LIMITATIONS ON ASSESSMENT INCREASES
During the budget season, we are often asked if limitations exist
for increasing assessments
for the upcoming year. This edition of The
Association e-Lawyer
will address this question.
CONDOMINIUMS:
I. Statutory Limitations:
Section 718.112(2)(e) contains the following, greatly misunderstood,
budgetary limitations:
A. During Developer Control:
If the developer controls the board, assessments may never exceed
115 percent of assessments
for the prior fiscal year unless approved by
a majority of all voting
interests.
B. After Developer Control
Ends:
Notwithstanding what many people think, post developer condominium
boards are not prohibited
from increasing assessments which exceed 115
percent of assessments
for the prior fiscal year. If, however, the
assessments exceed this
amount, the following process is put into
motion:
1. It must first be determined if the proposed assessments exceed
115 percent of assessments
for the preceding fiscal year. If the answer
to that question is no,
then the budget adopted shall take effect as
scheduled. If, however,
the answer to that question is yes, we must
proceed to step 2.
2. If the proposed assessments exceed 115 percent of assessments for
the preceding fiscal
year it must then be determined how much of that
increase is related to:
a. Reserves;
b. Anticipated expenses which the Board does not expect to be
incurred on a regular
or annual basis; and
c. Assessments for betterments to the condominium property.
If, after removing the above amounts from the assessments, the
increase is reduced to
less than 115 percent, the budget adopted by the
board shall take effect
as scheduled. If however, the increase is still
115 percent or more,
we must proceed to step 3.
3. If, after removing the items addressed above, the proposed
assessments still exceed
115 percent of assessments for the preceding
fiscal year then, within
21 days after the adoption of the budget, the
members may make a written
request that a special members' meeting be
held to consider a substitute
budget. The request is considered complete
if at least 10 percent
of all voting interests make such a request. If
the request is not properly
and timely made, the budget adopted by the
board shall take effect
as scheduled. If, however, the request is
properly and timely made,
we must proceed to step 4.
4. If the request for a special members' meeting is properly and
timely made, then a special
members' meeting must be conducted within 60
days after the adoption
of the budget. At that time, the members may
consider and adopt a
substitute budget. However, the budget adopted by
the board shall still
take effect as scheduled if:
a. A quorum of the members is not obtained for that meeting, or
b. If less than a majority of all voting interests fail to
approve a substitute
budget.
II. Limitations Found
in the Governing Documents:
While not typical, occasionally individual condominium governing
documents will contain
limitations on the increase of assessments and
budgets. If they are
more stringent than the statutory limitations
outlined above, they
must be followed. The following is an example of
one such limitation:
The following must be
agreed to by Owners who represent at least
sixty-seven percent (67%)
of the total allocated votes in the
Association:
* increases in assessments
that raise the previously
assessed amount by more
than 15%.
HOAs
I. Statutory Limitations:
As of the date of this publication, there are no statutory
limitations on assessment
or budget increases for HOAs.
II. Limitations Found
in the Governing Documents:
Unlike condominiums, which seldom contain assessment or budgetary
limitations in their
governing documents, HOAs many times do contain
such limitations. A typical
limitation found in HOA documents allows for
a small percentage increase
(3%-7%) and then provides for special quorum
and other meeting requirements
to permit members to vote for or against
larger increases.
Hopefully, with community associations expieriencing major increases
in their insurance premiums
the above information will be helpful when
budgeting for these anticipated
expenses.
FIRM NEWS: The law firm
of Taylor & Carls, P.A. is
pleased to announce that
Jennifer Sinclair has been admitted into the
Florida Bar and is the
attorney in residence in the firm's Tampa office.
The firm of Taylor &
Carls, P.A., with offices located in Maitland,
Melbourne, Tampa and
Palm Coast, Florida, was founded in 1981 and has
practiced in the area
of community association law since that date. This
edition was prepared
by Robert L. Taylor, Esq. of Taylor & Carls, P.A.
The information contained
in The Association e-Lawyer should not be
acted upon without professional
legal advice. The opinions expressed
herein are as of the
date hereof, and this law firm undertakes no
obligation to advise
the Association of subsequent changes in the law.
The firm of Taylor &
Carls, P.A., with offices located in Maitland, Melbourne, Tampa and Daytona
Beach, Florida, was founded in 1981 and has practiced in the area of community
association law since that date. This edition was prepared by Harry W.
Carls, Esq. of Taylor & Carls, P.A. The information contained in The
Association e-Lawyer should not be acted upon without professional legal
advice.
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©2006 Taylor &
Carls, P.A. All Rights Reserved. |
