Board not required to itemize every aspect of proposed assessment


Question: We have been notified of a special assessment meeting by our condominium association. The notification says that the purpose of this assessment is for expenses over and above those that were anticipated by the annual budget due to hurricane damage, which included: windows, garages, carports, and roof repairs.

The agenda for the meeting says that the board will consider a special assessment of umpteen dollars to cover these unanticipated hurricane expenses. Are we as homeowners entitled to an item-by-item cost breakdown before the assessment is voted on by the board? — W.S.

Answer: The Condominium Act, at Section 718.112, Fla. Stat., provides that “notice of any meeting in which regular or special assessments against unit owners are to be considered must specifically state that assessments will be considered and provide the estimated cost and description of the purposes for such assessments.” Note that it does not require an itemization of every project, and the exact amounts that will be expended for each item. It just requires that the notice describe the assessments “estimated cost” and “purposes.” I am assuming that the notice your board sent did not actually list the amount of the assessment as “umpteen dollars,” but instead gave a specific estimated amount they are intending to collect. With that, along with the general description of the proposed use of the funds (to collect funds for hurricane damage caused to the windows, garages, etc.) I think the notice would be sufficient (of course, it’s hard to say for certain without seeing the actual notice). In fact, it can be detrimental for a board to get too detailed in its description of the purposes of an assessment, as the Condo Act also provides that the amounts collected toward an assessment must be used for the stated purposes, or must be returned to the owners or credited toward future assessments. Now, this is an easy issue to fix, in the event the board did get a bit too specific — the board can simply hold another meeting to amend the assessment, or instead pass a new special assessment to be funded by the surplus from the former. However, that takes time and additional attorney fees, and so it’s often better to keep the notice a bit more general.

Q: Can assessments be levied against unit owners, and be collected from those owners, before the contracts for the specified work have been executed? Our governing master’s association approved a $4 million assessment for constructing improvements to our common areas, months before any construction contracts have been signed. Unit owners started paying the assessments without any contracts in place. Almost six months have passed since the assessment was approved, and there are still no contracts in place.

What are the guidelines for approving assessments and collecting monies before contracts are executed? Could this be an example of an abuse of power by the master association? — L.B.

A: I do not see any problem with a community association levying assessments for projects before the contracts to effectuate those projects have been negotiated and/or executed. In fact, it’s often essential that the association does so. Many construction contracts require a substantial initial deposit, and it takes time to collect assessments, particularly if the association wants to give owners a reasonable time to pay what may be a significant sum (in a moderately-sized community, a $4 million assessment could amount to five figures per owner). As a practical matter, then, it would be illogical to require that every aspect of the project be in place prior to assessing for the amounts that will be needed. Now, there may be other intertwined issues that could change this analysis (for example, whether the project requires membership approval), but in general many associations will assess for the estimated costs of large maintenance projects in advance of the contracts being finalized. Usually, the association will have bids upon which it can base its estimate, and, given that many of these projects will also require a 10 percent to 20 percent contingency, that is typically enough information to start collecting the necessary funds.

Ryan Poliakoff is a co-author of “New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living” and a partner at Backer Aboud Poliakoff & Foelster LLP. Email questions to condocolumn@gmail.com. Please include your hometown.



Reader Comments ...


Next Up in

PGA National in Palm Beach Gardens being sold for $255 million
PGA National in Palm Beach Gardens being sold for $255 million

PGA National Resort & Spa, one of the county’s most iconic resorts and the home of the Honda Classic, is under contract to be sold for $255 million to a Canadian company, according to a website that tracks hotel sales. Brookfield Asset Management of Toronto inked a contract on July 26 to buy PGA National in Palm Beach Gardens, according to OpenComps...
Strong economy aside, Florida homeownership hits bleak milestone
Strong economy aside, Florida homeownership hits bleak milestone

While Gov. Rick Scott campaigns on the strength of Florida’s economy, there is no mention of a bleak milestone the state just reached — a record low homeownership rate. From the soaring pre-recession days, when easy credit pushed housing numbers to new highs, the percentage of Florida households owning homes has now plunged to its worst...
Bethesda Hospital Foundation’s James is raising money to add services

Barbara James is the new leader of Bethesda Hospital Foundation, the nonprofit arm of Bethesda Hospitals’ two Boynton Beach facilities. It’s a big task: Bethesda’s east and west campuses face growing competition and growing demand, especially as the population surges to new housing communities in western Palm Beach County. Leaders...
Your eggs probably aren't cage-free
Your eggs probably aren't cage-free

For some time, it seemed like the plight of egg-laying hens-confined to cages so small they can't even spread their wings-was ending. Restaurants, retailers, hotels and manufacturers, as well as food service and hospitality groups, suddenly recognized that consumer revulsion might cost them real money. So they rushed to announce self-imposed deadlines...
HOA may be able to charge owners for each vehicle parked in community

First this week, an update on condominium term limits. You may recall that, in 2017, the Legislature amended the Condominium Act to provide that directors serving two-year terms could not serve more than four consecutive two-year terms unless elected by a supermajority of the membership. The big question at the time was whether prior board service...
More Stories