Category: Important Posts

Voluntary Compliance is by far the best result of a violation.

The three (3) strike rule:

The “three strike rule” gives three warnings before a fine or other disciplinary actions taken by the Board of Directors.

Verbal Warning: not recommended. There are many reasons why property managers will not give a verbal warning. One reason, the warning could be mistaken as a personal threat or construed as confrontational.

All warnings should be in writing: If a Board of Director gave a verbal warning, tangible proof would not exist and there would be no record of notice. Although a verbal warning may seem to be a considerate method, a written notice can be just as affective. Below is a sample first notice:

Associations Name
c/o Management Company
Management Companies Address
Phone, Fax & Email
Website Address
December 13, 2007

Name of Person
Address
City, State & Zip

Re: The Address of the person being sought after

Dear Mr. Person:

The Board of Director of “Name of Association”, believe you may not be aware that you are in violation of the “Condominium or Homeowner” documents.

If so, we ask that you please correct the following violation:

(State the Violation.)

(Provide an opportunity for the owner to correct the problem.)

It is the intention of the “Association’s Name” Board of Director’s to ensure that the common grounds retain the aesthetic beauty that will continue to reflect the high quality of living within our community.
If you have any questions in regards to this letter, please contact “Management Company” at the address above.

Sincerely,
Property Manager, CAM, for the Board of Directors of  “Associations Name”.

There should be no “Carbon Copy” for the first letter.

• The board should never discriminate between owners and renters, therefore all notices are sent to the homeowners of record and never to the renters address.
• Enforcement should be equal to all residents and never be selective. The right of the board to enforce the Covenants could be revolted if enforcements are not consistent or conducted in a timely manner.
• A fine may not be levied without allowing for an opportunity of a hearing of a committee of unit owners. If the committee does not agree with the fine, the fine may not be imposed. If the Board does not follow these procedures, then the Association would be subject to disciplinary actions in a Civil Court.
• The collection of fines is through small claims court. A lien could never be placed on a property due to a nonpayment or noncompliance of a fine or violation. (more…)

Do you have a New or self manage association? Is your association being turned over by a developer or would it be interesting to see comparisons?  Gulfshore Property Mgmt. offers free services.

Gulfshore Property Mgmt. will evaluate your association assets, income & expense and develop and/or create a proposed budget for free. Sometimes associations who are self managed may find themselves behind schedule or being rushed to complete a budget in a timely manner. To research all the utilities, cable, and necessary companies for your community takes a considerable amount of time and these companies only offer a guestimate of next years projected costs. Reserves can also be a painstaking task. Whether it’s roofing, paving resurfacing, asphalt seal coating, building paint, elevator replacement/repairs, pool equipment replacement, water pumps, fountains and Chickee hut or seawall replacement. With the array of all Marco Island and Naples proven vendors and by comparing prices and services, Gulfshore Property Mgmt. already has these projections ready for you.

Occasionally a Homeowner or Director is not sure if the budget reserves or the income and expense are regulated correctly. Or simply do not understand what “Owners Equity” is and why it applies to their association. Even landscape companies can be confusing because of hidden costs. There are costs associated with fungicide, pest control, fertilizer, and sprinkler repair. Every year there should be a plant replacement program for basic care and maintenance of the common grounds. These costs may or may not be in the landscaping contract. Here is a list of other considerations, if not already to include in a basic community association proposed budget:

• The costs to maintain all assets.
• The priority and costs of maintenance.
• The costs of required frequency of maintenance.
• The time it takes for required maintenance.
• Establish criteria of the level of maintenance required.
• The cost of preventive maintenance.
• Any other costs associated with emergency procedures and plans.
• Routine Maintenance: Requires maintenance costs. (Examples: landscaping, pool and building up-keep.)
• Preventive Maintenance:
  Cost of maintenance to preserve assets which can prevent breakdown. (Examples: Dryer vent, sewer and other drainage cleaning. Rebuilding of air/con, heater and pool equipment.)
• Emergency Services Maintenance: Requires available funds to respond to emergencies. (Examples: Water leaks such as broken pipes, roof leak and sewer stoppage etc.)
• Corrective Maintenance:
  These are costs of non-emergency, but are necessary maintenance. (Examples: Eradication of rat and other pest nests. Or the removal of ant, bee or wasps nest.)
• Schedule Replacements:
  The costs of wear and tear should already be evaluated and executed in the budget. (Examples: These are costs already in the reserves or line items in the operating budget.)

Pool Maintenance Requirements, Fire Safety, Elevator Service, pest control and security guard all have Florida State requirements and should be evaluated carefully while considering a budget. (More on these subjects in a later post.)

With a simple phone call or email, a professional property manager will answer any questions regarding your community. Even if it’s only for comparison purposes, we are friendly, considerate and are happy to assist. (more…)

Since all community associations are legal entities or corporations, a duty to properly maintain common grounds is appropriated through the use of a financial plan called a budget. A budget is a creation of a financial plan and is funded by collection of quarterly assessments. The results of the creation of the financial plan starts with a proposed budget and ends with a financial reporting of the fiscal year. Not all but most associations fiscal year ends December 31.

A copy of the annual financial report should be provided to each member of the association or a written notice that a copy of the financial report is available upon request at no charge to the member. A majority of associations will use the latter approach and include the notice in the proposed budget agenda.

The community documents will dictate if the Board or the members adopt the proposed budget. In most documents, the Board of Director adopts the annual budget. Condominium and Cooperatives require a fourteen (14) day written notice with attached proposed budget prior of the meeting at which the budget should be approved. Homeowner associations’ should consult in their governing documents. The minutes of the budget meeting validates the adoption of the annual budget.

Prior to the budget meeting, the Board should have a pre-budget or a budget workshop meeting. This is where the budget is initially prepared. The Treasurer, other Board and committee members work and finalize the proposed budget. All Board members should receive a draft of the pre-budget finalized copy. If any changes are to be made, they should be made prior of notice of the annual proposed budget meeting. The time not to change the budget is at the annual budget meeting. If the dollar amount is changed at an annual budget meeting for any reason, the whole process starts over and the result would be a waste of association funds due to administrative and mailing costs. For this reason, it is important that all Board of Director are in a 100% agreement before the annual budget notices are sent to the members. If an error is discovered at or before the budget meeting, then let it be shown is the minutes and a mailing of the corrected budget should be sent to all members. 

Some of the newer associations seem to make budgets a stressful event. Budgets are really an easy practice of forecasts projected through actual and reasonable predictions. A budget merely provides a guide for disbursing funds. Since no one can really predict the future, a line item for contingencies should be added. If unknown expenses occur that exceeds the budget, then associations will have to rely on special assessments or could even take out a loan to cover costs of such damages. See Florida Statute 718.112 part (e) below: (more…)

These procedures are set up for Homeowner Association’s. The Condominium provisions are less strengent. For more information, see Florida Statute section 718.303 below: 

1. Establish three (3) resident homeowners from the same Association were the violation occurred. The Board of Directors of the same community appoints these three members. For this purpose they could be called a Regulatory Hearing, Fining or an Ad hoc Committee. The Committee cannot be officers, directors, or employees of the association, or the spouse, parent, child, brother, or sister of an officer, director, or employee.
2. A fourteen (14) day notice is required giving the person sought to be fined an opportunity to a hearing by the Committee. The notice shall state the date, time and place of the hearing.
3. At the hearing the Committee shall give the person a clear opportunity to dispute the reasons why they should not be fined. After hearing the dispute, the Committee can excused the person or persons involved and determined if or if not a fine shall be imposed.
4. A fine may be levied on the basis of $100 a day but not to exceed $1,000 per violation.
5. If the Committee, by majority vote, does not approve the proposed fine, a fine may not be imposed.
6. At the next duly called Board of Director meeting, the Committee will recommend a fine and dollar amount based on their majority vote. The Board should strongly consider the Committee’s recommendations.
7. By a majority vote, the Board may imposed a fine and a reasonable amount of time for payment. (Fines are enforecable by small claims court and cannot be a lien on property.) (more…)

The Regulatory Council of Community Association Managers for the State of Florida, understand that not everything in the Declaration, Articles and Bylaws describe all the essential clarifications of an Association. Therefore the creations of the Rules & Regulations were made. Along with most Association governing documents, there should be an attachment called the Rules & Regulations. These Rules & Regulations (R&R’s) are usually initiated by the development company and passed on after turnover to the preceding Association.

In the rare case of document conflicts, the governing law shall take precedence. The order of priorities of laws and documents is as follows:

• Federal Law (Constitution, Statute then Administrative Rules)
• State Law (Constitution, Statutes then Administrative Rules)
• City or Counties (Building & Zoning Codes, Ordinances and other applicable laws)

Community Association Documents:

• The Declaration of Covenants Conditions & Restrictions (for Homeowners) or Declaration of Condominium
• The Articles of Incorporation
• The Bylaws
• The Rules and Regulations (R&R’s)

The Association may also add reasonable rules and regulation for the operation and use of the common elements, common areas and recreational facilities serving the Association.

The rules adopted by the Board should only clarify, not modify the formal documents.

Example: if the documents allow for common use for the purpose of furnishing personnel property, the rules may establish reasonable times and days permitted, but cannot prohibit common use for these purposes.

To be valid or enforceable in a court of law, the Rules & Regulations should be reasonable within the scope and powers of the Board’s authority.

In most governing documents, the Board of Directors are responsible for the interpretation of the applicable documents. The interpretations are binding upon all parties unless wholly unreasonable. In most cases, if a legal counsel renders the interpretation to be reasonable, then the Board’s interpretation shall be valid.
These areas of clarification and interpretation can be critical and tricky. If any discrepancies arise to the Rule & Regulation change, the Association should consult with a Community Association Attorney. (more…)

The Board of Directors should focus on the Wants & Needs of their Association and not the every day business and administration operation.

If the Association has eighteen (18) or more units, then the Association should hire a professional property manager. This will eliminate unnecessary costs and headaches, which is associated with these types of tasks. By assigning the major day-to-day Association business, the Board of Directors would have time for what really matters to them. Directors would also have more time to prioritize projects and plan for the future.
 
Top 5 reasons why it’s time to find a new management company:

• Due to the possibility of a conflict of interest, Directors may replace a management company appointed by the developers.
• An existing management company resigns.
• After a clear chance of redemption, the management company just can’t pull it together.
• Gross negligence.
• Lastly, an Association either serves more than fifty (50) units or carries an annual budget excess of $100,000.

After seeking a new management company through the yellow pages, newspaper, Internet via websites or reputation. Set up a date, time and place to meet for an interview. Have the same set of questions for all interviewing companies. Before the interview, have the management company supply a proposal/contract, job description and company references. Also, ask to meet with the associated manager and the manager’s assistant at or before the interview. Reviewing these documents before the interview will better help the preparation of relevant questions. Here is a list of possible questions:

• What is the primary service of the management company?
• How long has the company been in business?
• Does the company have any long time acquaintances?
• Does the company manage any associations comparable to yours?
• Is the company participating in any continual education programs?
• What are the procedures for handling complaints, violations and work orders forms? 
• Is there any undefined job descriptions?
• What are the companies after hour emergency procedures and/or policy?

After the interviews, your Association should have three (3) quality proposals. Have the Association Attorney review the management bids. Arrange for the management company to adjust any contact revisions made by the Association Attorney. Before electing a new management company, make sure everybody understands the amounts allotted for office expenses and any other outside costs. If the management company has their own landscape, pool or other services, then each one of these services must be itemized. This is the only way the Association will understand all actual costs.

Usually management contracts allow for a thirty (30) day clause for “just cause” and a sixty (60) day cancellation for any reason. Which ever management company the Association decided to go with, you can ensure the Board had made a fair, prudent and responsible decision and a new approach for the Board to meet its goals. For supporting documents, see Florida Statute below regarding definitions: (more…)

For the State of Florida there are two (2) mandatory meetings required for both Condominium and Homeowner Associations. The Annual Meeting and the Annual Budget Meeting. Once a year the Members shall hold an Annual Member’ Meeting. And once a year the Board of Directors holds a Special Budget, Annual Budget or Budget Meeting.
Prior to the Budget Meeting, the Board of Directors must provide for a proposed budget to all members. The mailing procedures are outlined in the applicable Bylaws. For Homeowner Association, if the reserves were established after developer turnover, then the reserve funding must continue as schedule.

All Condominium Associations must fully fund  roof replacement, building paint, pavement resurfacing with an useful life of three (3) to thirty (30) years and anything which cost more than $10,000 like swimming pools, elevators and fencing etc…

Most Homeowner Associations require reserve funding for replacement cost. The reserves may be adjusted from year to year as our economy grows. Some Associations pay for a “reserve studies” performed by specialists. A paid professional doesn’t alleviate Board’s liability. It’s a wonder why a professional with experience, references and good credentials performing the study offers no guarantee. Ultimately the Board of Director’s are responsible for adequate reserves. Without a licensed engineer, the reserve study wouldn’t be very accurate anyway. Since property managers are out in the field everyday, they are well aware of the dollar amounts of these replacement costs. It’s a rare day when a property manager is not in the middle of a roof, building paint or asphalt resurface project.

Now that the reserves are adjusted and the anticipated income and expense is added, it’s time to send out the proposed budget. With the escalating insurance premiums, the homeowners may not like the increase in quarterly dues. We already know the how to protest the excessive budget’s for Condominium Associations (Condominium has Regulations, Where Homeowner Associations do not. Regarding Notice of Meeting to Consider Excessive Budget).

For Homeowners Associations, here are your only recourse:

• 20% of the of the voting members would have to petition to hold another meeting requesting to be able to debate the proposed budget. 
• If the 20% had been achieved, then the Board would have sixty (60) days to hold a Special Board Meeting.
• A fourteen (14) day notice is required.
• The appropriate line item to the agenda would be added.
• Each member would have a minium of three (3) minutes to protest the matter.
• The Board could require all members to fill out a request form and/or sign in sheet before being elgible to speak.

Other than addressing the petitioned item at the meeting, the Board has no obligation to take any action. See Florida Statute (d) below: (more…)