Board must become involved with policy for enforcing the rules
Q: Our cooperative association documents restrict pets. What can a manager do when an owner brings their dog during short visits? The bylaws provide for fines in line with Florida statutes but offer no guidance regarding removing the pet. The owner is informed they are in violation and the process of imposing a fine begins, but neighbors want the pet removed.
A: It is not the manager's duty to enforce the rules without the board's approval. This means that any violation must be communicated to the board of directors and they must formally direct the manager how to enforce the violation.
I note that a general rules violation policy can be approved in advance for all violations by the board. This policy would include communications to the board and letters to be sent and at what point the matter would be transferred to an attorney for formal enforcement. If you have the power to fine, then the policy would include how to fine.
If you have an owner that is belligerent, a fine will only delay enforcement and the association will have to take the fine collection to court. It is better to take the violation to court to enforce the violation rather than a fine.
Your board must realize that if the manager's letters do not correct the violation then the matter must be turned over to an attorney. Once the word gets out that the board will take violators to court, violation letters will be more effective. One example reduces future violations.
Limits on street parking may be part of the association covenants
Q: I live in a gated community. There is a difference of opinion between the residents and the board. Our bylaws do not address parking on the street. I contend that even if it is not in our bylaws the board can forbid parking in the street. They claim that such a rule would require a change to our bylaws. I say it is a safety issue and the board can issue a mandate as a safety issue. Can you provide us with the answer if the board has the power to enforce this problem and tow the vehicles parked overnight?
A: Normally such a restriction would not be in your bylaws. Your documents are made up of three basic components: bylaws, articles and the HOA covenants. Though the bylaws define the business activity of the board, you would refer to the covenants; they cover the deed restrictions and rules. The second problem is that you need to determine who owns the streets. There are two choices, the city or county as public roads or the association as private roads. If the roads are public roads, without any parking restrictions listed in the covenants, the board has limited powers to enforce the parking restrictions you desire. If the roads are private, such a change would be required of the covenants and voted by the members. One thing you should consider: Sometimes the city or county will have a say in the problem, because street parking can limit their use of the streets for emergency equipment. But again, the covenants must be amended. I urge such an amendment be approved by an attorney.
Nondesignated reserve fund can serve as a safety net
Q: Could you explain the difference between designated and nondesignated reserve funds? My HOA has both in the budget and financial report but I cannot find anything in the statutes or our documents. Every time there is a cash shortfall, funds are taken from the nondesignated reserves without any approval of the members.
A: Reserve accounts are usually named for a specific account or expense, a line item that is being collected. Condominiums are required to have three designated line items: Roofing, Paving and Painting along with any other component that has a value of $10,000 or higher. Funds collected for those designated line items must be used for only those expenses unless the members vote to transfer funds to other expenses.
HOA boards should appraise the common areas that will need to be replaced in the future. Since the establishment of a reserve account can be a challenge for an HOA, it is good business to calculate the line items that should be reserved.
Another name for a nondesignated account could be contingency funds or maybe noncommitted funds. The key difference is that designated funds can only be used for the line item specified without members' approval. Nondesignated is a line item where the board has control of funds and can spend on any expense.
I do not recommend the use of nondesignated because the budget should be calculated in a way to provide for future expense. I do not object when a board wants that type of line item because it is a business decision by the board. Note the difference between not recommending and not objecting. Such uncommitted funds do provide a safety net.
Richard White is a licensed community associations manager. Write to him at 6039 Cypress Gardens Blvd., No. 201, Winter Haven, FL 33884-4115. Please include your name and city.