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Keep informed with Florida’s Property Management Industry, informative articles by industry leaders.  A great resource for Property Owners, Board Members of Condos & HOA’s and Property Management Professionals.

COPING WITH FL H.B. 1237 (2017)

COPING WITH FL H.B. 1237 (2017)

  • Posted: Aug 01, 2017
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COPING WITH FL H.B. 1237 (2017)

by Steven J. Weil, Ph.D., EA, LCAM, Royale Management Services, Inc.

Whenever the Legislature puts new laws on the books, in order to avoid becoming involved in expensive litigation, managers and board members are obliged to sort out what it all means along with what steps should be taken to address the real meaning, terms and conditions that the courts and judges conclude were the Legislature’s intent.

Florida’s Governor signed Florida House Bill 1237 (2017) into law on June 26, 2017.  The legislation went into effect on July 1, 2017 and added several requirements and prohibitions to the Florida Condominium Act (Chapter 718).

For example, HB 1237, now the law of the land in Florida, states, “Board members may serve 2-year terms if permitted by the bylaws or articles of incorporation. a board member may not serve more than four consecutive 2-year terms, unless approved by an affirmative vote of two-thirds of the total voting interests of the association.” The law also includes an exception if there are not enough eligible candidates to fill all board positions which allows current board members to continue beyond the otherwise prescribed period.

What is yet to be determined is whether this means a board member may serve no more than eight one-year terms, or, if association rules limit terms to one year, the four-term limitation still applies? Other questions still left unanswered include: When do these terms start? Is the law to be enforced retroactively, or are board members prior terms excluded from the new rule?

Another new rule states that a condo board member, despite good intentions, could be subject to penalties for violation of this caveat:  “An association may not employ or contract with any service provider that is owned or operated by a board member or any person who has a financial relationship with a board member.”  Under a strict interpretation of this update to the law, if a board member runs a pool service and is taking care of the association’s pool maintenance for only the cost of chemicals, that board member could end up facing criminal penalties for trying to help out.

Conflicts of interest (such as a board member providing a proposal from a company they are affiliated with) may have long existed, and while board members always should have abstained from any vote where it could be perceived that they had a financial conflict of interest, it could now be a criminal offense.

This is not the only place a condo officer, director or manager could find themselves facing the threat of criminal penalties.  While we all know, or at least should know, kickbacks of any kind are wrong, often accusations made by a unit owner are not grounded in reality and instead are based on little more than spite and mistrust.

However, The updated Florida Statute 718.111 now reads “[A]n officer, director, or manager may not solicit, offer to accept, or accept any thing or service of value or kickback for which consideration has not been provided for his or her own benefit or that of his or her immediate family, from any person providing or proposing to provide goods or services to the association. Any such officer, director, or manager who knowingly so solicits, offers to accept, or accepts any thing or service of value or kickback is subject to a civil penalty pursuant to s. 718.501(1)(d) and, if applicable, a criminal penalty.”

The updated statute goes on to require that an officer or director who is charged with certain crimes (primarily crimes of dishonest character) shall be removed from office and provides requirements for filling the vacancy left by any such removal. The silver lining here is that you have to be charged with a crime before you can be removed, a mere accusation is not enough.

Will these and other provisions that have been added to the law make it even more difficult to find volunteers who are willing to serve as board members? No one really knows yet. What we do know is, it will probably take years for the legislature and the courts to sort this new law out.  We also know that those who serve on our boards of directors are most often well-meaning volunteers who want to do the right thing and serve their fellow owners.  All we can do is hope that none of these changes make it harder to get these good people to serve, and the law works as intended keeping those with a self-serving agenda from throwing their hat in the ring.

We are not attorneys, and anything said here should not be construed as legal advice. This article is purely for educational purposes, with the goal of helping associations better understand current updates to the law. Royale Management Services team members are Licensed Community Association Managers (LCAM) who work with associations to manage, to navigate and to comply with the law.  As you can see, these changes raise several questions, and you can be sure that until these issues are addressed by a court, no one will really know the correct answers. Nevertheless, it is always advisable to seek legal counsel if an issue arises.

SFPMA MEMBER - Find us on the Members Directory
Royale Management Services, a registered and licensed community association management corporation in Florida, works with association Boards of Directors throughout South Florida to oversee the daily activities required for proper management, helping to educate them on their responsibilities, duties, and obligations. Royale’s team members are highly trained in all aspects of community association management and customer service to ensure that proper procedures are followed that keep the association in compliance with all of the rules governing elections, budgeting, accounting, operation, collection and assessment. The firm and its president are members of the Community Association Institute (CAI) and the Fort Lauderdale Chamber of Commerce.
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A few tips and reminders with everyone, as associations plan their annual meetings

A few tips and reminders with everyone, as associations plan their annual meetings

  • Posted: Jul 12, 2017
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As associations plan their annual meetings, we thought we would share a few tips and reminders with everyone.

Annual Meetings

RePublished with permission from Our Members:  http://royalemanagement.com/home/

Royale Management Services, Inc.
2319 N. Andrews Avenue, Fort Lauderdale FL 33311
Phone: (954) 563-1269 | (800) 382-1040 | Fax: (954) 563-2153 | Email: CAM@rmsaccounting.com

 

The annual meeting is a member meeting, hence every member can participate. Participation is by properly made motions, seconds, taking part in discussion of motions and through voting.

The first order of business is to appoint the chairperson to run the meeting.  The chairperson can be anyone that the members agree should chair the meeting.  In many associations the board president chairs the meeting; however this requires approval of the members. Some associations ask their manager or attorney to chair the meeting which is acceptable as long as this is approved by the membership.  In large associations having a professional chair the meeting can help to keep it on track and see that the required business gets done properly.

A motion can be made by any member of the association as to who shall chair the meeting.  This motion must be seconded and then voted on by the members present. If the motion is approved by a majority of the member’s present, the chairperson is elected for the meeting.

The Second order of business is to determine whether a quorum of the members is present in person or by proxy.  The quorum requirement is spelled out in the association documents or by state statute.  Without a quorum no business can take place at the meeting.  However, ballots must still be collected.

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A Guide to Being Politically Smart for Board Members

A Guide to Being Politically Smart for Board Members

  • Posted: Jul 12, 2017
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A Guide to Being Politically Smart for Board Members

RePublished with permission from Our Members:  http://royalemanagement.com/home/

Royale Management Services, Inc.
2319 N. Andrews Avenue, Fort Lauderdale FL 33311
Phone: (954) 563-1269 | (800) 382-1040 | Fax: (954) 563-2153 | Email: CAM@rmsaccounting.com

 

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FREE Condominium   Board Member Certification Classes

FREE Condominium Board Member Certification Classes

  • Posted: Jul 12, 2017
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FREE Condominium 

Board Member Certification Classes by our Members> Royale Management Services

Board Certification

This course takes place the 2nd Monday of every month. The course is sponsored and held at the offices of Royale Management Services, Inc. located at 2319 N Andrews Avenue, Fort Lauderdale FL 33311. Refreshments and networking will begin at 5:30 PM and the presentation will begin promptly at 6:00 PM. Reservations are Required!

This is a hands on class that will help you understand: the basics of how to keep yourself and your association out of trouble, what’s legal and what’s not, what it means to be a fiduciary, how boards should function, what records must be kept, what kind of financial information you should get, how to use that information and much more.  We take a managers approach to getting things done, avoiding problems and protecting both the integrity of the association and that of the board. Best of all we will provide plenty of time for questions and examples.

For Reservations call 954-563-1269 between 9AM and 5PM Monday through Friday.  Seating is limited so make your reservations early.

This class meets the Florida state requirements for board certification and has been approved by The Division of Florida Condominiums, Timeshares, and Mobile Homes. It meets the requirements Florida 718.112 for Condominium Association Board Members.

 

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Commercial vs Residential Property Management: What the Difference is?

Commercial vs Residential Property Management: What the Difference is?

  • Posted: Jul 12, 2017
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by Author Donatas Kazakauskas 

There are many differences between commercial and residential property management.

Usually, new property managers start with residential buildings, because of its simplicity. But if one wants to jump into commercial property management, there are many things to learn. In this blog, I will cover the key points.

sfpma1. Tenant expenses. In addition to the base rental fee, commercial building tenants need to pay some or all of the expenses related to real-estate ownership. These expenses (can be called “three nets” or NNN) consist of property taxes, insurance and maintenance fees. There are several types of commercial leases, such as:

a. Triple net – requires the tenant to pay the net amount for all three types of costs (real estate taxes, building insurance and common area maintenance (CAM) fees).

b. Modified net – a compromise between gross lease and triple net. The property manager and tenant usually agree to split the maintenance expenses, but the tenant pays for the real estate taxes and insurance.

c. Gross lease – In this case, the landlord collects the fixed rental fees and pays for all the expenses out of them. These contracts usually have many clauses that may increase the rental fee to cover increased taxes or insurance for the landlord.

d. Percentage lease – mostly used in shopping centres and retail malls. It typically requires a lessee to pay the base rent and on top of that amount, pay a percentage of their sales volume.

These leases are much more complex compared to residential leases. In cases where you collect a fixed amount for CAM fees every month, you need to do an annual recalculation based on what you have received vs actual expenses. Residential rental rates are typically a fixed amount per month or other price period plus the utilities payed based on consumption. Does your software allow you to deal with all calculation situations and easily calculate the correct amounts for the tenants? Soft4RealEstate does.

2. On-Site manager and maintenance. In large office centres or shopping malls, it is necessary to have on-site managers who can deal with tenant requests or take care of other issues. In some countries or US states, this is even defined by law. To track all the requests and work orders, you need to have a system that is easy to use for both the manager and tenant. It should be easy for the manager to track all ongoing tasks, view the work schedule, and change statuses. On the tenant’s side, it should be clear when and what will be done, and when any work can be expected to be finished. While renting apartments, you can have maintenance vendors and tenants usually deal directly with them without property manager interruption.

3. Responsibilities. This point is an advantage for commercial properties. Tenants of commercial buildings have a greater amount of responsibilities than residential tenants. With residential tenants, you’re agreeing to a habitable residence, and the laws weigh most heavily on the tenant when it comes to evictions, habitability, etc. Commercial properties are for business use, and the scope of landlord responsibilities is lower. What is more, most commercial buildings are only used during the daytime, so you won’t receive midnight calls for fixing a toilet, leaking pipes or complaints about loud music from neighbours.

4. Leases. It is easier to rent residential property. Moreover, the rental agreements are usually shorter in length and easily renewable, while commercial leases are more complicated. They are much longer, might have difficult extension options, rent is reviewed annually and prices are commonly increased by the CPI or some other fixed index. Commercial lease agreements are harder to break because of many termination clauses.

Even though the processes seem similar: you have tenants, you have contracts, and you have units to lease, maintain and manage, so commercial property management and residential property management are not the same. You need to take all the things mentioned above into consideration in order ensure the best results for every situation. Not every residential property manager can manage commercial properties without any preparation. Once you start doing commercial property management, make sure that you not only have the necessary knowledge, but also the tools, such as software, to make it work. Sometimes Excel seems good enough to do the work, but the day may come when you need to say goodbye to it. When?

 

 

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Tasks property managers commonly perform for owners

Tasks property managers commonly perform for owners

  • Posted: Jul 09, 2017
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Evaluate the property and determine an accurate rental rate

  • Perform detailed documentation of the interior and exterior including photos
  • Offer recommendations on repairs and cosmetic improvements that maximize monthly rent while providing good ROI.
  • Gather data on rental rates in the area and work with owners to determine the optimal rental rate. Rent research will vary, but should include looking at the recently rented comparables according to size and type.
  • Discuss with owners the pros and cons of different policies such as accepting pets, allowing smoking etc.
  • Install a lock box

Market the property for rent

  • Prepare home for rent
    •  Clean home and optimize interior appeal
  • Create ads tailored to the property and advertising medium. Some of the mediums commonly used are:
    • Paid and free rental listing websites
    • Print publications
    • Signs
    • MLS
    • Fliers
  • Work with other realtors and leasing agents to find a tenant
  • Provide a 24-hour hot-line where prospective tenants can listen to detailed information about the property
  • Field calls from prospects for questions and viewings
  • Meet prospective tenants for showings throughout the week and weekend.
  • Provide prospective tenants with rental applications that are legally compliant with fair housing laws
  • Collection applications with application fee

Tenant Screening and Selection

  • Perform a background check to verify identity, income, credit history, rental history, etc.
  • Grade tenant according to pre-defined tenant criteria
  • Inform tenants who were turned down

Tenant Move In

  • Draw up leasing agreement
  • Confirm move in date with tenant
  • Review lease guidelines with tenant regarding things like rental payment terms and required property maintenance
  • Ensure all agreements have been properly executed
  • Perform detailed move in inspection with tenant and have tenants sign a report verifying the condition of the property prior to move-in.
  • Collect first months rent and security deposit

Rent collection

  • Receiving rent
  • Hunting down late payments
  • Sending out pay or quit notices
  • Enforcing late fees

Evictions (A Great website for Eviction Information is: www.NationalEvictions.com )

  • Filing relevant paperwork to initiate and complete an unlawful detainer action
  • Representing owner in court
  • Coordinating with law enforcement to remove tenant and tenants possessions from unit

Legal

  • Advise in the event of a legal dispute or litigation
  • Refer owner to a qualified attorney when necessary
  • Understand and abide by the latest local, state and federal legislation that apply to renting and maintaining rental properties.

Inspections

  • Perform periodic inspections (Inside and outside) on a predefined schedule looking for repair needs, safety hazards, code violations, lease violations, etc.
  • Send owner periodic reports on the condition of the property

Financial

  • Provide accounting property management services
  • Make payments on behalf of owner (Mortgage, insurance, HOA dues, etc.)
  • Detailed documentation of expenses via invoices and receipts
  • Maintain all historical records (paid invoices, leases, inspection reports, warranties, etc.)
  • Provide annual reporting, structured for tax purposes as well as required tax documents including a 1099 form
  • Advise owner on relevant tax deductions related to their rental property
  • Provide easy to read monthly cash-flow statements which offer a detailed breakdown of income and itemized expenses

Maintenance, Repairs, and Remodeling

View the Associations MEMBERS DIRECTORY: Find top companies that work with the Management Industry.

  • Provide and oversee an in-house maintenance crew
  • Establish a preventative maintenance policy to identify and deal with repair needs
  • Provide an network of licensed, bonded and fully insured contractors who have been vetted for good pricing and good work that is up to code.
  • Assign jobs to different parties (in-house employees, handyman and professional contractors) based on who will do the best job for the best price.
  • Maintain outdoor areas
    • Leaf and snow removal
    • Landscaping
    • Removing trash and debris
  • Maintain and monitor a 24 hour emergency repair hot-line
  • Larger renovation or rehab projects
    • Provide recommendations on how the project can maximize rental income.
    • Prepare preliminary cost estimates
    • Get multiple independent bids for the work
    • Act as general contractor overseeing the work

Tenant Move Out

  • Inspect unit and fill out a report on the property’s condition when the client moves out
  • Provide tenant with a copy as well as estimated damages
  • Return the balance of the security deposit to the tenant
  • Forward any portion of the owner’s portion of the tenant deposit to the owner or hold in owner reserves for repairs.
  • Clean unit and perform and needed repairs or upgrades
  • Re-key the locks
  • Put the property back on the market for rent

This isn’t intended to be a comprehensive list of property management services, but it should give you a fair idea of the scope of a property management company’s activities

SFPMA Members work with HOA, Condo, Multi-Family, Single-Family, when you are ready to have your property Managed by a Professional and take the time to enjoy your life.

Find the right Management Company on our Members Directory.

 

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SUMMER IS HERE: GRILLING RULE VIOLATORS RISK FINES/IMPRISONMENT

SUMMER IS HERE: GRILLING RULE VIOLATORS RISK FINES/IMPRISONMENT

  • Posted: Jun 25, 2017
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SUMMER IS HERE:  GRILLING RULE VIOLATORS RISK FINES/IMPRISONMENT

by Steven J. Weil, Ph.D., EA, LCAM, Royale Management Services, Inc.

The Florida Fire Prevention Code (FFPC) prohibits cooking, using or storing gas or charcoal grills on balconies.   This prohibition also includes fire pits and any other use of fire or flame devices.

The Code also prohibits the storage or use of liquid propane (L.P.) gas in quantities greater than one pound above the first floor in any apartment or condominium. Thus, L.P. gas grills cannot be stored on a balcony. It is important to note that neither can L.P. gas cylinders be stored inside the residential unit or anywhere above the first floor.

Electric grills had been permitted in years past, but the FFPC was amended, effective December 31, 2011, to prohibit their use as well.  The current regulation provides that no hibachi, grill, or other similar devices used for cooking, heating, or any other purposes can be used or kindled on any balcony, under any overhanging portion, or within ten feet of any structure (other than one- and two- family dwellings).  A subsequent amendment in 2014 also prohibited storage of these items.

The only exception to this rule is that listed equipment permanently installed in accordance with its listing, applicable codes, and manufacturer’s instructions may be permitted.

Smoking, while not prohibited by law, also can be regulated under individual association rules.

What enforcement action will be taken for violators?

The local enforcement procedures and penalties for failure to comply with the Florida Fire Prevention Code, or the Uniform Fire Safety Standards, are found in Broward County Local Amendments to the Florida Fire Prevention F-101.4.

The ordinance states that violators of the fire code may be prosecuted in the same manner as misdemeanors; and, upon conviction, they may be punished by a fine not to exceed $500.00 or by imprisonment in the County Jail not to exceed 60 days or both.

The ordinance also states that fire inspectors may issue civil citations to violators. A separate citation may be given for each violation, and each day that a violation continues is a separate offense. If the citation is not contested the penalty is $50.00, plus court costs of $8.00. If a violator chooses to contest the citation and is convicted, the judge may impose a penalty up to $500.00 plus court costs for each violation.

Safety Tips from the National Fire Protection Association

Don’t let fire make your summer memorable for the wrong reasons.  The National Fire Protection Association offers these grilling safety tips:

  • Propane and charcoal BBQ grills should only be used outdoors.
  • The grill should be placed well away from the home, deck railings and out from under eaves and overhanging branches.
  • Keep children and pets away from the grill area.
  • Keep your grill clean by removing grease or fat buildup from the grills and in trays below the grill.
  • Never leave your grill unattended.

It pays to be safe at all times. Protect yourself, your neighbors and your property.

SFPMA MEMBER - Find us on the Members Directory
Royale Management Services, a registered and licensed community association management corporation in Florida, works with association Boards of Directors throughout South Florida to oversee the daily activities required for proper management, helping to educate them on their responsibilities, duties, and obligations. Royale’s team members are highly trained in all aspects of community association management and customer service to ensure that proper procedures are followed that keep the association in compliance with all of the rules governing elections, budgeting, accounting, operation, collection and assessment. The firm and its president are members of the Community Association Institute (CAI) and the Fort Lauderdale Chamber of Commerce.
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Having Security Provider Issues?

Having Security Provider Issues?

I saw a white paper titled “When your security provider, Becomes the security problem.” Although it was for the tech industry, I chuckled. I didn’t get to read it but…

  I have spoken to clients looking for all types of security services. And one of the most common issues in contracted security services is the lack of knowledge, quality and professionalism, or at the very least they may not known how to deliver that information, esp. equating to a proper security program.  It’s almost become an automatic assumption that where someone has or is receiving bad services that I ask what they are currently paying for it. Invasive? No, to the root of the problem. We’ve all been taught “you get what you pay for”, but one of the places this holds no truer is in security. So, what happens when your security provider becomes the security problem? And how do I know when they have become the security problem?

  To begin, let’s address those that currently have security services being provided. They came in sold you on services and since then it seems to have slowly declined. Maybe the front desk agent has become unfriendly and not welcoming? Maybe the guards start to come to work out of dress code, or start missing important information caught by CCTV that should be recorded in a log like deliveries. Guards show up late, don’t make rounds and now you have a question and no one is answering or helping.  If they’re lack – of proper services ends up causing more issues for the business and is creating vulnerabilities then YES, your security provider IS THE PROBLEM. When your security provider is no longer keeping up with new risks and threats to your business and how to mitigate them, then your security provider becomes the problem. When your security is the problem it can lead to extremely critical losses. When you as a business owner rely on quality and professional security services and because of their lack of attention to detail, complacency or what have you, a piece of the project is temporary slowed down or comes to a complete stop, it’s quite disappointing and can lead to a damaged brand image, effect deadlines and so much more

For those that are looking for Security services, STOP! Take a second to think about your concerns, wants and budget. A true security professional can tell you what you need fairly quickly. A proper run company will have an entire operation for the guards he will be utilizing and set up to handle admin duties.  I can’t tell you how many companies offer guards and all they can do is give you a warm body to work a shift. And that’s fine, but do not expect any further service from them.  And in many cases if the bid is very low, either corners are being cut, or pay is very low. Which announces itself as high turnover rates, theft, angry employees. Etc. What about those companies that try to staff 24/7 week long contracts with just two staff? Sleeping guards, distracted guards, etc.  All effect the security of the job and create insider threats as well as vulnerability to the assets.   

  It’s quite simple, not all business provided quality and professional work. And the negative ramifications on the Security Industry because of these companies it actually has shape shifted the service provider wage and clients outlook on security. For many years there has been another level to security, mostly overlooked, mostly fighting to correct the wrongs. When an everyday guard services has the ability the offer services otherwise considered specialized in practice it again starts to throw array an entire industry.

For more information on how OP4 can help!  CONTACT OP4 SECURITY SOLUTIONS @

Info@op4securitysolutions.com

954-304-5002

“IT’S THE LITTLE THINGS THAT COUNT”

SFPMA MEMBER - Find us on the Members Directory
Joseph Weedman is the Founder of OP4 Security Solutions. Mr. Weedman leads with a bold and unconventional vision that has amounted to great new insight for clients. Mr. Weedman has attended two International Executive Protection programs and graduated from American Public University where he studied Security Management.Through these measures he has helped improve the brand image for companies and clients as well as increased they’re safety and security. Joseph’s knowledge in criminal thinking makes him an asset to any team and pertinent to any security assessment. With his education, experience & current intelligence on recent events he is a well-rounded professional. Mr. Weedman is also a proud member of the National Crime Prevention Association (NCPA). Joseph is a natural leader with an adventurous and innovative spirit. He went on to create OP4 Security Solutions in 2015 planning on bringing changes to the Private Security Industry. His quote “It’s The Little Things That Count” are the back bone to the quality service he and his company provides.
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HOW TO KEEP MONTHLY ASSOCIATION MAINTENANCE FEES LOW

HOW TO KEEP MONTHLY ASSOCIATION MAINTENANCE FEES LOW

  • Posted: Jun 25, 2017
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HOW TO KEEP MONTHLY ASSOCIATION MAINTENANCE FEES LOW

by Enrolled Agent Steven J. Weil, Ph.D., EA, LCAM, Royale Management Services, Inc.

The answer to keeping association maintenance fees low is NOT to defer necessary maintenance or waiving reserves.  To keep postponing repairs is an act of sheer folly.  It is simply an artificial way to keep maintenance fees low that often backfires when the piper finally has to be paid by a special assessment.

The only thing owners hate more than a maintenance fee increase is a special assessment that becomes necessary because the budget does not adequately cover the ongoing operating and maintenance costs.

As a reminder, there are two parts to every budget: the operating budget and the reserve budget.

  • The operating budget should include all necessary regular and recurring expenses that are expected in the coming year, no matter how large or small, such as repairs, maintenance, up keep, payroll, utilities, supplies, insurance and administrative costs.
  • The reserves are designed to accumulate funds for replacement and renovation of major building systems and components that wear out over time. Statutes make it mandatory that reserve budgets include estimated expenditures for roof replacement, building painting and pavement resurfacing at a minimum.

What should go into a reserve budget?  Aside from what the law requires, a good reserve budget also covers other large capital items that will wear out and need to be replaced over the life of the association, such as elevators, windows, common area air conditioners, docks, generators, balconies, et al.  Other common area reserve items might include a pool upgrade, clubhouse renovation, landscaping and other amenities.

The tricky part of the budgeting process is to balance what is required with the often competing interests of those who want the lowest possible maintenance increase with those who are willing to pay more for better services, better amenities or other improvements.   The board is charged with the upkeep maintenance and operation of the association and amenities as provided for in the governing documents. Any change to what is provided for in the governing documents should be approved by an owner vote. This includes both increases and decreases in services and changes to facilities.

Projected estimates for the reserve budget should take into consideration the cost to replace each item, prorated over the years of its estimated life.

A common mistake in estimating this value is the failure to take into account the rise in replacement costs that occurs over time.  Cost estimates as well as remaining useful life should be evaluated annually. Reserve planning can be done with the assistance of association vendors, or a professional engineer could be hired to perform a Reserve Study.

Some of the costs of running an association can be managed.  Controllable expenses — those over which the board and or management have some control as to the amount and timing — include accounting, bank fees, repairs, supplies, office expense, labor costs, preventive maintenance, management, legal, landscaping and janitorial.

Over the years, however, non-controllable expenses have become the largest part of most association budgets.  They include utilities, contract services, electric, water, garbage, cable, loan payments, licenses, fees and insurance (property, liability, wind and Directors & Officers). Although boards and management work hard to keep these costs as low as possible, it is often difficult or even impossible to get competitive bids for such items as insurance. The costs of utilities and water are often controlled by monopolies or governments; and while conservation can help, it does not eliminate or substantially reduce these costs in the short run. Long term contracts may also lock in such things as elevator maintenance costs, cable TV, and other expenses.

In addition to the increases in these expenses, over the years as association property ages, the cost of maintaining it increases. While putting off maintenance may help cash flow and reduce expenses today, it also means that those expenses will be higher down the road.

Reserve funds cannot be used for purposes other than those intended without a majority vote of approval by the owners in advance. Thus, there is sometimes a reluctance to list in the reserve budget certain capital items that might be considered non-essential and could be postponed.  This can be a mistake, forcing a special assessment when these capital items need to be replaced.

It’s best to keep in mind that one good way to maintain property values is to ensure that the association has a reserve budget that covers necessary renovation and replacement of major components and assets and that the reserve budget is properly reviewed and funded each year.  Under Florida law, condominium associations are required to include a “fully funded” reserve schedule in the proposed budget and to fully fund reserves unless they are waived or reduced by a vote of the owners.

 

SFPMA MEMBER - Find us on the Members Directory
Royale Management Services, a registered and licensed community association management corporation in Florida, works with association Boards of Directors throughout South Florida to oversee the daily activities required for proper management, helping to educate them on their responsibilities, duties, and obligations. Royale’s team members are highly trained in all aspects of community association management and customer service to ensure that proper procedures are followed that keep the association in compliance with all of the rules governing elections, budgeting, accounting, operation, collection and assessment. The firm and its president are members of the Community Association Institute (CAI) and the Fort Lauderdale Chamber of Commerce.
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