Q: We found out recently that the property manager of our association approved a five-year maintenance contract with a company without bringing it to the board and getting the board's approval. What recourse do we have other than getting rid of the property management company?
A: Normally management has no powers to obligate the association. That means it cannot sign a contract for services without the board's approval. There is an exception, and that would be if the management contract included the service in the contract. I would first ask management where they have the powers to obligate the association to the contract. Depending on the answer, I would have a meeting with the owner of the maintenance company that was contracted and explain that the board never approved the contract and would not honor the service. This is a situation when you should have legal guidance. Since the board never approved the service, unless it was in the management contract, you should not be obligated to honor the contract.
Reserve fund choice is the board's job
Q: Several years ago our condominium board convinced the membership to vote to invest the majority of our reserves into a mutual fund. We continue to make monthly investments even after losing much of the value because of the recent market downturn. What are your feelings regarding a condominium being in the investment business?
A: I am not an investment adviser and will not offer suggestions as to where you invest your funds. As a manager I will tell you that the board has a fiduciary duty to place the reserve funds in the most secure depository. It appears that the only thing the board members did was to try to relieve themselves of the responsibility, they think, by having the members vote on the issue. The board was responsible and cannot pass the responsibility by a members' vote. Florida law places a fiduciary duty on the board to protect the return of the principal. It does not require the board to have a return on investments. What a shame that your board wanted to play with the association's funds and now you have lost value.
Woman left in charge should be licensed
Q: The board of directors of our cooperative mobile home park goes north for six months and turns all duties of the park over to the office manager, who does not live in the park. Our budget is over $100,000. I read your column about the license needed for managers. Is it proper for the board to have a person not licensed as a CAM if she manages the park and supervises the workers and enforces the rules?
A: Florida Statute 468.431 says a license is required for anyone who controls or disburses funds of a community association, prepares budgets or other financial documents for a community association, assists in the noticing or conduct of community association meetings and coordinates maintenance for the residential development. You can call the job by any title but if your office worker performs any of the above, she must be licensed. Engaging a nonlicensed person can result in the association and the person being fined by the state.
Foreclosure's share split among others
Q: When a unit is in foreclosure with no reasonable expectation of collecting monthly assessments or a special assessment, how is that unit's shortage or a special assessment equitably charged to the remaining unit owners?
A: You assess the remaining members their share of the special assessment and then you take the bad debt and assess the members for the shortage. You must assess the foreclosed unit along with the others' units. Then you treat the unpaid portion as a bad debt. The financial records must show that the foreclosed unit has a delinquent amount that included the special assessment.
Richard White is a licensed community associations manager. Write to him at 6039 Cypress Gardens Blvd., No. 201, Winter Haven, FL 33884-4115. He cannot provide personal replies by mail, but you can e-mail him at CAMquestions@cfl.rr.com. Please include your name and city.