|
SUPPOSE
YOU TOUCH THE RESERVE FUNDS YOU’RE NOT SUPPOSED TO TOUCH?
By
Eric Glazer, Esq.
Published August 18, 2014
We’re
approaching the time of year when Boards are starting to prepare
the budget for the following fiscal
year. As we all
know, in a condominium, the budget must show fully funded
reserves, and the owners then have the option of waiving or
reducing the funding of reserves.
In an HOA, the budget can include reserves but same is
not mandatory unless the owners previously voted to fund a
reserve account or the developer required same.
As we should also know
by now, reserve funds can only be used for the purposes for
which they were intended, unless a vote of the unit owners
authorize expenditures for a different purpose.
Occasionally however, a Board may use the reserve funds
for certain repairs, thinking that these funds are available for
this particular use, when in reality, they are violating the
statute. For
example, the Board is presented with the need to replace the
carpeting on all of the common elements.
The Board believes that the funds in the reserve account
can be used for such a repair.
If however, funds for new carpeting were never being
reserved in the first place, it would be illegal for the Board
to use the reserve account funds.
Only if a carpeting reserve was previously being funded
could the Board dip into the reserve account for funds to
purchase new carpeting.
Suppose the Board made
this error in good faith? What
should be the remedy? Sometimes,
irate unit owners want the Board members to individually replace
those reserve funds from their own monies.
That won’t happen.
Individual liability against a director is rare and is
almost exclusively found when that Board member stole
association funds and/or acted solely in their own personal
interest. The same
irate owner(s) will usually file a complaint with the DBPR and
an investigator will issue a letter to the association that
either requires the association to put back the monies in the
reserve account or obtain a vote of the unit owners to use those
reserve funds that have already been taken.
If the association does not have enough funds in its
operating account to replenish the reserve account, the
association will be required to pass a special assessment; just
like they needed to do in the first place.
|
|
About
HOA & Condo Blog
 |
Eric Glazer graduated from the University of
Miami School of Law in 1992 after receiving a B.A. from
NYU. He is currently entering his 20th year as a
Florida
lawyer practicing |
community association law and is the owner of
Glazer and Associates, P.A. an eight attorney law firm in
Orlando
and Hollywood. For the past two years Eric has been the host of Condo Craze and
HOAs, a weekly one hour radio show on 850 WFTL. See: www.condocrazeandhoas.com.
He is the first attorney in the State of Florida
that designed a course that certifies condominium residents as
eligible to serve on a condominium Board of Directors and has
now certified more than 7,500 Floridians. He is certified as a
Circuit Court Mediator by The Florida Supreme Court and has
mediated dozens of disputes between associations and unit
owners. Finally, he recently argued the Cohn v. Grand
Condominium case before The Florida Supreme Court, which is
perhaps the single most important association law case decided
by the court in a decade.
|
