by Candice J. Gundel, Esq.
Budget season for community associations is in full swing now and as many of you prepare your budgets and annual meetings we have some helpful reminders:
- Make sure to notify your attorney, especially collections counsel, of your new budget, including the regular assessment amounts and if any special assessments were passed for the upcoming fiscal year. Current Clients of Business Law Group should send this information to firstname.lastname@example.org.
- Talk to your attorney, manager, and CPA about effectively budgeting for bad debt as well as collections. Is your association foreclosing? Do you have a financial strategy for acquiring and repairing units? How are you going to manage rentals? How are you going to account for rental income?
- Be sure to account for upcoming capital expenses by appropriately funding reserves. If you are not going to fully fund reserves be sure you are taking the necessary steps to notify the community members and secure a vote, when required. This is particularly crucial in condominium associations.
- If your community is going to take advantage of the new electronic voting process be sure to get quotes and budget for the acquisition and maintenance of the software. For an overview of the electronic voting process please refer to our August 2015 newsletter.
- There have been numerous and significant changes to Florida Statutes governing community associations as well as applicable appellate cases in recent years. If you have not done so yet, consider budgeting for a compressive review and amendment of your association governing documents. This proactive step can help increase collection of delinquent assessments as well as prevent costly litigation in the future.
- Homeowners associations should make sure they have appropriately calendared and budgeted for preservation of the governing documents prior to their expiration, which occurs under Chapter 712, Florida Statutes, 30 years after the “root of title,” commonly the recording of the Declaration.
- Although the best way to estimate future expenses is to get a quote from vendors with continuing contracts, when that is not possible it is recommended to expect a five to ten percent inflation in operating costs per fiscal year.