Hello Screenman-ga,
In searching the Florida Administrative Code, which pertains to your question
http://election.dos.state.fl.us/fac/index.shtml
I have found a few references which pertain to your situation that you
have asked about. These are from the 3 sections you mentioned.
------------------------------------------------------------------------
In Section 718 it states:
(f) Annual budget.--
1. The proposed annual budget of common expenses shall be detailed
and shall show the amounts budgeted by accounts and expense
classifications, including, if applicable, but not limited to, those
expenses listed in s. 718.504(21). A multicondominium association
shall adopt a separate budget of common expenses for each condominium
the association operates and shall adopt a separate budget of common
expenses for the association. In addition, if the association
maintains limited common elements with the cost to be shared only by
those entitled to use the limited common elements as provided for in
s. 718.113(1), the budget or a schedule attached thereto shall show
amounts budgeted therefor. If, after turnover of control of the
association to the unit owners, any of the expenses listed in s.
718.504(21) are not applicable, they need not be listed.
2. In addition to annual operating expenses, the budget shall include
reserve accounts for capital expenditures and deferred maintenance.
These accounts shall include, but are not limited to, roof
replacement, building painting, and pavement resurfacing, regardless
of the amount of deferred maintenance expense or replacement cost, and
for any other item for which the deferred maintenance expense or
replacement cost exceeds $10,000. The amount to be reserved shall be
computed by means of a formula which is based upon estimated remaining
useful life and estimated replacement cost or deferred maintenance
expense of each reserve item. The association may adjust replacement
reserve assessments annually to take into account any changes in
estimates or extension of the useful life of a reserve item caused by
deferred maintenance. This subsection does not apply to an adopted
budget in which the members of an association have determined, by a
majority vote at a duly called meeting of the association, to provide
no reserves or less reserves than required by this subsection.
However, prior to turnover of control of an association by a developer
to unit owners other than a developer pursuant to s. 718.301, the
developer may vote to waive the reserves or reduce the funding of
reserves for the first 2 fiscal years of the association's operation,
beginning with the fiscal year in which the initial declaration is
recorded, after which time reserves may be waived or reduced only upon
the vote of a majority of all nondeveloper voting interests voting in
person or by limited proxy at a duly called meeting of the
association. If a meeting of the unit owners has been called to
determine whether to waive or reduce the funding of reserves, and no
such result is achieved or a quorum is not attained, the reserves as
included in the budget shall go into effect. After the turnover, the
developer may vote its voting interest to waive or reduce the funding
of reserves.
3. Reserve funds and any interest accruing thereon shall remain in
the reserve account or accounts, and shall be used only for authorized
reserve expenditures unless their use for other purposes is approved
in advance by a majority vote at a duly called meeting of the
association. Prior to turnover of control of an association by a
developer to unit owners other than the developer pursuant to s.
718.301, the developer-controlled association shall not vote to use
reserves for purposes other than that for which they were intended
without the approval of a majority of all nondeveloper voting
interests, voting in person or by limited proxy at a duly called
meeting of the association.
4. In a multicondominium association, the only voting interests which
are eligible to vote on questions that involve waiving or reducing the
funding of reserves, or using existing reserve funds for purposes
other than purposes for which the reserves were intended, are the
voting interests of the units subject to assessment to fund the
reserves in question.
(g) Assessments.--The manner of collecting from the unit owners their
shares of the common expenses shall be stated in the bylaws.
Assessments shall be made against units not less frequently than
quarterly in an amount which is not less than that required to provide
funds in advance for payment of all of the anticipated current
operating expenses and for all of the unpaid operating expenses
previously incurred. Nothing in this paragraph shall preclude the
right of an association to accelerate assessments of an owner
delinquent in payment of common expenses. Accelerated assessments
shall be due and payable on the date the claim of lien is filed. Such
accelerated assessments shall include the amounts due for the
remainder of the budget year in which the claim of lien was filed.
---------------------------------------------
Section 4 is the important part of this statement. Basically what it
says in layman?s terms is that in a association, the only voters which
are able to vote on anything that involves changing of funds or using
funds for purposes other than the purpose for which the were intended,
are the voters of the units who fund the reserves in question. This
section talks about reserve accounts, which are accounts reserved to
hold money intended for certain purposes. They usually accrue funds in
them so that if a situation arises, this reserve fund is there to pay
for that specific situation.
For example: You have a reserve fund set up for paving, one for
roofing, and one for hail damage. Every month, a certain percentage of
the money you receive goes into each of these accounts. Therefore, if
you ever need to repair roofing, you have an account set up that was
voted upon to be used only for roofing. This is why you need to have a
vote again, to approve that money going elsewhere since it was voted
and agreed upon only for a certain purpose. Therefore, the pooling of
funds from these separate accounts, as you mentioned, would fall into
this category. This is in section 718.112 Bylaws.
http://www.flsenate.gov/Statutes/index.cfm?App_mode=Display_Statute&URL=Ch0718/ch0718.htm
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In Chapter 719 it states:
Annual budget.--
1. The proposed annual budget of common expenses shall be detailed
and shall show the amounts budgeted by accounts and expense
classifications, including, if applicable, but not limited to, those
expenses listed in s. 719.504(20).
2. In addition to annual operating expenses, the budget shall include
reserve accounts for capital expenditures and deferred maintenance.
These accounts shall include, but not be limited to, roof replacement,
building painting, and pavement resurfacing, regardless of the amount
of deferred maintenance expense or replacement cost, and for any other
items for which the deferred maintenance expense or replacement cost
exceeds $10,000. The amount to be reserved shall be computed by means
of a formula which is based upon estimated remaining useful life and
estimated replacement cost or deferred maintenance expense of each
reserve item. The association may adjust replacement reserve
assessments annually to take into account any changes in estimates or
extension of the useful life of a reserve item caused by deferred
maintenance. This paragraph shall not apply to any budget in which the
members of an association have, at a duly called meeting of the
association, determined for a fiscal year to provide no reserves or
reserves less adequate than required by this subsection. However,
prior to turnover of control of an association by a developer to unit
owners other than a developer pursuant to s. 719.301, the developer
may vote to waive the reserves or reduce the funding of reserves for
the first 2 years of the operation of the association after which time
reserves may only be waived or reduced upon the vote of a majority of
all nondeveloper voting interests voting in person or by limited proxy
at a duly called meeting of the association. If a meeting of the unit
owners has been called to determine to provide no reserves, or
reserves less adequate than required, and such result is not attained
or a quorum is not attained, the reserves as included in the budget
shall go into effect.
3. Reserve funds and any interest accruing thereon shall remain in
the reserve account or accounts, and shall be used only for authorized
reserve expenditures unless their use for other purposes is approved
in advance by a vote of the majority of the voting interests, voting
in person or by limited proxy at a duly called meeting of the
association. Prior to turnover of control of an association by a
developer to unit owners other than the developer under s. 719.301,
the developer may not vote to use reserves for purposes other than
that for which they were intended without the approval of a majority
of all nondeveloper voting interests, voting in person or by limited
proxy at a duly called meeting of the association.
-------------------------------------------
Once again, the important part of this section which pertains to your question
in layman?s terms is:
The funds can only be used for a different purpose or moved with a
vote to use reserves for purposes other than that for which they were
intended. You can not do this without a majority of all nondeveloper
voting interests, voting in person or by limited proxy at a duly
called meeting of the association. This information is locate in
719.106 Bylaws; cooperative ownership
http://www.flsenate.gov/Statutes/index.cfm?App_mode=Display_Statute&URL=Ch0719/ch0719.htm
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CHAPTER 61B-22 FINANCIAL AND ACCOUNTING REQUIREMENTS; BUDGETS,
RESERVES, AND GUARANTEES?
?.Is our next step. This talks about accounts that are going to be or
have been pooled.
(8) Annual vote required to waive reserves. Any vote to waive or
reduce reserves for capital expenditures and deferred maintenance
required by Section 718.112(2)(f)2., Florida Statutes, shall be
effective for only one annual budget. Additionally, in a
multicondominium association, no waiver or reduction is effective as
to a particular condominium unless conducted at a meeting at which the
same percentage of voting interests in that condominium that would
otherside be required for a quorum of the association
is present, in person or by proxy, and a majority of those present in
person or by limited proxy vote to waive or reduce reserves. For
multicondominium associations in which the developer is precluded from
casting its votes to waive or reduce the funding of reserves, no
waiver or reduction is effective as to a particular condominium unless
conducted at a meeting at which the same
percentage of non-developer voting interests in that condominium that
would otherwise be required for a quorum of the association is
present, in person or by proxy, and a majority of those present in
person or by limited proxy vote to waive or reduce reserves.
http://fac.dos.state.fl.us/faconline/chapter61.pdf
Pg: 180 of the document
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So, basically what it boils down to, is anyone who has an interest in
these accounts, more than likely needs to vote. Once again, I
recommend that you speak with a lawyer about your specific
information, because I do not have your specific contract information
for these accounts and the people whom may pay in, nor do I know if
there is any city law that may pertain as well.
I refer you to the disclaimer on the
bottom of this page: "Answers and comments provided on Google Answers
are general information, and are not intended to substitute for
informed professional medical, psychiatric, psychological, tax, **legal**,
investment, accounting, or other professional advice."
For any specific information regarding your legal situation, please see a
lawyer who knows you and your problems. Only he or she could give
you a definite answer. There are many legal services you can use that
will do a free initial meeting to cover the bases pertaining to your
EXACT situation
If this answer requires further explanation, please request
clarification before rating it, and I'll be happy to look into this
further.
Nenna-GA
Google Answers Researcher |
Clarification of Answer by
nenna-ga
on
15 Jun 2004 14:58 PDT
Screenman,
I, like you, could not find this information in the Florida
Administrative Code. However, I did find a copy of the article that
you mentioned and what it sais. You can view it here at:
http://www.becker-poliakoff.com/publications/article_archive/jadams2003_pdf/112703_change_to.pdf
-----------------------------------------------------------
It states that:
"Found at Rule 61B-22.003(f) of the Florida Administrative
Code (available on-line at http://fac.dos.state.fl.us), the intent of
the regulation is to permit so-called ?pooling? or ?cash flow? funding
of reserves."
-----------------------------------------------------------
From 61B-22.003
61B-22.003 Budgets.
(1) Required elements for estimated operating budgets. The budget for
each association shall:
(a) State the estimated common expenses or expenditures on at least an
annual basis;
(b) Disclose the beginning and ending dates of the period covered by the budget;
(c) Show the total assessment for each unit type according to
proportion of ownership on a monthly basis, or for any other
period for which assessments will be due;
- 178
(d) Include all estimated common expenses or expenditures of the
association including the categories set forth in Section
718.504(20)(c), Florida Statutes. Reserves for capital expenditures
and deferred maintenance required by Section 718.112(2)(f),
Florida Statutes, must be included in the proposed annual budget and
shall not be waived or reduced prior to the mailing to unit
owners of a proposed annual budget. If the estimated common expense
for any category set forth in the statute is not applicable, the
category shall be listed followed by an indication that the expense is
not applicable;
(e) Unless the association maintains a pooled account for reserves
required by Section 718.112(2)(f)2., Florida Statutes, the
association shall include a schedule stating each reserve account for
capital expenditures and deferred maintenance as a separate
line item with the following minimum disclosures:
1. The total estimated useful life of the asset;
2. The estimated remaining useful life of the asset;
3. The estimated replacement cost or deferred maintenance expense of the asset;
4. The estimated fund balance as of the beginning of the period for
which the budget will be in effect; and
5. The developer?s total funding obligation, when all units are sold,
for each converter reserve account established pursuant to
Section 718.618, Florida Statutes, if applicable.
(f) If the association maintains a pooled account for reserves
required by Section 718.112(2)(f)2., Florida Statutes, the
association shall include a separate schedule of any pooled reserves
with the following minimum disclosures:
1. The total estimated useful life of each asset within the pooled analysis;
2. The estimated remaining useful life of each asset within the pooled analysis;
3. The estimated replacement cost or deferred maintenance expense of
each asset within the pooled analysis; and
4. The estimated fund balance of the pooled reserve account as of the
beginning of the period for which the budget will be in
effect.
(g) Include a separate schedule of any other reserve funds to be
restricted by the association as a separate line item with the
following minimum disclosures:
1. The intended use of the restricted funds; and
2. The estimated fund balance of the item as of the beginning of the
period for which the budget will be in effect.
(2) Unrestricted expense categories. Expense categories that are not
restricted as to use shall be stated in the operating portion
of the budget rather than the reserve portion of the budget.
(3) Record keeping requirements for budgets. The minutes of the
association shall reflect the adoption of the budget and a copy
of the proposed and adopted budgets shall be maintained as part of the
financial records of the association.
(4) Multicondominium associations. Multicondominium associations shall
comply with the following requirements:
(a) Provide a separate budget for each condominium operated by the
association as well as for the association. Each such
budget shall disclose:
1. Estimated expenses specific to a condominium such as the
maintenance, deferred maintenance or replacement of the
common elements of the condominium which shall be provided for in the
budget of the specific condominium;
2. Estimated expenses of the association that are not specific to a
condominium such as the maintenance, deferred maintenance
or replacement of the property serving more than one condominium which
shall be provided for in the association budget; and
3. Multicondominium associations created after June 30, 2000, or that
have created separate ownership interests of the
common surplus of the association for each unit as provided in
Sections 718.104(4)(h) and 718.110(12), Florida Statutes, shall
include each unit?s share of the estimated expenses of the
association, referred to in subsection (2) of this rule, which shall
be
shown on the individual condominium budgets. Multicondominium
associations created prior to July 1, 2000, that have not created
separate ownership interests of the common surplus of the association
for each unit as provided in Sections 718.104(4)(h) and
718.110(12), Florida Statutes, shall include each condominium?s share
of the estimated expenses of the association, referred to in
subsection (2) of this rule, which shall be shown on the individual
condominium budgets.
4. The budgets of multicondominium associations created after June 30,
2000 or of multicondominium associations that have
created separate ownership interests of the common surplus of the
association for each unit as provided in Sections 718.104(4)(h)
and 718.110(12), Florida Statutes, shall show the estimated revenues
of each condominium and of the association.
(b) Associations that operate separate condominiums in a consolidated
fashion pursuant to Section 718.111(6), Florida
Statutes, may utilize a single consolidated budget.
(5) Limited common elements. If an association maintains limited
common elements at the expense of only those unit owners
entitled to use the limited common elements pursuant to Section
718.113(1), Florida Statutes, the budget shall include a separate
schedule, or schedules, conforming to the requirements for budgets as
stated in this rule, of all estimated expenses specific to each
of the limited common elements, including any applicable reserves for
deferred maintenance and capital expenditures. The
schedule or schedules may group the maintenance expense of any limited
common elements for which the declaration provides that
the maintenance expense is to be shared by a group of unit owners.
(6) Phase condominium budgets. By operation of law, the annual budget
of a phase condominium created pursuant to Section
718.403, Florida Statutes, shall automatically be adjusted to
incorporate the change in proportionate ownership of the common
elements by the purchasers and to incorporate any other changes
related to the addition of phases in accordance with the declaration
of condominium. The adjusted annual budget shall be effective on the
date that the amendment to the declaration adding a phase to
a phase condominium is recorded in the official records of the county
in which the condominium is located. Notwithstanding the
requirements of subsection (7) of this rule, the association shall not
be required to follow the provisions of Section 718.112(2)(c),
Florida Statutes, unless, as a result of the budget adjustment, the
assessment per unit has changed.
(7) Budget assessment amendments. The association may amend a
previously approved annual budget. In order to do so the
board of administration shall follow the provisions of Section
718.112(2)(e), Florida Statutes. For example, the board shall mail a
meeting notice and copies of the proposed amended annual budget to the
unit owners not less than 14 days prior to the meeting at
which the budget amendment will be considered.
Specific Authority 718.501(1)(f) FS. Law Implemented 718.111(6),
718.112(2)(e), (f), 718.113, 718.501, 718.618 FS. History?New 7-11-93,
Formerly 7D-22.003, Amended 12-20-95, 12-18-01, 12-23-02.
http://fac.dos.state.fl.us/faconline/chapter61.pdf
Pg 177 of the PDF
Well, now you have that article and the section of the code it pertains to....
I'm glad we could get this clarified so you could find your information.
Nenna-GA
GAR
|
Clarification of Answer by
nenna-ga
on
16 Jun 2004 05:41 PDT
Hello again,
Here is the full text of the article you mentioned by Mr. Adams. Now,
reading this, I do not see where Mr. Adams states anything about a 2/3
vote. He mentions a majority vote, in paragraphs 3, 7, 8, and 9 that
you may want to reference.
--------------------------------------------------
Nearly a year after its enactment, the change to
the condominium law regarding reserve funding
remains largely misunderstood, misinterpreted, and
misapplied.
Found at Rule 61B-22.003(f) of the Florida Administrative
Code (available on-line at http://
fac.dos.state.fl.us), the intent of the regulation is to
permit so-called ?pooling? or ?cash flow? funding
of reserves.
Under previous law, the only option for a condominium
association was ?straight line funding? of
reserves for roof replacement, building repainting,
pavement resurfacing, and any other item of
capital expense or deferred maintenance exceeding
$10,000.00 (typical examples would include swimming
pools, tennis courts, irrigation systems, clubhouse
buildings, plumbing, windows, and structural
preservation/concrete restoration).
Of course, unit owners are always given the prerogative
of voting to reduce or even completely waive
the funding of reserves. However, when straight line
funding of reserves is used, reserve monies may only
be used for the specified purposes, unless a vote is
taken and the unit owners give the Board permission
to tap into the fund. For example, even though the
building roof may not need to be replaced for another
fifteen years, the Board could not use the roof
reserve fund for the building?s re-painting.
The pooling method of reserve funding attempts to
predict when a particular item will require replacement
or deferred maintenance, and reserves are
scheduled and funded so as to ensure that the necessary
amount of funds are on hand when the work
needs to be done. Theoretically, monthly or quarterly
reserve contributions can be lowered, while still
avoiding special assessments.
Of course, what works in theory does not always work
when placed in the hands of humans. In addition to
needing a crystal ball to exactly predict when reserve
expenditures will need to be made, reserve contributions
may be substantially higher in certain years, such
as when a fund for one item is depleted, and there is a
short useful life of the net asset on the list.
I neither encourage nor discourage my condo association
clients from switching from straight line
funding of reserves to the cash flow method. There
are pros and cons, and it ultimately boils down to a
matter of choice. Clearly, straight line funding is the
more conservative funding mechanism.
The switch from straight line funding to cash flow
funding requires a vote of the unit owners, and cannot
be enacted by the board. However, once the association
switches to cash-flow funding, no further
votes of the owners are required.
When the membership vote is taken to change from
straight line to pooled funding, the meeting notice
must include proposed reserve schedules containing
the legally required line-items (they are rather complicated
and set forth in the state?s regulations) on
both the straight line and cash flow basis. In subsequent
years, only cash-flow reserve schedules need
to be presented.
Remember, whether straight line or cash flow reserve
funding is used, any funding at less than the
fully-required amount requires unit owner approval
(majority vote) as does the use of reserves for nonscheduled
purposes.
----------------------------------------------------------------------
No where in this article do I see a reference of a 2/3 vote, just a
majority vote, which is the same as stated in Ch?s 718, 719, or 61B
Therefore, as long as there was a 51% vote, which is majority, they
were within legal guidelines from what I can read. Please make sure
you read the last paragraph on this article closely.
I hope that this clears it up now that the text of the article can be
reviewed by you again.
Nenna-GA
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