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Community Living: Florida Legislature expected to fix property insurance glitch

Q: What is the change in the state law that requires each owner to have insurance on our property?

A: State Rep. Julio Robaina, R-Miami, recently called to inform me of the change in wording in HB 601 where it said that all owners were required to have property insurance (HO-6 policy) on their unit and the association would be named on the loss assessment coverage. He reported that state legislators would correct the wording and owners would not be required to carry insurance if they wanted to self-insure. He said that one of the first actions of the new Legislature would be to clean up some of the language and make it more clear in a "Glitch Bill." He said that the corrections would be transmitted almost immediately to attorneys and managers. In addition, he said that another situation requiring correction involves not allowing two co-owners to serve at the same time on the board of directors. If there is one unit involved, only one owner can serve at any one time. If, however, the co-owners own two or more units, they can serve since they each would represent different units.

Late fees need action

Q: My condominium association is faced with $150,000 in delinquent accounts. This is causing us to under-fund our reserves because we allocate about $200,000 a year to reserves. What are some strategies for dealing with this? If we cut spending to a bare minimum and then show a surplus in our operating budget, can we then reallocate this money to the reserves at the end of the year to offset what we have not collected?

A: Why is your delinquency rate so high? Did the board have a strict collections policy? By this I mean a lien and foreclosure fast-action policy using an attorney. If you failed to have such a policy of quick action, you may never collect the delinquent fees. Then it may be necessary to special-assess the members for the loss of the delinquent fees to fund the budget and reserves. You have to do what you must do about the short collections. One thing is to keep your members aware of the problems. Send a letter to each owner about the delinquent accounts and the shortfall of fees to meet the necessary expenses and reserve funding. There are several sections of the statute FS 718 pertaining to this situation, but the most important section is the collections process: FS 718.115 and FS 718.116.

Keep investments safe

Q: We are researching ways to better invest our association reserve funds since CDs and money market funds are paying so little. One option would be an index annuity for two of our long-term reserves, roofing and building painting, which are not due for five to 15 years. Would this option meet the safety requirements for association-invested reserve funds?

A: The board must not look to the income as the first priority on the reserve fund. You are obligated to place the funds in the most secure vehicle. I do not know anything about the annuity you mention. With today's financial market I would be very cautious of any investment that was not insured by the government. Do not play with the members' money. In investments you have the return of the principal and the return on the principal. You only should be concerned with the return of the principal.

Dog run issue simple

Q: We have received a letter from one of our homeowners asking the board to put a motion on the ballot at our annual meeting to build an enclosed dog run. In our covenants it states that all dogs must be house dogs and there is no mention of the homeowners association constructing or maintaining a place for dogs to exercise. What is your opinion on this matter?

A: I have two dogs and wish we had a dog run where I live. Since your documents do not restrict dogs, it is an added benefit that has little expense to install or operate. When I walk my dogs, on several occasions prospective buyers have stopped their cars to ask if we have a dog run, so it does have benefits to the members and prospective members. This would be a capital improvement and the members need to vote on the issue. I would recommend a motion on the agenda for the members to vote on the addition. It should not be an amendment to the documents but a simple vote of the members to make the capital improvement. At the meeting, the board should have a location and an estimate of the expense to install the fence and other items. At the annual meeting, a member would need to stand and make the motion. It would be best if a board member does not make the motion. After a second, there should be a time for discussion by the members and then they vote on the issue. It does not need to be on the ballot but it can be added to the proxy as a limited proxy.

Richard White is a licensed community associations manager. Write to him at 6039 Cypress Gardens Blvd., #201, Winter Haven, FL 33884-4115. He cannot provide personal replies by mail, but you can e-mail him at [email protected] Please include your name and city. Online:

Community Living: Florida Legislature expected to fix property insurance glitch 12/12/08 [Last modified: Friday, December 12, 2008 10:03am]
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