Q: I own a condominium. The board recently sent out a letter giving two weeks’ notice on the 2014 budget, which called for increases averaging 25 to 30 percent over the past year.
There are additional security measures being taken, which could account for some of the increase. If it improves the property, I have no objection. I did voice my concern with adding an office manager, secretary and health insurance to the budget. We have not had these expenses for 10 years.
Is there a part of the FS 718 statute that limits the increase a board can assess? I found out after the meeting that they voted unanimously to approve it. Can they hire a board member as an office manager? I believe this to be a conflict of interest. The board seemed to ignore my concerns. What are the owners’ options?
A: FS 718.112 says that if the expense budget is increased 115 percent, the members have a right to petition the board to allow them to present an alternate budget. Remember that it addresses only the expense part of the budget and not the reserve section.
If the members do not petition and approve a new budget, the budget approved by the board goes into effect. There is a certain procedure necessary for this petition and you must review FS 718 budget section.
You also need to know that the statues do not limit the increase that a board of directors can approve. In fact the statutes clearly state that the board must maintain the community and the common areas. The statutes allow them to assess funds necessary to accomplish this mission. Thus, the statues have no upper limit to what the board can assess.
As to the question of whether a director can act as a manager, if they’re going to pay this director he must be licensed. It’s not a good situation but if the manager is a properly licensed CAM, then he can be paid. Not the best situation.
Q: We were just given a copy of your Q&A where the question was about members that did not pay their HOA fees for seven years. Your response was “although condominiums have a limitation of one year, an HOA does not have this limitation to collect delinquent accounts.”
Our advice as to the HOA statutes was that when a home is in foreclosure the bank needs to reimburse the HOA for only ONE year of dues once they take title of the property.
What are our rights to still go after the owner for all delinquent amounts over the 12 months in the statute? Our position is that it would cost more in legal fees to collect severely delinquent properties than to wait for the bank sale. Our dues are only $35 per month.
A: Your position is incorrect. Your collection policy of taking no action conflicts with the duties found in the statutes and more than likely your documents. The board of directors has a fiduciary duty to all the members to take fast action on delinquent accounts.
Your belief that it costs more in legal fees than to collect the fees is incorrect. Legal fees will be added to the amount due by the owner.
There is a chance that the property may go into bank foreclosure and in this situation you may not be able to collect all the past-due fees and legal costs. However, your duty and responsibility to the members in accordance with the statutes and your documents requires that you make every attempt to collect the delinquent fees.
I have recommended that any owner who is 60 days delinquent have a lien filed on his property. This means that you should have a strict collection/delinquency policy that’s approved by the association attorney. That attorney would file the lien and follow in about 45 days with foreclosure action.
Failure to follow a fast collection action will result in the association losing a high percentages of fees due and a breach of your fiduciary duties to the members.