Can a condo association set up a disaster reserve fund?
STUART, Fla. – Nov. 12, 2018 – Question: How can a condominium association set up a fund to handle hurricanes or floods, etc.? Currently according to our lawyer, we, as an association, cannot set up a reserve fund for such an item. – J.B., Stuart
Answer: Your lawyer is correct in that a statutory "reserve" cannot be established for future hurricane expenses. A statutory reserve is one that must be funded each year when the board adopts the budget unless the membership votes to waive funding or reduce funding on an annual basis.
Further, the reserved funds may only be used for the intended purpose unless the membership approves an alternate use. By definition, a statutory reserve must be established with a reserve schedule defining the capital item, defining its expected life remaining until replacement and estimating the cost of replacement at the end of the item's useful life.
A classic example is the roof on the condominium building. You can define the item – the roof; you can estimate the remaining life until replacement – say 25 years; and you can estimate the cost to replace the roof in 25 years – say $100,000. Therefore, you establish a reserve that requires $4,000 dollars to be placed in the roof reserve each of the next 25 years so at the end you have the $100,000. By law, the $4,000 must be placed in the roof reserve each year unless the owners vote otherwise, and the money may only be used for the roof unless the owners vote otherwise.
Hurricane expenses cannot be funded by a statutory controlled reserve because you cannot create a reserve schedule. There is no capital item that you can define with certainty, you cannot estimate when the funds will be needed, and you cannot estimate the amount of the funds that will be needed. Thus, you cannot establish a statutory reserve for this contingency.
You can, however, set aside money in a contingency fund each year earmarked for hurricane expenses. However, this money, not being a statutory reserve, would not have to be funded each year by the board and the funds could be used for a different purpose if a future board decided to do so. The only way to put restrictions on the funds would be to have the members adopt an amendment to the governing documents establishing the contingency fund, requiring it be funded each year and limiting its use to hurricane expenses. This would control a future board's actions unless the membership voted to amend the documents again to eliminate the restrictions.
Question: Florida Statutes 720 refers to physically handicapped persons' right to attend meetings. Does this term eliminate members that are hearing disabled, sight disabled or even mentally disabled? Example: I'm losing my hearing. Is the association required to provide a speaker system or even a person to transmit in sign language? – A.B., Port St. Lucie
Answer: No. Section 720.303(2)(a), Florida Statutes, which applies to Homeowner Association Board meetings provides that "[a] meeting of the board must be held at a location that is accessible to a physically handicapped person if requested by a physically handicapped person who has a right to attend the meeting." So, the law requires the meeting be "accessible" to the handicapped person. Thus, if you are able to physically attend the meeting, despite your unfortunate hearing loss, the statute does not require the association to provide a sign language interpreter or a particular type of speaker system.
However, under the Fair Housing Act you are entitled to a reasonable accommodation or modification under certain circumstances. The application of the Fair Housing Act to your particular situation is beyond the scope of this column but you may wish to consult an attorney as to how it might be used assist you in being able to hear the meeting discussion.
The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, PLLC or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.
Editor's note: Attorneys at Goede, Adamczyk, DeBoest & Cross, PLLC., respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, litigation, estate planning and business law.
Copyright © 2018 Journal Media Group, Richard D. DeBoest. Richard D. DeBoest II, Esq., is co-founder and shareholder of the Law firm Goede, Adamczyk, DeBoest & Cross, PLLC.
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