Transfer of reserve funds questionable
Q: We attended the budget meeting recently for our condominium. We discovered that the board had transferred some of the reserve accounts to even out the budget. When we questioned the transfer, the manager answered that the board had the authority to do this under a less than fully funded budget for this year. Does the board have the right to transfer reserve funds for this purpose?
A: The board has a responsibility to establish an adequate reserve budget. The board does not have the right to approve a reserve budget with less than adequate amounts. FS 718.112 under budgets requires the board to calculate the reserve items. It does not allow them to use phantom amounts or abridged figures but the best estimates using specific calculations. Transferring of reserve accounts is not a board function but a members' duty. It sounds to me that the board is trying to adjust the reserve accounts to keep the fees at lower figures.
Understanding the statute reserve calculations leaves me wondering if this is an attempt to get around the statute requirements. I cannot believe that a manager would say that the board can shift reserves accounts unless an error or past amounts were improperly applied to the reserve accounts.
The state has an excellent handbook on reserves called "Budgets & Reserve Schedules, A Self-Study Training Manual for Beginners." You can obtain a copy by contacting the Department of Business and Professional Regulations, 1940 N Monroe St., Northwood Centre, Tallahassee, FL 32399-1032.
HOA technically can fund get-togethers
Q: I read in your column that a condominium should not use funds for a Christmas party. I live in a HOA and we are planning to use funds for a community picnic. Can money from our fees be used for such parties?
A: The condominium statute very strictly excludes this expense. The HOA act is not so strict. However, I think it is wrong to use association funds to pay for the pleasure of some of the members. Conversely, I have a split opinion regarding association parties, as they have their advantages in bringing the community together. My suggestion is that you have those members who attend either bring a covered dish or pay a small payment to help cover the costs.
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.