Condos and HOA's

Appropriate vehicle and parking rules for your community

/in

A condominium or residential neighborhood can suffer detrimental effects to property values and the well-being of its residents if it does not have in place rules concerning residents’ and guests’ vehicles that the majority of the members in a community want. Condominiums have a limited number of parking spaces, and many newer gated communities have smaller front yards with limited driveway space and narrow streets.

If the number and types of vehicles permitted and locations where they can be parked is not controlled, a neighborhood can start looking like a used car lot.

For condominiums, you usually want to limit permanent residents’ vehicles to no more than two (2) and you may want to have assigned owner and guest parking spaces. Many times such assignments can be memorialized in the public records of the county so that owners know for sure what parking space or spaces are assigned to their unit. You may want to require residents and guest to register their vehicles with the association to make sure they are supposed to be there and you may even want to issue parking decals.

To protect the aesthetics in neighborhoods, you may want to have a rule that says owners must only use garages for the purpose of parking owners’ vehicles in the number of stalls the garages were intended for in order to prevent garages from becomes unsightly storage units. You can require that vehicles be parked in the garages (with a requirement that the garage doors remain closed when not in use) before vehicles can be parked in the driveways.

You may want to prohibit certain vehicles on the property (unless they can be kept in a closed garage hidden from view) such as recreational vehicles, boats, trailers, non-street licensed vehicles, motorcycles, panel vans, commercial vehicles not actively servicing the residence, inoperable, unlicensed, wrecked or vehicles obnoxious to the eye.

Although some communities prohibit trucks, because many people now have nice trucks as their main vehicle, you may wish to allow non-commercial trucks. You can distinguish between commercial trucks and trucks used like cars and allow trucks that are not used for a commercial purpose or have commercial markings on them. You could prohibit trucks from having tool boxes or commercial equipment in their beds as such would convert them into commercial trucks.

Last, you may want to adopt rules to prevent people from parking on the street (such street parking can prevent emergency vehicles from timely getting to those in need), on the grass or across the sidewalks in the neighborhood.

As people in condominiums and newer neighborhoods typically live closer together than in traditional neighborhoods on unincorporated county or city streets, it is important that vehicle restrictions are adopted and enforced to preserve and enhance the atmosphere of where the residents call their home. If your community is starting to look like that used car lot, maybe it is time to review whatever vehicle and parking rules are on the books and see if they need to be tweaked or just enforced.

If you are going to change or add new vehicle and parking restrictions, you will probably need to get a membership vote to approve amendments to your association’s governing documents to make them effective. Enforcement of vehicle and parking restrictions is not that difficult today with the proactive towing Statutes of Florida and remedies available through the courts.

Rob Samouce, a principal attorney in the Naples law firm of Samouce & Gal, P.A., concentrates his practice in the areas of community associations including condominium, cooperative and homeowners’ associations, real estate transactions, closings and related mortgage law, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.
Condominium Associations

Protecting residents’ privacy rights from drones

/in

Last month we discussed the benefits of implementing new governing document regulations for allowing security camera installations in community common areas, single-family homes and condominium units to stop and prevent vandalism or violations of rules and regulations while at the same time protecting the privacy rights of residents.

Today, we will look at an example of new regulation language that a community could amend into their governing documents to handle privacy concerns related to the blossoming use of drones. The definition of drones in the example is taken from the Florida Statutory definition as found in Section 934.50(2)(a), Florida Statutes.

Under the new FAA regulations pertaining to drones adopted in August of this year, drones cannot be flown higher than 400 feet unless flown around a building higher than 400 feet. They can be flown around a building higher than 400 feet as long as they are flown within 400 feet of the building. This federal regulation, therefore, appears to allow for drones to be flown around condominium high-rises.

Here is some model language that an association might want to consider amending into their Declaration of Covenants or Declaration of Condominium to handle breach of privacy issues related to drone use.

“Drones (defined for purposes herein as a powered, unmanned, aerial vehicle that use aerodynamic forces to provide vehicle lift, can fly autonomously or be piloted remotely, and is designed to be recoverable) shall not be permitted to be flown within the community, unless such drone is 1) registered with the FAA, to the extent required, 2) operated by an individual duly licensed by the FAA, to the extent required, 3) is only flown and utilized in accordance with FAA and other applicable governmental requirements, 4) is flown within the community in a manner not to interfere with an owner’s reasonable expectation of privacy with respect to such owner’s property, 5) is not utilized in any fashion to spy or otherwise peer or take pictures into the residence of another owner’s property, 6) is not utilized to harass any person with respect to private property or to the association’s common property, and 7) utilized in a manner not to cause injury to person or property. The operator of such drone shall be solely responsible for any injury to person or property which results from use of such drone. A person’s failure to comply with the terms and provisions of this section shall constitute a nuisance under this declaration and a violation. In no manner shall the association be deemed to be a guarantor or protector of an individual’s right to privacy with respect to any drones that are flown within the community, and the association shall only undertake actions under this section upon association representatives having direct knowledge and evidence of a violation or following receipt of a written claim from an offended resident and subsequent inspection by the association and determination of a violation.”

At some point before it becomes popular for packages to be delivered by drones, an association might want to consider adopting rules concerning drone deliveries, such as where on the property and when such deliveries can be made.

Condominium Associations

Use of security cameras in communities

/in

We are seeing more and more homeowners and condominium unit owners wanting to protect their property by installing security cameras. This can be a good idea but must be weighed against the privacy concerns of their neighbors.

Many homeowner and condominium associations also want to protect the common areas from vandalism and rule violations; such as in clubhouses and pool areas. Although cameras may not at first stop vandalism or violation of rules and regulations, they sure can be good for evidence needed to catch the perpetrators red-handed afterwards and the associations can then make them pay for damage done or rules broken.

Few declarations of covenants or declarations of condominiums address the ability to install and maintain security cameras, so in order to clarify the ability of owners to do so, many associations should consider amending their documents with something like the following:

For single-family homes: “Security cameras shall be permitted to be installed on an owner’s property, provided that such cameras are not visible from the street or other public area, the placement and use of such security cameras does not result in an improper view into another owner’s property, whether intentional or unintentional, but specifically excluding views from the front or side of the residence into the adjacent street or roadway and which might include some portion of the front yard or side yard areas of the property lying across the street or roadway, and the use of such security cameras is not used in a fashion to invade or disrupt any owner’s reasonable right of privacy. An owner’s failure to comply with the terms and provisions of this section shall constitute a nuisance under this declaration and a violation.”

For condominium units: “Unit owners may maintain security cameras within their units or on their lanais. However, no unit owner shall be permitted to maintain any security camera on or within their unit or their limited common element area appurtenant to such unit (such as their lanai) that is positioned in such a way as to film areas of the condominium property lying outside of their unit for which they do not have the exclusive use of.” Under this type provision, an owner can film the inside of their unit or their patio or lanai but no other parts of the condominium property that are shared by others.

For homeowners and condominium associations: “The association may, but shall not be obligated to, operate one or more cameras on the common areas for purposes of providing security for the property and its residents. In the event that the association does elect to use security cameras, each unit owner shall be deemed to have agreed, for such unit owner and such owner’s family members, guest and tenants, that the association is not and shall not be considered an insurer or guarantor of security for or pertaining to the property. The association shall not be held liable for any loss or damage by reason of failure in the security camera system or any other safety measures undertaken, each such individuals assume all risks for loss or damage to persons or property and to the contents of same, and each such individuals acknowledges that the association has made no representations or warranties related to the use and operation of security cameras.”
Associations must also understand not to place security cameras where a person has a reasonable expectation of privacy, such as in clubhouse restrooms, locker rooms or showers. People generally do not have an expectation of privacy in other common areas that are open to residents and guests.

Rob Samouce, a principal attorney in the Naples law firm of Samouce & Gal, P.A., concentrates his practice in the areas of community associations including condominium, cooperative and homeowners’ associations, real estate transactions, closings and related mortgage law, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.
Condos and HOA's

When condos and HOAs must get competitive bids

/in

When condominium and homeowners associations want to enter into new contracts with vendors or professionals for various projects or duties, there is a misconception that the association must get at least three (3) competitive bids before hiring the vendor or professional. This is definitely not the case.

For condominiums, Section 718.302, Florida Statutes, provides that: “If a contract for the purchase, lease or renting of materials or equipment, or for the provisions of services, requires payment by the association on behalf of any condominium operated by the association in the aggregate that exceeds 5 percent of the total annual budget of the association, including reserves, the association shall obtain competitive bids for the materials, equipment or services. Nothing contained herein shall be construed to require the association to accept the lowest bid.”

However, the statute goes on to say that: “Notwithstanding the foregoing, contracts with employees of the association, and contracts for attorney, accountant, architect, community association manager, timeshare management firm, engineering and landscape architect services are not subject to the provisions of this section.”

The reason you do not need to get competitive bids with these professionals is because you cannot compare their services apples to apples. How these professionals provide their services is unique to each, so getting competitive bids is not a good way to compare their services.

However, for other types of services that exceed 5 percent of the total annual budget of the association, including reserves, such as landscaping, bulk cable or hiring a building contractor or providing the materials for an expensive building project, it makes sense to require competitive bids as many contractors can provide the same service or materials at different prices.

There are exceptions in Section 718.3026, Florida Statutes, to having to obtain competitive bids when usually required including obtaining needed products or services in an emergency (after a hurricane for example) or if there is only one business entity that serves the association within the county as the source of supply. Also, there is nothing in the statute requiring an association to get at least three (3) bids; getting only two (2) competitive bids is all that is required.

For homeowners associations (HOAs), Section 720.3055 puts the magic percentage, which requires competitive bids at 10 percent of the total annual association budget, including reserves. If a contract was awarded under competitive bids, any renewal of the contract is not subject to competitive bids “if the contract contains a provision that allows the board to cancel the contract on 30 days’ notice.”

An additional twist for HOAs is, that although competitive bids are not required for the same professionals as in condos, including community association managers if an HOA does use competitive bids for contracting with a manager, the contract can be made for up to three years. The same emergency and sole source of supply within the county exceptions available to condos also apply to HOAs.

Last, it should be pointed out that for both condos and HOAs, all contracts for the provision of services and all contracts that are for the purchase, lease or renting of materials or equipment that are not to be fully performed within one (1) year, must be in writing.

Condominium Associations

Association contracts need legal review

/in

Condominium and homeowners associations enter into new contracts all the time and many are for thousands if not hundreds of thousands of dollars. You have ongoing management, maintenance, accounting and landscape contracts, periodic construction contracts for reroofing, painting, paving and remodeling of social rooms or clubhouses.

Associations are required by Florida statutes to get competitive bids (at least two bids) for many of these contracts while for others you do not need bids but can contract with whomever you want. Next month we will discuss when bids are required.

Once you have picked out your contractor or vendor and the company has prepared the proposal or the draft contract, usually a committee, the president or board will review it, and if things look good, go ahead and sign it. We understand that many association directors and officers come from business backgrounds and are use to negotiating, reviewing and signing major dollar contracts. However, before the president signs and legally binds the association to such contracts, it really is prudent and worth a few extra dollars to have the negotiated contract draft run by association legal counsel.

Legal counsel will focus on the terms of the contract and how easy will it be to get out of the contract if the vendor breaches or the association is just no longer satisfied with the quality of the work being performed by the vendor or contractor. Ongoing contracts, such as management and maintenance, should have a 30- or 60-day out provision for the association “with or without cause.” This means that if the association becomes dissatisfied with the vendor, it can provide written notice of termination within say 30 days and does not need to, nor should it provide, any reason why it is terminating the contract.

In many states up North, you want to fill up the file with examples of breaches of the contract by the vendor before you terminate as such states believe there are property rights in an ongoing contract or a job. However, Florida is a right to work state meaning that unless a contract says there is some sort of “right” to the job, there is none, so you don’t have to gather any evidence of breaches or fill up any file. You can just say “you’re fired.”

Beware of non-compete clauses some vendors will bury in their contracts because they can come up and bite you down the road when you no longer like the way the vendor is doing business but you want to keep some of their good employees. We understand that some vendors need to be able to recoup some of the upfront training costs of employees who may leave, and such can be built into a decent non-compete clauses. However, the vendor should not be able to hold their employees hostage from being able to gainfully work if they leave.

When it comes to construction or remodeling contracts, it is really important that certain clauses be added to prevent the association from paying twice on the same contract. Section 713, Florida Statutes provides detailed protection to a property owner when work is to be done on the property. If the provisions are referred to in the contract requiring the general contractor to follow the statute, then the association will be protected if the general contractor fails to pay a subcontractor or supplier. Once Section 713 is invoked in the contract, the association will not make final payments to the contractor until any liens filed by subs or suppliers have been released and the contractor has presented a signed Contractor’s affidavit showing that all subs and suppliers had been paid.

If the contract does not incorporate the protections of Section 713, then the association may pay the contractor everything owed under the contractor only to find out later the contractor failed to pay his subs and suppliers and the contractor then went out of business or declared bankruptcy. Guess what, the association will still be on the hook to pay what is owed by contractor to the unpaid subs and suppliers (having to pay twice).

When you are talking about entering into contracts of $50,000, $100,000 or more, it is worth paying a few hundred or a few thousand dollars more (depending upon the complexity of the job) in legal review to make sure the association is legally protected. It also seems like many times Murphy’s Law comes in to play in this issue. When we review and revise association contracts with legal protections, things usually seem to go smoothly. However, when an association did not run the contract by legal, this is where many times we have seen it go south. We are then called in to try to pick up the pieces or to minimize the damage caused to the association by the poorly written contract that was not reviewed.

Condominium Associations

Older high-rise condos, co-ops must vote to opt out or install fire sprinklers

/in

Typically this time of year I report on all the new laws the Florida Legislature adopted in this year’s session that affect condominium, co-ops and homeowners associations. However, any bills that would have had major direct effects on the operation of community associations died in committees, so there is not much new to report.

One major fallout of the quiet session was the lack of any new bill extending the ability of associations to take a membership opt-out vote to avoid having to install expensive fire sprinklers in high-rise residences. In the past, every few years the Legislature amended the applicable statute which extended the opt-out vote since 2002. The last amendment was in 2010 wherein Section 718.112(2)(l), Florida Statutes now reads:

“Notwithstanding Chapter 633 or of any other code, statute, ordinance, administrative rule, or regulation, or any interpretation of the foregoing, an association, residential condominium, or unit owner is not obligated to retrofit the common elements, association property, or unit owner is not obligated to retrofit the common elements, association property, or units of a residential condominium with a fire sprinkler system in a building that has been certified for occupancy by the applicable governmental entity if the unit owners have voted to forego such retrofitting by the affirmative vote of a majority of all voting interests in the affected condominium. The local authority having jurisdiction may not require completion of retrofitting with a fire sprinkler system before January 1, 2020. By December 31, 2016, a residential condominium association that is not in compliance with the requirements for a fire sprinkler system and has not voted to forego retrofitting of such a system must initiate an application for a building permit for the required installation with the local government having jurisdiction demonstrating that the association will become compliant by December 31, 2019.”

Section 553.895, Florida Statutes, entitled “Fire Safety” is the statute that determines which buildings are considered high-rises that will need to either take a vote to opt-out or to pull a building permit to install sprinklers. Although the wording in the statute is confusing, we believe it says that if the construction contract for the building was let after Sept. 30,1983, buildings three stories or higher with interior corridors, or buildings over 75 feet in height with exterior corridors, will need to have sprinklers installed throughout the building and in the units unless an opt-out vote has been taken. If the construction contract for the building was let after Jan. 1, 1994 and the building is three stories or higher, sprinklers must be installed unless an opt-out vote is taken. It appears then that one- and two-story condominium and co-op buildings are in the clear and need not be concerned about this issue or taking an opt-out vote.

So if your high-rise condominium or co-op building does not have fire sprinklers in the units and the common areas of the building, your association will need to take the op-out vote before the end of this year or face the wrath of your local fire department, who will require you to install sprinklers, a very expensive venture. We suggest that the membership vote opt-out be taken sometime this fall.

This sprinkler requirement statute appears to have been originally pushed through the Legislature by those special interests whose business is to install fire sprinkler systems, which must be a very lucrative business. Over the years some folks representing condominiums and co-ops fought back by getting the Legislature to extend the deadline to add sprinklers or opt-out. It looks like this year the ones who always got another extension may have either dropped the ball or could not find a passable bill to latch another opt-out extension onto.

Rob Samouce, a principal attorney in the Naples law firm of Samouce & Gal, P.A., concentrates his practice in the areas of community associations including condominium, cooperative and homeowners’ associations, real estate transactions, closings and related mortgage law, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.
Condominium Associations

New law accommodates service members in communities

/in ,

It was a good legislative session this year when it comes to condos, HOAs and co-ops if your idea of good is that nothing much at all was passed. All of the bills, that would have had major direct affects on community associations that were filed, died in committees. This was probably a good thing because the content of most of these bills did not look favorable for associations.

One bill that did pass and became effective July 1 was Senate Bill 184 adopting a new Section 83.683, Florida Statute. This bill to accommodate service members which include ‘any person serving as a member of the United States Armed Forces on active duty or state active duty and all members of the Florida National Guard and the United States Reserve Forces.’

Military personnel many times get change of orders and their family must then relocate to a new place quickly. What this new Florida Statute does to accommodate the quick moves required by our armed forces personnel is to say that if a condominium association, homeowners association or cooperative association requires a perspective tenant to complete a rental application before residing in a unit or parcel, the association must complete processing of the rental application submitted by a service member within seven (7) days and must notify the service member within that seven (7) days of approval or denial. If denial, the reason for the denial must be given. Absent a timely denial, the association must allow the unit or parcel owner to lease to the service member.

Most condos, HOAs and co-ops in Florida require a rental application, and most of their governing documents give the associations 20 to 30 days to process the applications once the applications have been fully completed and all information requested by the prospective tenants have been provided.

Because military personnel have to move many times on a moment’s notice, it could be very expensive for the service members to have to relocate to a temporary place such as a hotel or motel while waiting for association approval. This expensive inconvenience to our dedicated men and women in uniform should not have to happen now in Florida under the new law.

As background checks can be done quickly now electronically, seven days should usually be sufficient to weed out any military persons with questionable backgrounds sufficient to legally support grounds for denial.

Remember, although you cannot discriminate based on race, religion, sex or color, you still can discriminate against bad actors and keep bad characters out of your community. This includes keeping out persons convicted of a felony involving violence to persons or property, a felony involving possession or sale of a controlled substance, or a felony demonstrating dishonesty or moral turpitude. Also, possible reasons for denial include a history of financial irresponsibility such as prior bankruptcies, foreclosures or bad debts, a history of disruptive behavior or evidences an attitude of disregard for association rules or the rights of others by past conduct.

It is not very often when an association runs into a prospective tenant that should be denied, but when a background check does come back with a lot of red flags, associations must review the facts closely and should consult with legal counsel before deciding to deny.

With the sacrifices made by our servicemen and women and their families, it is great to see that our Legislature has found another way to accommodate their upended way of life by providing for prompt review and approval of the vast majority of their rental applications so there is no unnecessary delay in the relocation as they carry out their duty to country.

Condominium Associations

Boards who snooze over the summer may lose

/in ,

Well just about all of the remaining snowbirds have flown back North until next season. During last season there were many rules and restrictions violations at our local condominium buildings and gated neighborhoods ranging from late night pool parties, unlawful pets, too many guest and rental visits, smoking and noise violations, parking violations, failure to maintain homes and yards and various forms of obnoxious behavior causing nuisance to others.

Some violation letters were written to tell the inconsiderate perpetrators to knock it off but their violations continued. We got to the end of season and most of the board members went back up North and with their leaving the ‘out of sight/out of mind’ phenomenon is kicking into gear.

While those who left are no longer bothered by the violations, the members who live here year-round may still be suffering from the violations that continue on. As the board is gone and not planning to have any meetings until late fall or next winter, nothing further happens to enforce the violations.

The directors come back in December or January and get an earful from the permanent residences of what nefarious things continued to go on over the summer and fall and demand that something be done about it.

We will then get calls from the president or manager asking us to immediately bring legal action against the violators so the members can get some relief. Well guess what? It’s too late.

There are legal defense concepts called waiver and estoppel which provide that once you know of a legal right for which you can sue, you have to bring legal action within a timely manner or you will be time barred from having a legal claim because you ‘sat on your hands’ in light of your rights to bring a legal action. You waived your rights and are ‘stopped’ from bring suit because of your inaction once you were aware of the violations.

Reported Florida case have said anywhere from six months to one year of inaction is enough time to waive your rights and another just sending another letter within six months to a year is not enough to preserve your right to sue. You must actually file a legal arbitration, mediation or court action within the six months to one year.

So, because you waived your rights and are therefore stopped from bring suit on the past violations, you must start all over again. You must first wait for a new violation, send a new enforcement letter and then bring legal action after a reasonable period of time has passed since the letter and the violation continued uncured — about 30 to 60 days.

We see some associations do this over and over season after season and many violators know how this works and are counting on the association just sending them another letter and taking no further enforcement action.

Directors must realize that it is their ‘duty’ to enforce the rules and regulations of the association. If the board operates in the manner discussed herein and fails to bring suit in a timely manner, the directors may find themselves at the other end of a lawsuit against them from one or more owners for their failure to carry out their fiduciary duty to all the owners of their community.

Condominium Associations

Snuffing out the smokers in condominium

/in

Even as of a few years ago, it was almost unheard of for a condominium building to go nonsmoking. Apparently there was fear that in doing so, property values would suffer as potential smoker purchasers would look elsewhere. This is no longer the case.

We are seeing more and more condominiums going to nonsmoking. To do so, enforcing a house rule passed by the board of directors of the association would be difficult as such a rule would arguably be considered unreasonable to many owners (especially smokers). Under the law, board rules must be.

However, if the owners in the building vote to amend their Declaration of Condominium to go nonsmoking, such a regulation is enforceable as such a regulation would not be considered arbitrary, capricious or unconstitutional even though arguably unreasonable. Declaration covenants, because they are approved by the owners, can be unreasonable as long as they are not arbitrary, capricious or unconstitutional.

The biggest problems most buildings see with smoking is residents smoking on their lanais where the smoke creeps to other lanais and units making it difficult for neighboring residents to enjoy their units and lanais when the smokers are smoking around them. Another problem is that when heavy smokers smoke inside their unit, the smoke can travel through the walls to adjacent units.

Therefore, most amendments will prohibit smoking in the units, on the lanais, or anywhere on the common elements except at smoking area(s) designated by the board of directors from time to time. It is good to have one or more designated smoking areas somewhere on the common areas (usually in the pool or barbecue vicinity) so even if the owners in the building may not smoke, there will be a place for their guests and tenants to smoke where nonsmokers will not be bothered.

To get such an amendment approved in buildings that do have quite a few owners who smoke, a building might want to grandfather allowing smokers in residence to continue to allow them to smoke in their units or on their lanais, until they move away, as long as they don’t unreasonably disturb their neighbors with their smoking.

Apparently going to no-smoking buildings does not appear to be hurting property values and more and more condominium buildings are saying it is now time to go no-smoking for the benefit of the large majority of nonsmokers in the buildings.

First it was airplanes, then indoor restaurants and bars, and now it looks like condominium buildings where people live in proximity to each other. We understand that many new apartment complexes in some cities are now opening as nonsmoking for the same reasons.

Rob Samouce, a principal attorney in the Naples law firm of Samouce & Gal, P.A., concentrates his practice in the areas of community associations including condominium, cooperative and homeowners’ associations, real estate transactions, closings and related mortgage law, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.
Homeowners Associations

Should a vote be put to association owners to waive yearly financial auditing requirement

/in ,

Pursuant to Florida Statutes, Condominium and Homeowners’ Associations have to each year report the financial health of the Associations to their members. Such requirements are contained in Section 718.111(13), Florida Statutes for Condominium Associations and Section 720.303(7), Florida Statutes for Homeowners’ Associations.

For Condominiums with less than 50 units, or for Neighborhoods with less than 50 parcels, all that is required to be provided to the members is a ‘report of cash receipts and expenditures’. If communities have 50 or more units or parcels but the Associations total annual revenues are less than $150,000, they also only need to provide their members with a report of cash receipts and expenditures. Reports of cash receipts and expenditures can be prepared by an Association’s bookkeeper.

However, for Associations with annual revenues of $150,000 to $299,999, they must annually prepare ‘compiled’ financial statements. For Associations with annual revenues of $300,000 to $499,999, they must annually prepare ‘reviewed’ financial statements and for Associations with annual revenues of $500,000 or more, they must annually prepare ‘audited’ financial statements. Compiled, reviewed and audited financial statements are prepared by Certified Public Accountants (CPAs).

As it costs extra money for an Association to pay a CPA every year to prepare the required higher level of reporting financial statements, the statutes allow the members to vote to ‘waive’ the compilation, review or audit and instead just have prepared a report of cash receipts and expenditures. Such a vote to waive must be approved by a majority of the voting interests at a properly called meeting.

In Homeowners’ Associations there is not limit as to how many years a vote to waive the complication, review or audit can be taken or any limit on when the vote can be taken. However, in Condominium Associations, the vote must be taken before the end of the fiscal year and is effective only for that fiscal year or for that year and for the next fiscal year. Also, in a Condominium Association the members cannot vote to waive for more than three consecutive years. So, if a Condominium Association waives for three years, it must every fourth year engage a CPA for a compilation, review or audit.

A board of directors can always decide not to put to the members a vote to waive if the Directors believe waiver is not in the Association’s best interest. In addition, a Board can always decide to perform a greater level of auditing than is minimally required in the statutes. A greater level may be decided if the Directors want assurance that the Association’s books and finances are property being administered or have believe that maybe they are not being administered correctly.

As you can see there are some protections to Association members per Florida Statutes to either prevent, or quickly catch, any foul play with Association funds. However, there is also the ability for an Association to realize cost savings by only periodically paying for more costly financial reporting when there is no evidence of, or hint of, any monkey business going on with the member’s monies. Therefore, a board of directors, with the Association’s Treasurer’s input, should then each year make a knowledgeable decision as to whether to put the wavier question to a vote of its members or not.