Commingling of Association Funds
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Last updated: Thursday, February 21, 2008

For some reasons, this word “commingle” cracks me up. Mix or share money with different accounts is the first thing that comes to mind, after chuckling. The State legislation must have had the same concept on their mind, when writing the commingling law.

Commingling of funds is prohibited and it’s pretty obvious why. However, the State of Florida allows for commingling of funds if the sole purpose is for investment reasons only. This means, as long as intended for an investment, an association can commingle both operating and reserves accounts together.

Currently we don’t know of any community banks offering a checking service with a higher annual percentage yield (APY) than standard certificate of deposit (CD) or savings accounts. But if keeping both operating and reserve accounts together somehow earns a higher return, then commingling association accounts would be prudent.

There are only two rules that apply regarding commingling. First, accounting is recorded separately, indicating the actual amount of reserves verses operating. Secondly, the reserve portion can never be lower than the operating amounts.

The second rule is pretty obvious, because if the operating account dropped lower than the reserve amount, then the reserve portion would be use to support the operating account. Therefore, it would be hard to explain how commingled funds were solely used and intended for investment purposes only.

For other posts not directly related, simply click, “Ten (10) Reasons that make Property Managers go Hymn”. To review supporting documents, click here.

718.111 (14)  COMMINGLING.–All funds collected by an association shall be maintained separately in the association’s name. For investment purposes only, reserve funds may be commingled with operating funds of the association. Commingled operating and reserve funds shall be accounted for separately, and a commingled account shall not, at any time, be less than the amount identified as reserve funds. This subsection does not prohibit a multicondominium association from commingling the operating funds of separate condominiums or the reserve funds of separate condominiums. Furthermore, for investment purposes only, a multicondominium association may commingle the operating funds of separate condominiums with the reserve funds of separate condominiums. A manager or business entity required to be licensed or registered under s. 468.432, or an agent, employee, officer, or director of an association, shall not commingle any association funds with his or her funds or with the funds of any other condominium association or the funds of a community association as defined in s. 468.431.

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