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RAISING ADDITIONAL FUNDS FOR ASSOCIATIONS
July 1, 2005
Many associations have had to resort to raising additional
monies to fund repairs, capital improvements and reserve
items. This shortfall in funds has been due mainly to
inadequate operating budgets, under-funded reserves for
repairs and unforeseen or unanticipated expenses from the
hurricanes that we experienced last year. Most
associations have no budgets or savings that are designated
for insurance deductibles.
Associations can raise additional funds through borrowing
from financial institutions, increasing assessments by
recalculating budgets or by having special assessments to
pay for repairs or improvements. Unless the documents
provide otherwise, these decisions are made by the Board of
Directors.
Some documents require that the membership be allowed to
make the decision to special assess on amounts over a
certain amount. In those cases, there may be different
notice requirements, certain quorum requirements and the
documents may require something other than a simple
majority for the passage of this assessment. Please check
you documents and consult with the associations’ attorney
prior to sending out your notices. However, the Board must
make sure that notices for these meetings be sent to all
members or the Board’s actions could be rendered invalid.
In this article we will address the proper way for an
association to inform, notice and conduct a meeting whereby
additional funds will be solicited from the membership.
Homeowners’ associations which are governed by F.S. Chapter
720 now require all members to be notified of the meeting
at which a special assessment is to be considered, not less
than 14 days in advance by mail, hand delivery or by
electronic transmission of the meeting notice. Your
documents may require additional time for the notice. The
notice must state that the Board of Directors will be
considering a special assessment, and the notice must also
state the exact nature of the special assessment. In
addition to the above, the notice of meeting must also be
posted on the property and, if available, may be broadcast
on a community closed circuit cable television channel.
A homeowners’ association Board of Directors meeting must
be open to all members of the association and the members
will be allowed to speak on any item that is placed on the
agenda by petition of the voting interests for at least 3
minutes. The Board of Directors is also allowed to make
reasonable rules and regulations regarding owner
participation at Board of Directors meetings. Though it is
not specifically mentioned in the statutes, it would be
wise for a homeowners association to follow the same rules
if they are considering borrowing the funds from a bank.
The repayment of the loan will impact the owners as well,
therefore, the owners should be informed and involved as
the statute dictates.
If there is any meeting whereby the Association will be
considering a budget, or reconsidering a budget, the same
14-day notice rule is to be followed. In the past, the
statute was unclear and many associations simply posted
their meeting notice when considering a budget or a special
assessment and they failed to mail the notice of meeting to
the members. This caused many problems whereby the owners
were surprised when they were told, after the fact, that
there was a new budget or a special assessment. We also
suggest that all agendas of any Board of Directors meetings
be as specific and detailed as possible, and whenever
possible, through newsletters and flyers, inform the
membership leading up to the meeting what the Board is
thinking. Any type of research that is being conducted by
the Board of Directors, bids or quotes should be available
to the members and why a special assessment or new budget
is being considered and how the process may affect the
members. Disseminating information to the members is a key
component for the Board of any association in helping to
raise new or additional revenues.
Chapter 718 and 719 Associations generally follow the same
notice requirements and unit owner participation, unless
their documents require more stringent notice requirements.
Review your documents and consult with your Associations’
attorney prior to noticing your meeting.
Today, all associations are under increasing pressure to
fund shortages that may be a result of poor budgeting or
for unexpected expenses. Budget shortfalls require raising
revenues through assessments and/ or borrowing. In the
future, inform your members in a timely and proper manner
of revenue raising measures being considered. Follow these
suggestions in order to minimize any misunderstanding with
your members when raising revenues.
Copyright 2007© Associated Property Management of the Palm Beaches, Inc.
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