complete the answer sheet and evaluation found in the back of this book. Include your payment information and email address. Mail to: Elite Learning, PO Box 37, Ormond Beach, FL 32175
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COURSE TITLE
HOURS PRICE CODE TO ENTER
ALL 15 HOURS IN THIS CORRESPONDENCE BOOK
15
$129.00 CAMFL1524
If you are only completing individual courses in this book, enter the code that corresponds to the course below online.
CAMFL03FM
Fundamentals of Financial Management (Mandatory)
3
$30.00
Human Resource Management Systems and Development (Mandatory)
CAMFL03HR
3
$30.00
CAMFL03LU
Legal Update 2023-2024 (Mandatory)
3
$30.00
Maintenance Responsibilities of a Community Association (Mandatory)
CAMFL03MR
3
$30.00
CAMFL03WM
Who’s Moving In
3
$30.00
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COMMUNITY ASSOCIATION MANAGERS CONTINUING EDUCATION
Book Code: CAMFL1524
Chapter 1: Fundamentals of Financial Management 3 CE Hours
Expiration Date : Febuary 5, 2026 Learning objectives
Comprehend the prohibition for use of debit cards in condominiums. Understand the required bank information that a condominium must send to the DBPR annually. Comprehend accrual, cash, and fund accounting. Identify required financial reports. Understand financial records retention requirements. Be familiar with association income tax laws. monies owed by members to the association, and available remedies. We reference provisions of the Florida Residential Landlord and Tenant Act that are applicable to associations that collect rent from members’ tenants. Additionally, we explain estoppel requirements and allowable fees; accrual, cash, and fund accounting. Finally, we describe the financial reporting requirements.
After completing this course, the learner will be able to: Understand the unbudgeted expenses and special assessments. Identify how associations may use surplus funds. Understand association investments. Recognize how the association collects assessments, and the remedies for delinquencies that are available to associations. Understand collections, liens, and foreclosure processes. Course overview In this course, we discuss several of the many aspects of financial management in community associations. It includes topics like financial records, unbudgeted expenses and they may be funded by the association. We discuss in limited detail the board of directors’ responsibility when considering special assessments, investment of funds, transferring funds, and borrowing money on behalf of the association. We also discuss the collection of
INTRODUCTION
● Calculate and prepare certificates of assessment and estoppel certificates. ● Collect amounts due to the association before filing a civil action. ● Complete forms related to the management of a community association that have been created by statute or by a state agency. ● Comply with the association’s governing documents and the requirements of law as necessary to perform such practices. ● Control or disburse funds of a community association. ● Coordinate maintenance for a residential community association. ● Coordinate or perform maintenance for real or personal property and other related routine services involved in the operation of a community association. ● Determine amounts due to the association. ● Draft meeting notices and agendas. ● Prepare budgets or other financial documents for a community association. In the following pages, we address these activities and provide more detailed information of what constitutes financial management from a CAM/CABs perspective.
It is quite common for a CAM to be involved in the annual budget preparation. Their input is significant because the CAM is the gatekeeper of events and activities that relate to the financial management of an association. Management is a primary source of information that chronicles and measures the activities of a community association. The CAM, for example, usually is involved in knowing when maintenance is required, which entity will perform it (under contract or by in- house personnel), if it is a regular or unique occurrence, scheduling the maintenance activities involved, overseeing the completion of the maintenance work, and recording the cost. Once the CAM has seen the process through, they document the information, inform the board, advise the accounting personnel, and update the records. It is the CAM who recognizes expenses and incomes and how they affect the budget and the financial health of the association. F.S. 468 Part VIII provides that a CAM/CAB has many responsibilities regarding the fundamental aspects of financial management of a community association including assuring that the financial and other records of the association are appropriately maintained. Provisions a CAM/CAB’s responsibilities for financial management come from F.S. 468 Part VIII, F.S. 455, 718, 719, 720, and 721 as well as the Florida Supreme Court Opinion #SC 13-889 (regarding UPL): The Condominium, Cooperative, HOA, and Timeshare Acts require that associations maintain certain financial records. Financial records are comprised of all records that chronicle, measure, and communicate financial data and statistics, whether they are maintained in a computerized (electronic) system or on a manual spreadsheet. Many of these records are used during the preparation of the budget.
FINANCIAL RECORDS
● Equipment maintenance records ● Information from utilities ● Bids - past 12 months ● Minutes of meetings ● Warranties ● Changes in wages, tax rates, etc.
● Bank statements ● Engineering reports ● Maintenance records ● Invoices - past 12 months ● Aging reports - past 12 months ● Contracts ● Insurance policies ● Most recent property appraisal ● Manager’s reports - past 12 months ● Most recent legal status reports
Financial Records List ● Approved budget ● Balance sheet ● Most recent financial reports ● Budget - last year ● Detailed receipts of expenses ● Detailed revenue information
● Owner ledgers ● Vendor ledgers ● Reserve schedule ● Tax records ● Legal status reports
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Definitions The vernacular of financial management includes the following terms and definitions: ● Account (Line item) : An account or line item is created and used in a budget to define each class of items for which money, or the equivalent is spent or received. It is used in balance sheets, budgets, and other financial reports to organize the finances of the entity and to segregate expenditures, revenue, assets, and liabilities to give interested parties a better understanding of the organization’s financial health. The complete list of such accounts is referred to as a chart of accounts. ● Aging report : A periodic accounts receivable report that lists the amounts owed by delinquent members sorted by the length of the discrepancy (e.g., 30, 60, 90, 180 days or more). ● Asset : Any item of economic value owned by an individual or other entity, especially that which could be converted to cash. ● Balance sheet : A statement of a company’s financial position at a particular moment in time. It shows the two sides of a company’s financial situation, the monetary value of what it owns and what it owes. The value of the company’s assets (what it owns) is always equal to the combined value of its liabilities (what it owes) and the value of its shareholders’ (or association member’s) equity. ● Balanced : The amount budgeted for revenue and the amount budgeted for expenses must be equal. The annual budget for condominiums, cooperatives, and timeshares should be balanced. ● Budget : An estimate of revenue and expenses for a specific period of time. The association should develop the budget to meet its objectives as they relate to its primary functions of protecting, preserving, and enhancing the property and its assets, enhancing the lifestyle of the community, and providing a harmonious community. ● Bulk services : Services, such as cable, Internet, and telephone provided by a community association to its members through a contract, typically multi-year, with a service provider. The cost of the contract is a common expense of the association. ● Bulk services contract : A contract in which an association negotiates and enters into on behalf of its members, for services, such as cable, Internet, and telephone for the purpose of obtaining a more favorable rate for its members than each member would be able to obtain by entering into an individual contract. ● Capital expenditure : Any disbursement of funds for the purchase or replacement of an asset, the useful life of which is greater than one year, or for the repair of an asset that will extend its useful life for a period greater than one year. This includes the funds that are necessary to renew, repair, or replace an asset for it to continue to function as needed. ○ Example : Replacing a generator; reroofing, retrofitting the pool with a solar heater, etc. ● Chart of accounts (COA) : A created list of the accounts used by an organization to define each class of items for which money or the equivalent is spent or received. It is used to organize the finances of the entity and to segregate expenditures, revenue, assets, and liabilities to give interested parties a better understanding of the financial health of the entity. ● Common expenses : The expenses related to the operation, maintenance, repair, replacement, and protection of the common elements and association property, and the cost Unbudgeted expenses An unbudgeted expense refers to an unplanned event, or item; that is, an expense that has not been included in the current year’s budget. Such items may be small (such as a minor leak in the roof), or major (such as a major leak in the roof that results
of carrying out the powers and duties of the association. Community associations are required to budget for all common expenses. ● Contract : An agreement with specific terms between two or more people or entities in which there is a promise to do something in return for a valuable benefit known as consideration. ● Deferred maintenance : Any maintenance or repair that is performed less frequently than annually and results in maintaining the useful life of an asset. ○ Example : Overhaul of the generator; painting a building every five or seven years; touch-up painting is not a deferred expense. ● Deficit : A status of financial health in which expenditures exceed revenue. ● Expense (expenditure) : An expense or expenditure is an outflow of money to another person or entity to pay for an item or service. ● Fiscal year (FY) : A fiscal year is the 12-month period that an organization uses for budgeting and financial reporting. It differs from a calendar year since its start and end dates may encompass any 12-month period including, but not limited to, January 1 to December 31. The bylaws specify the fiscal year of the association. Community associations are required, by statute, to create an annual budget based on the association’s fiscal year. The fiscal year also determines when the association must submit its tax return and taxes to the IRS. ● Income : In strict accounting terms, refers to the profit or the money that remains after deducting expenses from revenue. However, community associations typically use revenue and income interchangeably, as we will in this course. ● Limited common elements (LCE) : Some associations have limited common elements, such as a penthouse swimming pool or a garage that are restricted to the use of specific members. If the association’s governing documents identify those elements as the financial responsibility of those members, the association is required to create a separate proposed budget that estimates revenue and expense for those limited common elements. That budget should identify the amount of the additional maintenance assessment for those members and will appear as an attachment to the basic budget. ● Operating capital : Monies paid to the association at the time a unit is conveyed from one member to another. ● Operating budget : Typically identifies routine, regularly occurring, expenses of the association. It effectively functions as the association’s annual financial plan. ● Reserve schedule : Is based on a schedule attached to the budget that estimates expenses for capital expenditures and deferred maintenance over a multi-year, long-term period. The reserve section functions as the long-term financial plan of the association. The reserve appears on the budget as a single account or line item that shows the cost of funding the reserve for the next fiscal year. ● Revenue : The amount of money that a company receives during a specific period. ● Special assessment : An assessment for a non-budgeted, sometimes unanticipated, repair or replacement where operating and/or reserve funds are not available. There are times that the association knows in advance that it will need additional funds and chooses to special assess rather than raise regular assessments.
in damage to common elements or unit components). If the association has funds available in its operating budget, it has the authority to use those funds to pay for such expenses.
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Book Code: CAMFL1524
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Alternatively, the association can borrow the monies (e.g., a bank loan), propose to the members that monies be moved from a Transfer funds from other accounts Depending on the funds the association requires, if there is a sufficient surplus in the operating budget, the board may use monies from other accounts to pay for the unbudgeted expense. Unless the association documents state otherwise, the association may reconcile these changes in the year-end financial Transfer funds from reserve accounts If the association wants to use funds that are set aside for reserves, a majority of members at a duly called and quorumed meeting must vote in person or by proxy to approve the transfer Borrow funds Pursuant to F.S. 617, an association may borrow the funds for the unbudgeted expense. Banks offer different types of loans, depending on the project and how the association will repay the monies. In case of a disaster, such as a hurricane, an association may borrow funds and file an insurance claim. The loan, in effect, is a bridge to allow the association to make repairs while their claim is pending. Because the association cannot guarantee that the insurer will approve the claim, a bank will require that the association identify other sources of dedicated funds to repay the loan.
reserve to pay for such expenses, or pass a special assessment. Let’s discuss each option.
report. Alternatively, the board may choose to amend the operating budget, to formally transfer funds to the unbudgeted expense. In this case, the board must hold a meeting to amend the budget, following the same steps as discussed for approving the annual budget.
of the reserves. In a condominium, any limited proxy must include disclosures regarding the use of reserve funds.
Documents vary on the board’s authority to borrow monies. Some allow the board to unilaterally enter into an agreement with a bank. Others may require that members approve loans, or loan amounts under certain conditions. If the association documents require member approval, the members must approve the loan at a duly called and quorumed member meeting. Additionally, most banks will require the association to provide a formal resolution, approving the loan and repayment terms, and specifying the funds it will use to repay the loan as well as a copy of the minutes of the meeting at which approval was achieved.
SPECIAL ASSESSMENTS
● Unexpected increases in the cost of essential obligations, such as insurance premiums. ● Emergency expenses caused by a natural or manmade disaster. ● Capital equipment that must be replaced on an emergency basis. ● Reserves funds insufficient to pay for reserve item. ● Poor budgeting.
A special assessment is an assessment of a specific amount, in addition to the regular periodic assessment, for a non-budgeted and unanticipated operating expense, maintenance repair or replacement, or other expense where operating and/or reserve funds are not available and/or are insufficient to cover the expense. Typical reasons for a special assessment include: ● A higher delinquency rate than anticipated or budgeted. Special assessment approval The board may levy special assessments unless the association documents state otherwise. Some association documents require that members approve special assessments over a certain amount or for certain purposes (such as additions or improvements). Other association documents may define Special assessment notice and meeting requirements The association must mail, deliver, or electronically transmit to the members a written notice of a meeting at which the board or members will consider a nonemergency special assessment. The association must also post the notice conspicuously on the property for at least four continuous days before the meeting. The notice must identify: Changes to special assessments The association may not increase a special assessment from the proposal sent to members. If a special assessment amount increases, the association must send a revised notice of the Condominiums and cooperatives The association must prepare an affidavit executed by the person providing the notice of the special assessment, present HOAs Prior to turnover, a developer-controlled board may not levy a special assessment unless a majority of eligible TVI (excluding developer- controlled units) approves the special assessment at a properly noticed special meeting of the members at which there is a quorum.
specific criteria for a special assessment, where certain types require membership approval. The board may wish to consult with the association attorney when the association considers a special assessment.
● The specific purpose of the special assessment. ● The items on which the board proposes to expend the funds. ● The estimated cost of each item. ● The estimated assessment per unit or parcel. ● Proposed due date(s) for payments of the special assessment.
special assessment meeting, with details of the new or amended items and costs, providing a minimum 14-day notice.
it at the meeting, and file it among the official records of the association.
The association must segregate special assessment funds from operating funds for accounting purposes.
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Surplus funds In budgeting and financial management of a community association, the term common surplus refers to the common surplus or net income in excess of all revenue retained by the association after the deduction of all expenses. Although the members have an undivided share in the common surplus, only the association may use the funds. When a member sells their unit, they lose any rights to the common surplus. The Florida Not For Profit Corporation Act prohibits a corporation (such as an association) from distributing income to its members, directors, or officers. [F.S. 617.1301] Generally, accountants and attorneys agree that an operating budget surplus must be: ● Used to reduce future assessments, or
● Transferred to one or more reserve accounts in any combination of allocation that the board decides on. When an association funds a project via special assessments, it must segregate and use such funds solely for the identified purposes. However, when the association completes such projects, accountants and attorneys agree that the board may use any surplus from a special assessment as follows: ● Refund to members [F.S. 718.116(10) or 719.108(9)]. ● Offset future expenses in the operating budget (that is, apply the remaining funds to offset routine assessments). ● Transfer to one or more reserve accounts in any combination of allocation that is decided by the board, and/or ● Apply to a proposed special assessment that has not yet been enacted.
SAMPLE SPECIAL ASSESSMENT NOTICE XXX HOA, Inc. Notice of Special Board Meeting February 22, 12XX 7 PM Clubhouse The board of XXX HOA will consider passage of a special assessment at the meeting noted above. Special assessment details: Concrete restoration of balconies Engineering $ 25,000 Construction 625,000 Project Management 62,500 Replacement of pool furniture 17,500 Upgrade front entrance landscaping 25,000 Project contingency 75,000 Total $830,000 Assessment per unit:
Type A Units (1.25%) ............$10,375 (4x $2,593.75) Type B Units (0.75%) ................ 6,225 (4x $1,556.25) Type C Units (0.55%) ................4,565 (4x $1,141.25) Type D Units (0.62%) ................5,146 (4x $1,286.50)
The board proposes to collect the special assessment in four equal payments due May 1st, July 1st, October 1st, and December 1st. Notice posted: 01/21/20XX FINANCIAL MANAGEMENT The board is responsible for control and disbursement of
As is the case of budget preparation, usually management has a large part in the policies, processes, and procedures of maintaining the financial and other records of the association. In this section, we explain good financial management and an association’s financial practices. ● Any other records that identify, measure, record, or communicate financial information. ● Records retention policy. The association should maintain its accounting records according to generally accepted accounting principles (GAAP). These are not a fixed set of rules. They are guidelines or, more precisely, a group of objectives and conventions that have evolved over time to govern how financial statements are prepared and presented. The Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA) provide guidance about acceptable accounting principles. Compliance with GAAP helps maintain credibility because it reassures members, creditors, lending institutions, and vendors that the association’s financial reports accurately portray its financial position. CPAs routinely audit companies to determine whether their financial statements are prepared according to GAAP. The association should preserve its accounting records in sufficient detail so that when a member or other interested party inspects the records, that person can determine the assets, liabilities, cash flows, revenue, and expenses of the association. Good accounting principles also include controls to protect the financial assets of the association.
association funds. The budget provides the guide and authority for spending monies. The board should review the periodic financial statements to determine whether the association is over or under budget in specific line-item accounts and make adjustments as appropriate. Good financial management practices It is important for an association to have financial management systems in place to properly manage the monies of the association, prevent fraud and embezzlement, and minimize mismanagement. This also means that the association, board of directors, and management comply with specific matters, as we discuss in this section. A financial management system should include but not be limited to: ● Comprehensive inventory of equipment and a maintenance schedule. ● A current account and periodic statements of the account for each member, designating the name and current address of each member who is obligated to pay assessments, the due date and amount of each assessment or other charge against the member, the date and amount of each payment on the account, and the balance due. ● Vendor ledgers. ● All contracts for work to be performed. ● Copies of insurance policies. ● Accurate, itemized, and detailed records of all receipts and expenditures. ● Checking account ledger. ● Collection policies and procedures. ● Personnel policies and position descriptions for officers, staff, and volunteers. ● All tax returns, financial statements, and financial reports for the association.
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Records retention A condominium, cooperative, or homeowners’ association must maintain accounting and financial records for a period of seven Debit card use (condominiums only) According to statute, an association and its officers, directors, employees, and agents may not use a debit card issued in the name of the association or billed directly to the association for the payment of any association expense. Use of a debit card Annual report to DBPR (condominiums only) Condominium associations are required to provide an annual report to the DBPR containing the names of all the financial institutions in which it maintains accounts. A copy of the report may be obtained from the DBPR upon written request from any association member. Associations should restrict the information provided to the DBPR to the names of the financial institutions
years. A multi-condominium or cooperative must maintain separate records for each association.
issued in the name of the association or billed directly to the association for any expense that is not a lawful obligation of the association may be prosecuted as credit card fraud. [F.S. 718.111(15)] only without additional information. Any information provided to the DBPR is subject to the Florida’s Sunshine Law (F.S. 286) that makes it available to the public. The provision of non- required, confidential information could subject the association to potential liability.
CONDOMINIUM ASSOCIATION FINANCIAL ANNUAL REPORT The information on this form is required to be provided annually to the Department of Business and Professional Regulation by F.S. 718.71 [Ch 2017-188 Laws of Florida, effective July 1, 2017]. The information contained on this report includes: ● Association Name ● MA Number [from annual billing statement] ● Mailing Address ● City/State/Zip code ● Contact person ● Contact email/phone ● Name(s) of Financial Institution(s) – [list only the names of the institution(s)] Fiduciary duties
● Duty of loyalty : To place no other causes, interests, or affiliations above their allegiance to the association and its members. Florida Administrative Code regarding condominiums, cooperatives and timeshares address violations regarding accounting, budgets, records, developer, assessing, and common expenses. F.A.C. 61B-15 through 25, 45, and 50 include details of violations that are considered minor and major violations including the consequences. The following are identified as minor violations (concerning budgets and finances): ● Failure to obtain competitive bids on contracts that exceed five percent of the association’s budget [F.S. 718.3026(1)]. ● Failure to include applicable line items in a proposed budget. Failure to show limited common element expenses in a proposed budget [F.S. 718.112(2)(f)1, F.A.C. 61B- 22.003(5)]. ● Failure to provide for funding of one or more reserve fund categories in the proposed budget [F.A.C. 61B-22.003(1)(e) (f)(g)]. ● Failure to timely provide the annual financial report [F.S. 718.111(13)]. ● Improper disclosure in the year-end financial statements of revenues and expenses related to limited common elements [F.A.C. 61B-22.006(3)(d)]. than $5,000 be imposed for a single violation. The penalties are set forth in categories 1, 2, and 3, for each violation as follows: Category Penalty Range 1 $10 - $18 per unit 2 $20 - $50 per unit 3 $100 - $300 for each unit offered/created; deposit or contract
While the Florida statutes and Florida Administrative Code related to various types of community associations do not provide detailed guidelines for management and investment of association funds, the board, in determining its financial policies and strategies, must be guided by its documents. This entails three duties for directors and officers: ● Duty of care : To investigate all possible decisions that may impact the association when making decisions, to ensure it makes the best possible choice. ● Duty to act in good faith : To choose the option that best serves the interest of the members in the long and short terms. Minor violations Violations shall be considered minor due to their lower potential for consumer harm. If an enforcement resolution is utilized, the division shall impose a civil penalty between $1 and $5, per unit, for each minor violation. The penalty will be assessed beginning with the middle of the specified range and adjusted either up or down based on any accepted or mitigating factors. An occurrence of six or more aggravating factors or five or more mitigating factors will result in a penalty being assessed outside of the specified range. The total penalty to be assessed shall be calculated according to these guidelines or $500, whichever amount is greater. Finally, in no event shall a penalty of more than $5,000 be imposed for a single violation. Major violations Violations shall be considered major due to their increased potential for consumer harm. If an enforcement resolution is utilized, the penalty will be assessed beginning with the middle of the specified range and adjusted either up or down based upon any accepted aggravating or mitigating factors. An occurrence of six or more aggravating factors or five or more mitigating factors will result in a penalty being assessed outside of the specified range. The total penalty to be assessed shall be calculated according to these guidelines or $500, whichever amount is greater. Finally, in no event shall a penalty of more
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Book Code: CAMFL1524
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F.A.C. 61B-37 through 41 detail specific violations and their consequences related to F.S. 721, Vacation and Timeshare Plans. Examples of violation actions: ● Books and records [F.A.C. 61B-40.003-.004]. ● Reserve funding [F.A.C. 61B-40.0061]. ● Annual audit [F.S. 721.13(3)(e)]. ● Failure to arrange annual audit; failure to file [F.A.C. 61B- 40.007]. ● Receipts and disbursements [F.S. 721.13(3)(f) and 192.037(6)(e)]. ● Assessments; guarantees, common expenses; billing [F.S. 721.15; F.A.C. 61B-40.004]. For full details regarding any of the violation categories and consequences, refer to: ● F.A.C. 61B-15 through 25, 45 and 50 (condominiums).
Examples of major violations: ● Insufficient detail in the accounting records [F.S. 718.111(12) (a)11]. ● Failure to maintain sufficient accounting records [F.A.C. 61B- 22.002]. ● Failure to assess at sufficient amounts [F.S. 718.112(2)(g)]. ● Failure to maintain adequate fidelity bonding for all persons who control or distribute association funds [F.S. 718.111(11) (d)]. ● Failure to pay annual fees to the division [F.S. 718.501(2)(a)]. ● Using association funds for other than common expenses. [F.S. 718.115(1), F.A.C. 61B-23.003(3)]. For a complete list of minor and major violations refer to F.A.C. 61B-15 through 25, 45 and 50. In similar manner, F.A.C. 61B-75 through 79, Regarding the Cooperative Act address among other aspects, accounting, budgets, records, developer, assessing, common expenses, and other violations related to cooperative associations. Part of good financial management includes the policies and activities of collecting on the debts members owe the association. The three types of assessments members are subject to are routine, special, and service-reimbursement. Routine : Routine assessments are the funds members are charged periodically as their share of the cost for routine operations and annual reserves. Special : Special assessments are generally for unanticipated expenses. Service reimbursement : A service reimbursement is charged when a member is liable for damages caused to CEs, LCEs, Collection policy While association documents usually state when regular assessments are due, they rarely define the procedure by which the association will collect monies. Florida statutes outline the information the association should maintain for each member. Every association should develop and distribute a written collection policy. An association must treat all members equally in the collection of assessments. If the association differentiates among members in Collection policy components An effective collection policy should include the following components and should be shared with management, accounting, and the association attorney: ● Identification of assessments and charges that members routinely pay. ● The frequency and due date for assessments. ● The treatment of partial payments. ● The date after which the association will impose a late fee. Late payment consequences Consequences for late payments that an association may impose includes: ● Acceleration of assessments : If the association documents allow it, an association may accelerate the assessments of a member whose payment is delinquent. Accelerated assessments must include the amount owed plus the balance for the remainder of the budget year. For example, if the member’s April assessment is delinquent, the association requires the member to pay all assessments that are due for the period from April through December of that year, if the budget is prepared on a calendar-year basis. ● Interest : The Condominium, Cooperative, and HOA Acts provide that an association may charge a maximum of 18% simple interest, unless a lesser interest rate is stated in the documents. ● Late fees : The Condominium, Cooperative, and HOA Acts provide that an association may charge a late fee of $25 or
● F.A.C. 61B-75 through 79 (cooperatives). ● F.A.C. 61B-37 through 41 (timeshares).
COLLECTION PROCEDURES
or to other member’s property intentionally or negligently. Additionally, some associations provide special services at the member’s option, such as replacement of light bulbs, or minor plumbing repairs. Members are usually billed for these services separately from assessments. However, the association may collect these monies as it would any other assessment. Note that service reimbursement is not a term used by statutes. We are using it to describe a set of charges an association may charge a member, separate from routine or special assessments. Note: Service reimbursement is not a term used by statutes. We use it to describe a set of charges an association may charge a member, separate from routine or special assessments. its collection of assessments, it may lose the right to enforce its collection. Any communications that are related to the collection of delinquent assessments may be subject to the requirements of the Federal Fair Debt Collection Practices Act (15 USC 1692 et seq.), and F.S. 559.72 - Prohibited practices generally. The board should consult an attorney when attempting to collect a debt. ○ Example : The assessment is due on the 1st of the month; therefore, the payment is late if received after the 1st. ○ Grace period : A grace period is in effect between the 1st and the 10th of the month. A late fee is assessed after the 10th. ● Other collection actions and the procedures to take such actions, such as filing liens and suspending voting rights. 5% of the assessment amount, whichever is greater, if the association documents provide for it. ● Privileges and amenities : A condominium, cooperative, or HOA may suspend the rights of the member, or the member’s tenants, guests, or invitees, to use common areas and facilities. ● Returned check or non-sufficient funds (NSF) fees : Banks usually charge the association a fee when a member has insufficient funds to cover the amount of a check. The association may pass this cost on to the member. An association may also include a labor cost for notification and collection. ● Suspension : An association may suspend certain member’s rights if the member is more than 90 days delinquent in paying any monetary amount (e.g., assessments, special assessments, fines).
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Book Code: CAMFL1524
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suspension ends upon full payment of all obligations due to the association. ● Voting: A cooperative or HOA may suspend a member’s voting rights if they are more than 90 days delinquent. A condominium may only suspend a member if they are more than 90 days delinquent in paying any monetary amount over $1,000. The condominium must send proof of monies owed to the member at least 30 days before the suspension takes effect. specifies the amount owed to the association and provides the unit/parcel owner an opportunity to pay the amount owed without the assessment of attorney fees. NOTE : The Condominium, Cooperative, and HOA Acts are silent on if a fine takes precedence over an assessment. The Acts do not address collection of service- reimbursement assessments. Some association attorneys have opined that a fine is paid prior to an assessment, and a service-reimbursement assessment is paid prior to a regular assessment. The board should discuss this with the association’s attorney. the association the subsequent rental payments and continue to make such payments until all monetary obligations of the member that are related to the unit or parcel have been paid in full to the association. The association is specifically excluded from the requirement to maintain a unit or parcel unless it owns the unit or parcel. That is, the member must continue to maintain the unit or parcel, in accordance with their lease. The lessee does not, by virtue of payment of monetary obligations, have the same rights as an association member to vote in any election or to examine the books and records of the association. Reminder: In a condominium, the association must provide the lessee with a copy of the bylaws and rules and regulations, upon the lessee’s request. Florida Residential Landlord and Tenant Act provisions Under the Florida Residential Landlord and Tenant Act, the association may issue notices according to F.S. 83.56 and may sue for eviction according to F.S. 83.59-83.625 as if the association were a landlord under F.S. 83, Part II, if the lessee fails to pay a required payment. The association is not otherwise considered to be a landlord under F.S. 83 and specifically has no duties under F.S. 83.51. NOTE : For more information under the association’s rights and responsibilities under the Florida Residential Landlord and Tenant Act, please see the above referenced sections of F.S. 83. For required forms and additional information, see F.S. 718.116(11) (condominiums), F.S. 719.108(1) (cooperatives), and F.S. 720.3085(8) (HOAs).
The board must approve all suspensions imposed at a properly noticed board meeting. Upon approval, the association must notify the member, and, if applicable, the member’s occupant, licensee, or invitee by mail or hand delivery. ● In a condominium or HOA, the suspension applies to a member and when appropriate, the member’s tenants, guests, or invitees, even if the delinquency or failure that resulted in the suspension arose from less than all of the multiple parcels owned by a member. In all cases, the Application of payments Regardless of the method used to collect late or delinquent payments, once money is received from a member, it must be applied in the following order: 1. Interest. 2. Late fees. 3. Fees to the management firm (administrative fees). 4. Attorney fees and court costs.* 5. Assessments (regular and special). * The Condominium, Cooperative, and HOA Acts provide that an association may not require payment of attorney fees related to a past due assessment without first delivering a written late payment notice to the unit/parcel owner that Collection from unit/parcel owners’ lessees This applies to condominiums, cooperatives, and HOAs. If a unit or parcel is occupied by a lessee and the member is delinquent in paying any monetary obligation due to the association, the association may make a written demand that the lessee pay to Demand notice The association must mail to the lessee a written notice of the association’s demand to make the payments to the association, with a copy to the member. The lessee must begin these payments immediately, and continue until the association releases the lessee, the lessee discontinues the lease, or the member pays the balance that is due. That is, the lessee must make the next payment to the association. A lessee who pays the association in response to its written demand is immune from any claim of non-payment of rent by the member. If the lessee prepays rent to the member before they receive the demand from the association and provides written evidence of paying the rent within days after receiving the demand, the lessee must make any subsequent rental payments to the association to be credited against the monetary obligations of the member until the association releases the tenant or the tenant discontinues tenancy in the unit. Notice of increase The lessee is not liable for increases in the amount of the member’s regular monetary obligations to the association, unless the association notifies the lessee in writing of the increase at least 10 days before the rent is due. Note that the lessee’s monthly liability to the association may not exceed the rent due to the landlord (member). Credit due lessee The member must provide the lessee a credit against rents due to the member in the amount of the monies that have been paid to the association. Changing method of delivery Before changing the method of delivery for invoices or statements of accounts, the association must deliver a written notice of such change to each unit/parcel owner at least 30 days before the association sends the invoice for assessment or statement of account by the new delivery method. The notice must be sent by first-class mail to the unit/parcel owner at their last address as reflected in the association’s records and, if such address is not the unit address, must be sent by first-class mail to the unit address.
ASSOCIATION ASSESSMENT NOTICE REQUIREMENTS
The unit/parcel owner must affirmatively acknowledge their understanding that the association will change its method of delivery before the association changes the method of delivery. The unit/parcel owner may make the affirmative acknowledgement electronically or in writing.
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Book Code: CAMFL1524
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