Condo line: Substantial surplus funds in operating budget not necessarily a good thing
08/23/2014 12:00 AM
09/12/2014 4:03 PM
Q. I live in a homeowners association that has a yearly operating budget of over $200,000. Currently, we have surplus funds in the operating budget of close to $150,000. This is money that was budgeted for maintenance over the past six or seven years but not spent, and has just been piling up.
The board has even placed part of this surplus into certificates of deposit attached to the operating account.
My thought is this money should not have been allowed to accumulate. It should be spent on what it was originally budgeted for. The money should not be allowed to just sit and collect dust, or to grow into an even-larger amount. The board rejects this, and again insists the surplus is evidence of their wise financial management. Can you tell me who is correct?
A. From the information you provided, it does appear that the board is improperly budgeting and poorly managing the expenses. At the end of the year, the grand total of expenses plus reserves, whether it is surplus or deficit, should be within 5 percent of the budget. I suggest that the board seek professional guidance in developing future budgets.
Q. I live in a condominium that has a property manager. Recently we elected a new seven-member board. The president was chosen internally by a majority of the seven directors. He had never served on any resident committee.
Many of us are struggling with his leadership, because almost immediately he went into a dictatorial mode. micromanaging every decision made by the subcommittees. He also has strong personal animosity towards certain volunteer members. Sadly, the property manager is no help in mediating this matter.
Can a volunteer committee member be ordered to resign by the president acting alone without the board of directors? Does a decision to oust a volunteer committee member require a quorum vote from the directors? This new president thinks he can order anyone he wants off any committee for whatever minor infraction he fabricates.
It seems impossible that the Florida statutes would allow one person to have this much discretionary power, as this would lend itself to misuse and allow for personal vendettas. If this happens, is there recourse? Where can I get help with this matter?
A. Normally the officers, including the president, are elected by the directors. The seven directors that you elected are totally responsible for the operations and management of the association. The officers elected by the directors have duties to the directors. Notice the words responsibility and duties. Therefore, the directors have the highest responsibility to the members, and the officers, including the president, have duties to the directors.
If the president is taking actions with which the other directors do not agree, the directors can replace him at any board meeting. The president has the authority to manage committees at his will as long as the other directors agree. If you’re not happy with the way that the president is acting, send letter to the board of directors and express your feelings.
Q. Could you identify the basic rights of shareholders in a resident-owned cooperative 55-plus mobile home park? We are suffering from a scary board of directors. Between now and election time can we canvass shareholders, distribute information, and have meetings in order to help facilitate not electing most of these board members?
A. Let me paraphrase a brochure created by the Florida Condominiums Division titled Condominium Unit Owner Rights And Responsibilities. While you’re referring to cooperatives, this brochure applies to homeowner associations as well as co-ops. Your rights include notices of meetings, the right to attend meetings, receive notice of any legal action, the limited right to speak at meetings, record meetings, receive notice of budget or special assessments, vote to select directors, and vote for motions and amendments. You have a right to financial information and administrative documents upon written request to the board. You have a right to use association properties and common elements and a duty to respect these properties through proper usage.
As a member you have responsibilities. They include paying your fair share of the common expenses as required. Your use of your private area and common areas must not hinder or infringe on the rights of other owners. You have a responsibility to know the rules, documents, and statues.
You do have the right to talk to other owners, have meetings, or publish information. However, you cannot publish or communicate incorrect information. I recommend using positive statements rather than negative or slanderous remarks.
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