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Condo law does not prohibit board from raising budget year to year


Question: I purchased a condo in 2016. Each year since, my quarterly maintenance dues have increased. The highest increase was $15 per quarter for my unit.

For 2018, my quarterly maintenance fee will increase $82 (from $518 to $600 per quarter). The reason for the increase given by the condo association is that “we have now taken a hard look at how we originally estimated the cost of replacing our capital assets such as roads roofs and gutters, painting buildings, etc.,” and that the budget was changed accordingly.

This is all well and good, but my question to you is, can the condo association increase my maintenance dues by such an exorbitant amount? Isn’t there a law somewhere on the books that says a maintenance fee cannot be increased by a certain percentage or amount? — P.S.

Answer: There is no law flatly stating that a board may not increase annual dues by more than a particular percentage. There may be such language in your governing documents, and I have even seen associations where the budget must be approved by the membership — and if it is not approved, the budget from the prior year rolls over. In my experience, such provisions are not beneficial to condominiums and HOAs, and requiring membership approval of the budget often results in stagnant communities that are not well maintained (as individual owners, who have no particular fiduciary duty to the other owners, frequently do not consider the variable costs of maintaining and operating the community, but instead only take into account their personal bottom lines).

The Condo Act, at 718.112, does provide that, if a board adopts in any fiscal year an annual budget which requires assessments against unit owners which exceed 115 percent of assessments for the preceding fiscal year, the board shall conduct a special meeting of the unit owners to consider a substitute budget, if the board receives, within 21 days after adoption of the annual budget, a written request for a special meeting from at least 10 percent of all voting interests.

At that meeting, a majority of the members may vote to approve a substitute budget. Whether or not the budget increases over 115 percent is calculated excluding the statutorily mandated reserves. Given what you described, is sounds as if your most recent increase was the result of a reserve increase, and if that’s the case, this provision would not help, in any event.

Q: I am on the board of a small Boca Raton HOA and have a question regarding fines and the fining committee.

Chapter 720.305 specifically states that the role of the committee is limited to determining whether to confirm or reject the fine or suspension levied by the board.

Our board still has a question regarding who has the final decision. Assume that a homeowner is fined and goes to the fining committee and presents a case for either reducing or eliminating the fine, and the committee decides that the fine should be imposed. In effect, the committee “confirms the fine.” Can the homeowner then go in front of the board and present the case that the fine should be reduced or eliminated, and can the board reduce or eliminate the fine that was already confirmed by the committee? — I.G.

A: As a strictly technical matter, the board applies fines, and the committee confirms or rejects that fine (at least to the extent the owner has requested a hearing in front of the committee). Conceivably, the owner could then appeal to the board again to eliminate the fine, since the board is ultimately responsible for the fine. But, I would have other significant concerns with the board making such an adjustment. First, it seems unusual that this would become an issue, given that the board presumably considered whether or not to apply the fine in the first instance (usually at a board meeting). Second, if the board were to allow an owner to appeal their properly-approved fine, I think it would create procedural and selective enforcement arguments with respect to other owners who were previously fined, given they were not aware that such an appeal was possible.

So, while I think it is technically possible for a board to decide not to enforce a properly-confirmed fine, I think it is a bad idea to do so. Despite this concern, if a board decided to go ahead and retroactively modify the fine or suspension (rather than just eliminating it), an additional argument exists that the owner must receive another notice of fine or suspension and opportunity for a hearing. Having the board reconsider a previously applied penalty creates all sorts of problems, and it would be best if the board simply considered fines carefully in the first instance.

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.



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