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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Book Code: CAMFL1524
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