Condo Line

Is board mishandling budget reserve?

 

CAMquestion@cfl.rr.com

Q: Can a board underfund a reserve study without a vote of the membership?

B.C., Naples

A: The board has a fiduciary duty as well as a statutory duty to establish an adequate reserve budget. The board is also required to have a reserve study. While it’s advisable that the board use the reserve study and develop an adequate reserve budget, the board may vary their figures in the reserve budget if they are justified.

There are two sides to this question — the board may underestimate or overestimate the reserve study. It is a board’s responsibility and not the members that vote on the final reserve budget. However, at a members’ meeting the members may vote to eliminate or reduce the budget.

The key to the answer to your question: Will the budget provide adequate funds when needed?

Q: Our condominium has hired a building manager who also rents and sells condominium units. The manager has hired unlicensed friends to do air conditioning and electrical work. The manager has access keys to all building locks in the building. The manager enters condominiums units without owner knowledge or permissions.

The manager has only recently acquired a CAM license at our insistence. Still, all problems with management have been dismissed as gossip or ignored by the board. The manager approves unlicensed contractors’ billings, which are all approved by the board president over the phone.

This all seems to benefit some at the peril and expense to other owners. Am I right? How do we correct and prevent this from happening in the future?

Anonymous

A: Your manager does not understand his duties and obligations. In addition you have a board that does not understand its responsibilities. The association, the board and its management are on the brink of a serious disaster.

Apparently the inexperience of your management shows that they have not been properly trained. Any accident or failure of the system or breach of security could result in a lawsuit. As an owner/member of the condominium, you and your fellow members would bear the financial obligation for any claim.

I would send a certified letter to the Board of Directors and explain that they are responsible for the operations of the condominium. Any decisions they allow the manager to make would be their decision and responsibility, not the manager. Explain to the board that the manager is subservient to the board and should not be making final decisions.

Explain to the board that when they allow unlicensed or uninsured workers to perform repairs in the condominium, any accident would be the responsibility of the board and the members.

It appears that the board and the manager need training and education. Such courses are available and are required by the state.

Q: It is near our annual elections and the manager sent a letter that all candidates are required to fill out a certification form as required by FS 718.112(2) wherein they understand the documents and statutes for the association. In reading the statutes it is my understanding that this must be completed within the first 90 days after the election. Must we do this before the election or is it after the election?

J.B., Miami

A: This is a new statute requirement that all board members must complete either before or within 90 days after they are elected. Many attorneys and some real estate or association schools are offering a class for this requirement.

The statutes also provide that new directors can self-study. However this means that they must read and understand the statutes that involve the association as well as the documents that control the association. If you think about it, very few directors fully understand the duties and responsibilities that they’ve accepted by becoming a candidate.

In the end, directors are totally responsible for the operations of the association and it only makes sense that they fully understand what their duties are. This was the major reason that the state now requires all directors to sign a certificate that they understand their duties and responsibilities.

Write to Condo Line, Richard White, 6039 Cypress Gardens Blvd., #201, Winter Haven, FL 33884-4115, or e-mail CAMquestion@cfl.rr.com. Include name and city.

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