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THIS COURSE FULFILLS THE INSURANCE AND FINANCIAL MANAGEMENT REQUIREMENT Chapter 1: Budget Fundamentals [3 CE Hours] In this course we discuss fundamentals of the budget and financial management process for community associations. When used properly, the budget serves the association as a guide to compare, throughout the fiscal year, its actual revenue and expenses to its budgeted revenue and expenses. Good financial management practices are a responsibility of a board of directors as well as that of a CAM, management firm, and/or managing entity. THIS COURSE FULFILLS THE OPERATION OF PHYSICAL PROPERTY FOR COMMUNITY ASSOCIATIONS REQUIREMENT Chapter 2: Landscape Maintenance Responsibilities in Community Associations 13 [3 CE Hours] 1 To a significant extent, landscape plans, designs, and maintenance are centered around procedures and principles based on F.S. 373.185, “Local Florida-Friendly Landscaping Ordinances.” Florida-friendly landscaping is defined as quality landscapes that conserve water, protect the environment, are adaptable to local conditions, and are drought tolerant. It provides regulations and guiding principles for counties and municipalities in Florida. This course will explore procedures as well as elements of landscaping. THIS COURSE FULFILLS THE LEGAL UPDATE REQUIREMENT Chapter 3: Legal Update 2025-2026 26 [3 CE Hours] This course provides students with statutes and administrative rules applicable to community associations and community association managers. Some laws directly impact condominiums, cooperatives, homeowners’ associations, and timeshares. While others may apply to related entities, such as management, flood disclosures, and fire prevention. Included are laws passed and administrative codes adopted during the 2025 legislative session. We will review legislative changes from 2024 as they may impact those made in 2025. THIS COURSE FULFILLS THE HUMAN RESOURCES REQUIREMENT Chapter 4: Meetings, Important or a Waste of Time? 49 [3 CE Hours] This course examines the requirements, authority, process, and procedures for community associations to conduct meetings. It addresses the perception of the importance of meetings in community associations that often differs between owners and board members. In this course, we will discuss the necessity of meetings as it relates to Florida statutes, meeting requirement differences among condominiums, cooperatives, homeowners’ associations, and timeshares. This course intends to review certain statutory requirements and recent changes that licensed CAMs, CAM firms, and community association leaders must understand. It seeks to outline the importance of a CAMs understanding of meeting purposes and processes and provides suggestions for planning and conducting successful meetings. THIS COURSE SATISFIES REQUIREMENTS RELATED TO THE MANAGEMENT OR ADMINISTRATION OF COMMUNITY ASSOCIATIONS Chapter 5: Records Management for HOAs 66 [3 CE Hours] This course examines various sections of Florida Statute 720 as well as F.S. 468 statutory professional practice standards of community association managers (CAM) and community association management firms. Specifically, how they apply to the records and records management operations of homeowners’ associations. The course includes discussion of what CAMs should be aware of while in service to homeowners’ associations related to record keeping. Final Examination Answer Sheet 76
©2026: 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: CAMFL1526
What are the requirements for license renewal? License Expires Frequently Asked Questions CE Hours Required
Mandatory Subjects
3 hours – Legal update 3 hours – Insurance and financial management 3 hours – Operation of the association’s physical property 3 hours – Human resources 3 hours – Topics directly related to community association management
15 (All hours are allowed through home study)
Licenses expire September 30 of the even year
How much will it cost? If you are only completing individual courses in this book, enter the code that corresponds to the online course listed below. Course Title CE Hours Price Course Code
Chapter 1: Budget Fundamentals
3
$30.00 CAMFL03BF
Landscape Maintenance Responsibilities in Community Associations
Chapter 2:
3
$30.00 CAMFL03LM
Chapter 3: Legal Update 2025-2026
3
$30.00 CAMFL03LE
Chapter 4: Meetings, Important or a Waste of Time?
3
$30.00 CAMFL03ME
Chapter 5: Records Management for HOAs Best Value - Save $41.00 - All 15 Hours
3
$30.00 CAMFL03RM
15 $129.00CAMFL1526
How do I complete this course and receive my certificate of completion? See the following page for step-by-step instructions on how to complete and receive your certificate. Are you a Florida board-approved provider? Colibri Healthcare, LLC is an approved provider with the Florida Regulatory Council of Community Association Managers (Provider #0008051). Are my hours reported to the Florida board? 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. 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, email 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: https://www2.myfloridalicense.com/community-association-managers-and-firms/
ii
Book Code: CAMFL1526
COMMUNITY ASSOCIATION MANAGERS CONTINUING EDUCATION
How To Complete This Book For Credit
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COURSE TITLE
HOURS PRICE CODE TO ENTER
ALL 15 HOURS IN THIS CORRESPONDENCE BOOK
15
$129.00 CAMFL1526
If you are only completing individual courses in this book, enter the code that corresponds to the course below online.
Chapter 1: Budget Fundamentals
3
$30.00 CAMFL03BF
Landscape Maintenance Responsibilities in Community Associations
Chapter 2:
3
$30.00 CAMFL03LM
Chapter 3: Legal Update 2025-2026
3
$30.00 CAMFL03LE
Chapter 4: Meetings, Important or a Waste of Time?
3
$30.00 CAMFL03ME
Chapter 5: Records Management for HOAs
3
$30.00 CAMFL03RM
iii
COMMUNITY ASSOCIATION MANAGERS CONTINUING EDUCATION
Book Code: CAMFL1526
Chapter 1: Budget Fundamentals 3 CE Hours
Expiration Date : January 21, 2028 Course overview
The essential elements of a budget are described. The budget provides a basis to make necessary changes to ensure, as much as possible, that the association is staying within budgetary limits while working toward achieving the community association’s long-term goals and short-term objectives.
In this course we discuss fundamentals of the budget and financial management process for community associations. When used properly, the budget serves the association as a guide to compare, throughout the fiscal year, its actual revenue and expenses to its budgeted revenue and expenses. Good financial management practices are a responsibility of a board of directors as well as that of a CAM, management firm, and/or managing entity. Learning objectives After completing this course, the learner will be able to: Understand some of the primary elements of a budget. Identify the roles of those who develop an annual budget. Understand the role of a CAM, management firm or managing entity. Know the statutory requirements for condominiums, cooperatives, HOAs, and timeshares.
Understand the processes of budget preparation and development. Identify the components of the operating section of a budget. Understand the reserves, their functions, processes, and characteristics. Discuss statutory reserve requirements. Understand insurance statutory requirements as it applies to budget preparation.
INTRODUCTION
A community association is a legal entity (corporation) established to operate and maintain common property for the benefit of its members. The board of directors must have a financial plan (budget) to serve the goals, objectives, and legal requirements of the association. The budget provides a projection of income and expenses for a fiscal year and serves as the basis for determining the financial obligations of its members, whether through regular assessments or other fees and obligations to the association. This course is divided into four parts: PART 1 : Elements of the budget process. PART 2 : The operating section of the budget.
It is common for a CAM to play a significant role in the development and preparation of a community association’s annual budget. Times have changed! If you, as a CAM, have been engaged in budget preparation over a number or years, you can’t ignore the fact that statutory requirements, and economic and environmental concerns have had an impact. As a result of such changes, CAMs and management firms have had to evolve their business relationships and responsibilities with the community associations they serve. With the help of a fictional CAM, Mike, we will discuss many of the basic components of a budget and explore the ways in which a CAM might find themselves assisting a board or budget committee to prepare a budget that meets the criteria of a fair and balanced financial system of the community association.
PART 3 : Reserves. PART 4 : Insurance.
Introducing Mike Hello, I’m Mike and I’ve been an on-site CAM for the same community association for more than seven years. I’ve been involved in preparing and developing the budget for five of those years. During the first year, the board treasurer prepared the budget. The board appointed a budget committee in year two. From year three the board recognized the value of the CAM playing a major role in the development and preparation of the budget. They still appoint a budget committee each year, but we now work together on this important function in the life of their community association. PART 1: ELEMENTS OF THE BUDGET PROCESS
What is important is that the total of actual revenue and expenses be within budgetary limits, so as not to produce a budget deficit. In the event of a budgetary deficit, the board will need to either reduce expenses, increase revenue, or expend surplus monies accumulated in its cash accounts, if legally permitted. The documents should be checked to determine what are common elements, limited common elements, and unit components. At this stage of budget preparation, the board and management are confirming what the association is and
Regardless of the effectiveness of the budgetary process, unanticipated events will occur (such as hurricanes or other catastrophic events, or an unexpected breakdown of a major piece of equipment, such as an elevator or generator), resulting in variances from the budgeted amounts of both revenue and expenses. Sometimes those variances are favorable, less money expended than budgeted in a specific account or more revenue generated. Other times they are unfavorable, more money spent or less revenue realized.
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what the member is responsible for. Remember, association funds cannot be used for maintenance of those items that Who is responsible for preparing the Budget? The board of directors is responsible for the development of the proposed annual budget, unless the bylaws specify another entity. The association treasurer is responsible for all financial matters of the association, including coordinating the development of the proposed annual budget. A budget committee can be the preferred choice when a substantial assessment increase is anticipated. The inclusion of respected community members on the committee can provide legitimacy to the increase and foster understanding of the proposed budget by members. A committee can often be helpful when a CAM has the primary role in the budget preparation process but requires assistance to meet deadlines. ● The board or president’s authority to appoint and delegate power to committees is governed by the association documents (generally, the bylaws). ● Special committees (also referred to as ad-hoc, select, task force, or work group) are created to perform a specific, time-limited purpose. If the association’s bylaws or rules are silent on the method of creating special committees and appointing committee members and chairpersons, the board can empower the president with What is the CAM’s role? It varies in community associations, but typically, the CAM has a significant role in the development of the budget. Even when the CAM doesn’t have a prominent role, it’s a good idea to stay up-to-date and perhaps monitor the process. This is a way for the CAM to help or provide information to whomever is developing the budget and to advise the board of the budget development status. Remember, as a CAM, we may have information or documentation at hand so that a board member, committee member, or accountant may not have readily available to them during the preparation process. Sometimes, budgets are developed with certain preconditions set by the association’s documents or a board. This might include conditions prescribed in the documents, such as prohibiting the assessments from increasing by more than a particular percentage, or directives from a board to “keep assessments at a same level” or “reduce expenses by 10%.” Remember, if the CAM observes that the board’s preconditions could result in insufficient funds to properly maintain the property and meet the association’s other objectives, the CAM has a fiduciary responsibility to inform the board. If potential statutory violations are observed, the manager is responsible for recommending to the board that it seek legal guidance. Management should never perform an act directed by the association or its board, if the act violates state or federal law. Statutes and code guidance The Florida Statutes (F.S.) and the Florida Administrative Code (F.A.C) describe the legal requirements for budgets. The following describes some of the important requirements for each type of community association according to statute.
the member is responsible and such items/elements should not be included in the budget.
the authority or opt to require a vote of the board. Some associations may interpret their bylaws in a manner that allows the president to create committees, and to appoint and remove their members and chairpersons. Depending on the association, the board may choose to have one or a combination of the following entities develop the proposed budget. Each approach has advantages and disadvantages. When the association undergoes a significant change or expects major repairs and projects to appreciably increase costs, the board may want to consider involving the association members. Typically involved are the manager or management firm, accountant, budget committee, treasurer, president, or other designated board member. Members who are involved in the budget development process might be more likely to accept and understand the budget that is required by the association. Many association documents set specific guidelines for budget preparation such as the maximum allowable increases or formal acceptance of the proposed budget by the board at a duly noticed meeting. Any concerns of how the budget is being developed should be brought to the attention of the president or treasurer and create a memorandum to file. If the CAM is employed by a management firm, a written report, describing and explaining their concerns, should be forwarded to their supervisor. CAMs, with some exceptions, are typically required to be able to properly develop a budget. Creating an effective budget requires knowledge of budget related statutes and administrative rules, as well as relevant provisions within the association’s governing documents. A CAM who prepares an improper budget as a result of the lack of knowledge does a disservice to the association and risks disciplinary action by the DBPR, should it receive a complaint from the association. A CAM should understand that even when they have the primary role of developing a budget, they need to consult with the association president, treasurer, and/or other board officers, the association’s attorney, accountant, insurance agent, maintenance director, and service providers to obtain information and guidance ruling the budget process. One size does not fit all. A CAM must understand that the budget preparation process differs from association to association, type to type. Don’t perform any tasks for which you lack the skill to do properly.
Condominiums and cooperatives The basic requirements for condominium budgets are provided in F.S. 718.112(2)(e) budget meeting, F.S. 12 718.112(2)(f) annual budget, F.A.C. 61B-22.003 budgets, and F.A.C. 61B-22.005 reserves. The basic requirements for cooperative budgets are provided in F.S. 719.106(2)(e), F.A.C. 61B-76.003, and F.A.C. 14 61B-76.005.
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A condominium or cooperative board of directors must provide for certain expenses in a proposed annual budget, including the following items, as applicable (example: if the association does not have a manager or management company, it will not have a line item for management fees):
The budget must include the estimated revenue and expenses for the upcoming fiscal year and the estimated surplus or deficit as of the end of the current fiscal year. The budget must also set out separately all fees or charges for recreational amenities, whether they are owned by the association, the developer, or another entity. Timeshares F.S. 721.07(5)(t), F.S. 721.55(4)(h)5, and F.A.C. 61B-40.004 requires each year an itemized annual budget, that includes all estimated revenues and expenses, be provided to all purchasers. The budget shall be the final budget adopted by the managing entity for the current fiscal year and shall include the following accounts: ● Administration of the managing entity ● Insurance ● Maintenance A copy of the approved annual budget for a timeshare plan is filed with DFCTSMH within 30 days after the beginning of each fiscal year. ● Managing entity means the person or entity who operates or maintains the timeshare plan. The managing entity can be the developer, a separate manager or management firm, or an owners’ association. ● Division of Florida Condominiums, Timeshares, and Mobile Homes (DFCTMH) is a division within the Florida Department of Business and Professional Regulation (DBPR). The Division plays a crucial role in the regulation and oversight of condominiums, cooperatives, timeshares, and mobile homes in Florida. ● Effective July 1, 2025, F.S. 468.438 Timeshare management firms: A timeshare management firm and any individual licensed under this part who is employed by a timeshare management firm are governed by F.S. 721.13 and not by F.S. 468.4335. ● Operating capital ● Other expenses ● Reserves for deferred maintenance and for capital expenditures ● Rent for facilities ● Security provisions ● Taxes on timeshare property ● This action removed the provision that any managing entity performing community association management must comply with part VIII of F.S. 468. Timeshares, F.S. 721, provides that to determine if the assessments exceed 115% of the preceding fiscal year the calculation must exclude the cost of insurance. Effective July 1, 2025, relating to Timeshare statute 721.13 Management, requires that If a timeshare management firm or an owners’ association provides goods or services through a parent, affiliate, or subsidiary of the timeshare management firm, the fact that a related party is providing goods or services must be disclosed annually to the members of that owners’ association in a number of ways, including as an explanatory note to the annual budget. The other options for disclosure included in the management contract; by mail sent to each owner’s address on file for providing notice; in the notice of an annual or special meeting of the owners; by posting notice on the website of the applicable timeshare plan; or by any owner communication used by the managing entity .
● Administration of the association ● Fees payable to the DFCTMH ● Insurance ● Maintenance
● Management fees ● Operating capital ● Rent for recreational and other commonly used facilities ● Other expenses ● Reserves ● Security provisions ● Taxes on leased areas ● Taxes on association property ● Reserves The annual budget required by F.S. 718.112(2)(f) and any proposed budget to be considered at budget meeting, must be on the website for those associations required to have a website. Effective January 1, 2026, condominium associations with 25 or more units shall post digital copies of the documents specified in 718.111, (12)(g) subparagraph 2, which includes the budget and proposed budget, on its website or make such documents available through a mobile app. Multi-condominium A multi-condominium refers to a real property containing two or more condominium buildings, each of which must have a separate budget reflecting estimated revenue and expenses specific to that building. Depending on the master association documents, assessments may be paid by the building or by the member. If the building pays the master, it includes a single income and a single expense line item in the budget for that master association. If the members pay the master directly, the building will not reflect master association revenue or expenses. Mixed-use condominium A mixed-use condominium association consists of both residential and commercial units. The declaration or bylaws may define the requirements for a mixed-use association. Generally, the association must budget separately for the community association portion versus the commercial portion. In some cases, the association owns and leases the commercial space. In such cases, the budget most likely will include a separate section for the commercial elements, indicating both the revenue and expenses. In other cases, for instance, where there are condominium units and hotel units, the entity may require a separate budget for each. The documents should include a formula for the allocation of expenses for shared common elements, such as the pool, conference rooms, elevators, etc. Homeowners’ association (HOA) The basic requirements for homeowners’ association budgets are provided in F.S. 720.303(6). There is no statutory requirement for the common reserves or common expenses to be included in the HOA budget. The budget may include reserves, as specified by the documents or statutes. It is necessary to review the documents of homeowners’ associations to determine the budgetary requirements.
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Budget preparation The board, with the manager’s input, should determine the date it intends to hold the budget meeting. The board should set a date that permits sufficient time for development of the budget, review it with the president, treasurer, and/or board members, and allow for the required minimum 14-day notice to members (unless the documents require a longer notice). As part of a CAM’s role, once the budget is adopted, management needs to notify members of the assessment for the new fiscal year. Some members will need time to inform their financial institutions of changes in the assessment amount. If an association prints and distributes coupons or invoices it will need sufficient time to perform these functions. It is also important to remember that condominium and cooperative associations are required to adopt the annual budget at least 14 days before the start of the association’s fiscal year. The amount of time needed to prepare a budget depends on its complexity, the workload of the manager, and the involvement of directors, officers, committees, and others. For many associations, it is common to begin the process four or five months prior to the date of the budget meeting. Ultimately, each association must make its own determination when to begin the process. Part 1 summary There is neither statute, rule, regulation, nor document that states, “Keep assessments low.” An association that focuses on maintaining unreasonably low assessments may be neglecting its property and, at some point, may face special assessments to repair and replace components that may have been accomplished through better budgeting. A board that does not properly maintain the property of
Budget development Consideration of the primary goals and objectives of the community association are key to budget development. They should be described in terms of actions that need to be accomplished. For example: To preserve, protect and enhance the value of the community and its assets, the objectives to consider may be issues, such as: ● Annual HVAC (heating, ventilation and air conditioning) inspection or maintenance ● Adequate insurance coverage With the objective of enhancing the lifestyle of the community, considerations similar to these may be warranted: ● Renegotiating the cable and internet bulk contracts ● Replacing lobby furniture Related to providing to the extent possible a harmonious community, objects may include: ● The annual budget fairly considers the income and expenses of the association. ● Proper notice of meeting to consider the budget
the association is not fulfilling its fiduciary responsibility. When sufficient funds are expended to accomplish the association’s budgetary objectives, it results in compliance with Florida statutes and maintains the property so that it stays comparable to its condition when transferred by the developer.
PART 2: THE OPERATING SECTION OF A BUDGET
Required documentation To estimate revenue and expenses accurately and properly develop the operating section, the following documentation is required: ● Current year’s most recent financial reports including the income and expense statement and balance sheets ● End of year financial reports for the past three years ● Invoices for the past 12 months ● Aged balance reports for the past 12 months ● All current contracts and retainer agreements ● Contract summary chart (see the example on the next page) ● All current insurance policies ● Insurance policies summary chart (see the example on the next page) ● Most recent property appraisal ● Manager’s reports for the past 12 months ● Most recent legal status report ● Records of equipment maintenance ● Minutes and any resolution of board related planned capital projects, other budget related issues ● Warranties
Condominium, cooperative, timeshare, and homeowners’ association budgets have two major sections, operating and reserves. The operating section typically identifies routine, regularly occurring income and expenses of the association. It effectively functions as the association’s annual financial plan. The reserve section appears on the budget as a single account or line item that shows the cost of funding the reserves for the next fiscal year. It 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 for the association. We’ll discuss the operating section first.
The operating section of a budget reports and reflects the income and expense items that occur at least annually and are associated with day-to-day operations of the association.
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Example Contract Summary Chart
Annual Total (CY)
Termination Date
Termination Notice
Comments
Acct. # Description Company Monthly Amount Frequency
7025 Trash
Oscar Trash Pick-up
$2,250 Monthly
$27,000
12/31/CY 90 Days
Removal
7035 Cable/ Internet
Com-Net
$11,042 Monthly
$132,000 12/31/20XX 90 Days
Annual 5% Increase
7040 Generator
Reliable Generator
$250
Quarterly $1,000
N/A
20 Days
7070 Landscape Services
Lanny’s Cuts
$3,842 Monthly
$46,100
12/31/CY
7090 Pest
Florida Xeriscape
$667
Monthly
$8,000
6/30/XX
Control
7130 Pool/Spa/ Fountain
I.M Underwater Pool Service Topper’s Tree Service
$833
Monthly
$10,000
12/31/XX
7355 Tree
$7,000 Monthly
$7,000
N/A
Trimming
Example Insurance Policy Summary Chart
Replacement Value/ Coverage
Premium (CY)
Termination Notice
Comments
Period Deductible
Acct. # Type
Company
7055 Multiperil
Citizens
$300,000 Annual
$100,000
$50,000,000 12/31/CY Agent estimate 10% increase
Wind
5% of Replacement Value
100% coinsurance
7556 Flood
FEMA
$11,000 Annual
$100,000
$54,250,000 12/31/CY FEMA
formula of $250,000 per unit. 100% coinsurance
7557 General Liability
Relectant Pay Ins. Co.
$15,800 Annual
N/A
$1M/$100/000 per Incident $1M/$100/000 per Incident
12/31/CY
7558 D&O Regretful Ins. Co. 7558 Umbrella Stormy Weather Ins. Co.
$4,000
Annual
N/A
$7,500
Annual
N/A
$5M per Incident
12/31/CY
7560 Fidelity Bond 7560 Plate Glass
Not Guilty Ins. Co. Broken Dreams Ins. Co.
$2,500
Annual
N/A
$1,000,000
12/31/CY
$9,500
Annual
5% of Damage
N/A
12/31/CY
Total:
$350,300
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Organize the operating section The operating section of the budget is divided into two major sections, revenue (or income) and expenses. The operating budget identifies the categories of revenue and expenses (referred to as line items or accounts in a chart of accounts) for the routine, day-to-day activities of the association. Expenses are anticipated to occur on a regular basis, daily, weekly, monthly, quarterly, and annually. Income section This section includes income from assessments, as well as
Special accounts Special accounts that are frequently encountered include: ● Limited common elements : If the association maintains certain limited common elements (LCE) at the expense of only those members who are entitled to use those limited common elements, then the budget must include a separate schedule for revenue and expenses that pertain to those limited common elements. Example : A covered parking space or garage. ● Member expenses : In a condominium or cooperative, if such expenses for members are required, they are not counted as expenses that are collectible through assessments, generally related to disclosures during developer control of the association and therefore do not appear in the budget. ○ Example : Maid service that is available on a pay-as- wanted basis but is not a common expense of the association. ● Capital contribution : Refers to monies paid to the association at the time a unit or parcel is conveyed from one member to another. It is usually equal to one to two months of assessments, collected at the time of purchase of a unit/parcel. The documents must specifically allow the collection of capital contributions. ● Recreational leases : Rent for commonly used facilities under a recreation lease refers to any facility that the association uses but does not own. It pays rent directly to a lessor or agent of a recreational facility under a recreational lease or lease for use of commonly used facilities. The use and payment are a mandatory condition of association ownership and is not included in the common expenses or assessments for common maintenance paid by members to the association. ○ Example : A large-scale mixed-use community association (composed of multiple homeowner sub- associations as well as a condominium association) is part of a recreation association that operates recreational facilities serving association members. Members who are also members of the recreation association pay assessments directly to the recreation association therefore this expense is not part of the regular assessment and is included in the budget solely for disclosure purposes. ● Bulk services : These are services common to many community associations, such as television, Internet, and telephone, are provided to the members as part of their common expenses of the association. The association negotiates and enters into this agreement on behalf of the members to obtain a more favorable rate than each member would be able to obtain through an individual contract. Important considerations for budget preparation related to bulk services include whether the common expenses are allocated according to a certain percentage stated in the governing documents or an equal per-unit basis. Does the contract include a provision for an annual increase? If so, at what amount, or percentage will that increase be? Have any members opted out of the bulk service because they are either sight or hearing disabled, or are receiving certain public assistance? Insurance is another essential part of a community association’s budgetary obligation. Community associations are required to carry insurance, as required by the applicable community association statute and its governing documents.
other non-assessment income, such as: ● Screening fees (new owners/tenants) ● Vending or Laundry machine income ● Late fees ● Estoppel fees ● Returned check fees (NSF)
● Clubhouse rental ● Interest income ● Miscellaneous fees Expense section Expenses are divided into major categories, such as: ● Administration
● Contracts ● Insurance ● Repairs and maintenance ● Salaries and benefits (if applicable) ● Utilities
Sometimes an association decides to include a one-time expense, such as an expensive piece of equipment, in the annual budget. It may list the item, and other such planned purchases, under a section titled capital expenses , to differentiate them from the regularly recurring expenses typically referred to as ordinary expenses. Account creation There are no hard and fast rules here. For example, an association may choose to include a contracts section because it allows management to easily identify certain fixed costs. Alternatively, it may choose to simply include the cost of a contract, such as landscaping, with other non-contractual and variable landscaping related costs such as plant or flower replacement, pest control, and tree In addition to the accounts identified earlier associations may create and use other budget accounts. They can also create sub-accounts to provide more specific information about certain expenditures or revenue categories. Management may recommend to the board to create sub-accounts, such as lawn maintenance, pest control, tree trimming and plant replacement, under the landscaping account. Why? This type of organization generally provides easily identifiable cost information regarding all landscape-related services. Better control and understanding of services/items that don’t necessarily fall under the contract. trimming, under a landscaping account. Selection and organization of accounts The budget must show the beginning and end dates of the fiscal year (the budget period). The budget will include the association’s name and specify the assessment amount that is to be paid by each member. For condominium and cooperative associations, the proposed budget must include the amount budgeted for the current budget year and for the proposed budget year.
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Book Code: CAMFL1526
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There are other differences in budgeting for insurance for a condominium association including that if a board proposes a budget in any fiscal year an annual budget which requires assessments against unit owners that exceed 115% preceding fiscal year, the board shall simultaneously propose a substitute budget that does not include any discretionary expenditures that are not required to be in the budget. The substitute budget must be proposed at the budget meeting before the adoption of the annual budget. However, in determining if the assessments exceed 115%, the calculation must exclude required reserves, deferred maintenance, repair or replacement of these required reserve items, and insurance premiums. By statute, cooperatives have a similar provision that excludes insurance premiums in calculating if the budget is 115% of the preceding fiscal year. Timeshares also include such a provision. Homeowners’ associations do not have such statutory restrictions, it’s important to consult the governing documents of the association for any similar restrictions. when preparing or assisting the association in preparing its annual budget. Keep in mind, although mathematics is a large part of a budget, being organized and diligent in chronicling and measuring the association’s financial activities is perhaps a CAM’s most important task here
At a minimum, most associations have at least the following: ● Property insurance ● General liability insurance ● Fidelity bond: ○ HOA, fidelity bond: If annually approved by a majority of the voting interests present at a properly called meeting of the association, an association may waive the requirement of obtaining an insurance policy or fidelity bond for all people who control or disburse association funds. ● Workers’ compensation insurance ● Directors and officers (D&O) liability insurance For condominium associations, F.S. 718.111(11) requires a condominium to specify the deductible amount on its property insurance policies, in a motion passed by the board. If the association does not pass such a motion at the time the insurance is renewed, it must do so at the budget meeting. Part 2 summary Well, we’ve talked about several of the important aspects of the operating section of the budget. Remember as noted earlier, not all budgets will look the same related to the type of association it is and the elements of a particular community. CAMs have a responsibility to use best practices
PART 3: RESERVES
The reserves must be funded or maintained in a way prescribed by statute and governing documents, or have their funding waived (currently there are limitations related to structural reserves for condominiums and cooperatives). In order to decrease the funding or to waive a reserve item, the membership must vote affirmatively on an annual basis. Funding methods for reserves include: ● Straight-line, also known as restricted, or component method ● Pooled, also known as the cash flow method. Pooled reserves generally provide more flexibility A reserve schedule included as an attachment to a reserve budget, provides the following: ● A list of all required deferred maintenance and capital expenditure reserve items ● The estimated useful life of each item ● The estimated remaining useful life of each item ● The estimated cost of deferred maintenance and capital equipment replacement for each item ● The estimated fund balance for each item as of the end of the current fiscal year ● The required funding amount for each budget year for each item A reserve study i s an in-depth evaluation of a property’s physical components and an analysis of its reserve funds. A reserve study projects the anticipated replacements or repairs to common-area elements and recommends annual reserve funding to cover capital expenditures and deferred maintenance for each year of a future thirty-year period. The steps for each reserve item: 1. Estimate the useful life less the current age equals the remaining useful life. 2. Replacement cost less the year-end balance. 3. Divide by the remaining useful life for the amount the association should reserve this year.
In accounting terms, reserves are portions of a company’s profits that are set aside for specific or general purposes. Setting aside money for reserves can help keep an organization such as a community association in a good financial state by providing savings to handle future expenses. Reserves are defined by the DBPR as, “Any funds, other than operating, that are restricted to deferred maintenance and capital expenditures and any other funds that are restricted to use by the association or its documents.” There are some basic concepts about reserves for community associations, however, there are significant differences in types of reserves and statutory requirements for reserves for condominium, cooperatives, HOAs, and timeshares. In this part of the course, we will take a look at some of the similarities and differences. The purpose of reserves includes helping the members of the association to avoid special assessments or loans to replace or repair significant physical components of the community association that, over time, are subject to wear, deterioration, or effects from natural or man-made disasters. Providing reserves helps to protect the investments of the members, reduces the cost of maintenance, fulfils a board’s fiduciary duty to an association and, in certain circumstances, provides for compliance with various state and local laws. The uses of reserves are restricted from day-to-day spending. They must designate individual components. These designations vary between HOAs, condominiums, cooperatives, and timeshares. Reserves schedules There are two different types of reserves schedules: straight- line (segregated) and pooled. Referring to the illustration below, using the straight-line method, how much should the association reserve?
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Book Code: CAMFL1526
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Reserves condominiums and cooperatives In 2022, significant changes took place in the statutes governing Florida condominiums and cooperatives. Specifically, it was determined that buildings that are three stories or higher were required to have performed a “milestone” inspection of each of those buildings located on the association property by a Florida licensed architect or engineer. Additionally, it required such condominium and cooperative buildings to have a structural integrity reserve study (SIRS) and mandatory reserves. The milestone inspections were required to be performed by December 31 of the year that the building turns 30 years of age and every 10 years thereafter. The milestone inspections are required, currently, for single-, two-, three-, and four-family dwellings with three or fewer habitable stories. The purpose of the “milestone” inspection is to attest to: ● The adequacy of the life safety and structural components of the building. ● The general structural conditions of the building affect the safety of the building, including determination of any necessary maintenance, repair, or replacement of any structural component of the building to the extent reasonably possible. The “milestone” inspection is performed in a two-phase method: Phase One : A licensed architect or engineer authorized to practice in Florida shall perform a visual examination of habitable and non-habitable areas of the building, including the major structural components, and provide a qualitative assessment of the structural conditions of the building. Structural integrity reserve study Residential condominium and cooperative associations must have a structural integrity reserve study (SIRS) completed at least every 10 years after the condominium or cooperative’s creation for each building on the association property that is three stories or higher in height, as determined by the Florida Building Code, which includes, at a minimum, a study of the following items as related to the structural integrity and safety of the building: ● Roof ● Structure, including load-bearing walls and other primary structural members and primary structural systems, as ● Any other item that has a deferred maintenance expense or replacement cost that exceeds $25,000 or the inflation-adjusted amount determined by the division and the failure to replace or maintain such item negatively affects the items listed in sub-subparagraphs a.-g., as determined by the visual inspection portion of the structural integrity reserve study. A structural integrity reserve study is based on a visual inspection of the condominium or cooperative property. A structural integrity reserve study including the visual inspection portion of the structural integrity reserve study must be performed or verified by an engineer licensed under F.S. 471, an architect licensed under F.S. 481, or a person certified as a reserve specialist or professional reserve analyst by the Community Associations Institute or the Association of Professional Reserve Analysts. those terms are defined in F.S. 627.706. ● Fireproofing and fire protection systems ● Plumbing ● Electrical systems ● Waterproofing and exterior painting ● Windows and exterior doors
Phase Two : If any substantial structural deterioration is identified during the Phase One inspection, a Phase Two inspection must be performed. Upon completion of a Phase One or Phase Two milestone inspection, the architect or engineer who performed the inspection must submit a sealed copy of the inspection report with a separate summary of, at a minimum, the material findings and recommendations in the inspection report to the condominium or cooperative association, and to the building official of the local government that has jurisdiction. The “milestone” inspections are a record of the association, and the board must assure that a copy is distributed to all members of the condominium or cooperative association; must post a copy of the report in a conspicuous place on the property; and must publish the full report and summary on the association’s website (if the association has or is required to have a website). The inspection reports must also be available for review or copying by renters. Remember as of January 1, 2026, condominium associations with 25 or more units shall post to their website or through a mobile app, digital copies of the documents specified in F.S. 718.111(12) (g) subparagraph 2, which includes, among other documents, the milestone inspection reports and the association’s most recent structural integrity reserve study, if applicable. This does not apply to buildings less than three stories in height; single-, two-, three-, and four-family dwellings with three or fewer habitable stories above ground; any portion or component of a building that has not been submitted to the condominium form of ownership; or any portion or component of a building that is maintained by a party other than the association. Before a developer turns over control of an association to unit owners other than the developer, the developer must have a turnover inspection report in compliance with F.S. 718.301(4)(p) and (q) for each building on the condominium property that is three stories or higher in height. Associations existing on or before July 1, 2022, that are controlled by unit owners other than the developer, must have a structural integrity reserve study completed by December 31, 2025, for each building on the condominium property that is three stories or higher in height. An association that is required to complete a milestone inspection in accordance with F.S. 553.899 (building construction standards) on or before December 31, 2026, may complete the structural integrity reserve study simultaneously with the milestone inspection. In no event may the structural integrity reserve study be completed after December 31, 2026. If the officers or directors of an association willfully and knowingly fail to complete a structural integrity reserve study, it is a breach of an officer’s and director’s fiduciary relationship to the unit owners under F.S. 718.111(1). An officer or a director of an association must sign an affidavit acknowledging receipt of the completed structural integrity reserve study. Within 45 days after receiving the structural integrity reserve study, the association must provide the division with a statement indicating that the study was completed and
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Book Code: CAMFL1526
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