Board must abide by special requirements when passing assessments

Dec 30, 2017

Question: My condominium board wants to discuss whether to pass a hurricane assessment, and a meeting was held to determine whether this special assessment was needed. Should the board inform unit owners about this discussion before or after the meeting? The board has taken the position that, if the assessment is approved, then they will notify unit owners as to the exact items to be included in the special assessment, and another board meeting will be held to formally approve the assessment. Can you clarify the proper procedure? — T.L.

Answer: I get more questions about special assessments than perhaps any other issue, and this is not really surprising given the financial impact an unplanned assessment can have on unit owners. Assessments for repairs and maintenance almost always tie back to the reserves. As you may recall from prior columns, the Condominium Act requires every condominium to collect reserve funds for repairs and deferred maintenance of the common elements. But, unit owners may vote to waive collecting all or a portion of these reserves — and in many communities, the owners vote to waive 100 percent of reserves each year as a matter of course. However, it is inevitable that a vote to waive reserves is a vote to be specially assessed in the future. There is simply no other method for collecting maintenance funds. Either you collect those funds in small amounts each year for 10 or 20 years, or you collect the entire amount due all at once when the repair becomes urgent. Personally, I feel it’s far easier to plan my own finances based on a known annual amount, rather than an unknown and possibly massive one-time assessment, but others disagree. Either way, the choice is one or the other. There is no practical way to avoid paying to maintain a condominium property, entirely (other than by selling your unit before an assessment is considered).

Special assessments are typically passed by a vote of the board of directors (some governing documents may require that some or all assessments be approved by the membership, but in a condominium, such provisions are unusual, except perhaps relating to capital improvements). The Condominium Act, at Section 718.112, Fla. Stat., provides that written notice of a meeting at which a nonemergency special assessment will be considered must be mailed or delivered to the unit owners and posted conspicuously on the property at least 14 days before the meeting. Further, the notice must expressly state that assessments will be considered and provide the nature, estimated cost and a description of the purposes of the assessments.

It seems from your description that the board scheduled a first meeting to discuss the possibility of an assessment, and then planned to hold a second meeting where the assessment would be formally approved. The question under the statute would be whether that first preliminary meeting constituted a meeting at which the assessment was “considered.” In my opinion, so long as the board has not formally approved the assessment (nor charged owners for the assessment), and so long as they follow the express statutory procedures for the second meeting, their procedure would be acceptable. Owners will receive 14 days’ notice of the proposed assessment and its purpose and estimated cost, and they will have the opportunity to attend the board meeting where the board will formally vote on whether to approve the assessment. This would seem to satisfy the intent of the law, and I can’t see a court or an arbitrator penalizing a condominium for simply discussing the idea of a special assessment at a meeting.

As a side note, you mention that your assessment was necessitated by the hurricane. Even in the event that your governing documents limit the power of the board to pass an assessment without membership approval, the Condo Act, at Section 718.1265 (Association Emergency Powers) provides that, in response to damage caused by an event for which a state of emergency is declared, a board may levy a special assessment without a vote of the owners. The meeting notice requirements would still apply, although the emergency laws also allow the board to conduct meetings with notice given “as is practicable.” However, I do not think that, months after the storm, your board could argue that it was not obligated to provide 14 days’ written notice pursuant to this provision. That would be a stretch.