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Find Blog Articles for Florida’s Condo, HOA and the Management Industry.

Rental Property Expenses are deductible only in the year they are paid…

Posted: Nov 26, 2019
By: Admin SFPMA
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End of year Taxes for your property

While tax returns aren’t due until April, to minimize your tax burden the strategy of accelerating rental property expenses should be considered now, property owners, should start deducting these expenses this year could be more important than ever, especially if you’re affected by the new Affordable Healthcare Act tax.

Under the Act, if your modified adjusted income exceeds $250,000 (filing jointly) then you’ll pay an additional 3.8% tax on any rental income or other passive income above that amount. Rental property expenses are deductible only in the year they are paid, so December is your last chance to pay for any rental property-related expenses that you want to deduct this year. Additionally, you can pay your expenses in advance, so consider paying in December some expenses due next year (such as a mortgage payment, property taxes, or utility bills) to offset this year’s income.

As far as rental income is concerned, don’t be tempted to defer rental income for December rents to next year. The Internal Revenue Service matches 1099s for commercial leases, and they want to see rental income match up with 1099s. While residential rental owners don’t receive 1099s from their tenants, many audits that CAP’s have been involved in where the IRS examined residential lease agreements and had issues with the rental owner declaring less than a full twelve months of income if the unit was occupied for the entire year. But what if you were on vacation for all of December and didn’t check your mailbox until mid-January? That’s still income for December.

It’s important to not make assumptions about rental income losses–several clients get burned because they thought they could deduct these losses. The problem is that rental income losses fall under the “passive income rule” which can be a complicated beast. Rental income is considered passive income, and under the rule, passive income losses can only be offset against passive income, which means you need to have another rental property that makes money or some other passive income source. The rule is different if your adjusted gross income is less than $150,000. The passive income rules are very complex and everyone has a different situation, so it’s critical that you consult with your tax adviser before you act on any assumptions.

Checklist: Year-end Review
Review rental property insurance policies; update amounts if necessary.
If you don’t have an umbrella liability insurance policy, consider one.
Make sure that if you have converted your primary residence to a rental property, that you made that classification change with your insurance company.
Review local city or county ordinances for changes, such as registration requirements.
Review federal and state laws, including fair housing rules and your state landlord-tenant statute, for any changes.

We have Courses, Meetings and Seminars to help Managers, Board Members with Taxes.

RMS Accounting: https://www.facebook.com/RMSAccounting/

Checklist: End of Year Taxes
Meet with your accountant to discuss end of year tax strategies.
Consider paying now expenses due next year to offset this year’s income.
Let your accountant know if you anticipate any rental losses next year, or if you’re planning on refinancing, buying, or selling rental property as these activities may have tax consequences that might be partially mitigated with informed planning.
If you formed an LLC or S-Corporation to hold your rental property, order 1099s now to send to your unincorporated vendors (to whom you paid more than $600) by January 31st–it can sneak up quickly.

Year-end reviews:

Revisiting and evaluating insurance policies and rental regulations and laws is key to protecting your rental property investment. We recommend that rental property owners set an annual calendar reminder to review their insurance policies for proper and adequate coverage and check on new local ordinances affecting landlords.

Insurance policies and their respective coverage amounts change frequently. We have seen many owners move out of their property and convert it to a rental but forget to call their insurance provider to make sure their policy is updated from a primary occupant policy to a landlord policy. If an owner does not make this policy change then it is very likely a future claim will be denied for the wrong policy classification. The classification change to a landlord policy will likely result in a premium increase but without the proper classification the property owner is not adequately insured which, in the end, will be a much bigger price to pay.

City ordinances can change quickly and are difficult for distant and even local landlords to be aware of. While a local professional property manager should be able to help you with local ordinances, It is ultimately the property owner’s responsibility to make sure rental property is compliant with local city and county ordinances.

In addition to local ordinances, make sure you understand federal and state laws that impact rental property, such as fair housing requirements and your state’s landlord-tenants laws. Your property manager, if you have one, will be an important resource here. If you self-manage your rental property, consider joining a state or local landlord association, as these groups often have attorneys provide updates on changing laws as well as provide other benefits. Property Managers can join forces with www.sfpma.com.

Planning for Next Year:

While it might be a slower time for year for landlords and property management companies, the winter, especially December, can nonetheless get busy because of the holidays. However, it’s important to have a game plan for the coming year. Schedule a planning meeting to meet with key people, including any co-owners of your rental property or your property manager, if you have one, to address these issues:

Checklist: Planning for Next Year
Confirm annual or six-month rental property inspections are scheduled.
Review lease agreement template.
Review policies or “house rules.” Consider adding a policy addressing space heater safety. Adding a Pet Policy, we see many more tenants and owners with pets, along with service animals.
Review rents and consider an increase.
Discuss whether any significant repairs, such as re-roofing, need to be undertaken in the coming year.

Tags: Accounting & Taxes, Condo and HOA Accounting, Management News

We are Running a Florida Rising Magazine – Cover Picture Contest.

Posted: Nov 13, 2019
By: Admin SFPMA
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We are Running a Cover Picture Contest.

Submit to this page Florida Pictures for consideration. We will select the winner to be the DEC 2019 Cover

– If your picture is Selected We will Place your company on a Full Page ( With a Great Bio and Article, Letting our industry know more about You!)

Think of Pictures showing Condo & HOA along with Property Management In Florida!
With Voting Season coming – December we will learn more about Voting for Officers, How it is Accomplished, Some stories on how things go bad, and new companies ready to help with Voting for your Condo and HOA’s
Please include your Info: so we can contact you, most will be from a FB, LI or Email – we can IM you with our decision..

This closes on 27, November 2019. So we can have a few days to place the company information

You can also send the pictures in an Email: FloridaRising@sfpma.com

Best of Luck to the Winner..

SFPMA

Tags: Condo and HOA, Management News, Members Articles, SFPMA Social Media

If Your Association Fails to Hold Board Elections at an Annual Meeting, Do You Still Have a Board?

Posted: Nov 04, 2019
By: Admin SFPMA
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If Your Association Fails to Hold Board Elections at an Annual Meeting, Do You Still Have a Board? The Answer May Surprise You…

As Condominium and HOA attorneys, we often receive questions from our clients dealing with all the issues that can get in the way of conducting a successful annual meeting. Most often, it is the issue of not being able to achieve a quorum of owners in attendance—which stymies the Association’s ability to hold Board member elections, approve the budget, and take other important actions to further the HOA’s business for the coming year. So what happens if an Association’s Bylaws calls for annual board elections, but the Association does not hold elections for a number of years? Is there a Board? Does the Board have any authority? A recent case addressed these issues, and the court’s findings might surprise you.

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Facts

In a 2019 case, a Condominium Association sued an owner for violating the governing documents. The owner claimed that the Association’s Board, who initiated the lawsuit against him, lacked the authority to sue (and lacked the authority to do anything for the Association) because the Association had not held board elections in recent history. Instead, the same directors had been in place for many years, despite the mandate in the Bylaws that board elections should be held each year at the annual meeting. The Association had not held annual meetings, and as a result, no Board elections had taken place.

Court Rulings

The trial court agreed with the homeowner defendant that the Association Board did not have any authority to act on behalf of the Association because they did not follow the Bylaws and hold annual elections. The Association appealed, and the Court of Appeals reversed the trial court’s decision, finding in favor of the Association, holding that the Board members did have authority because they were still “in power.” Why? The secret was held within the language of the Bylaws, which stated that Board members serve until the earlier of (1) the next annual meeting of the Association or (2) such time as the Board members are replaced. As the Association never held an annual meeting, and the Board members were not replaced, the Board members still legally served as the Board.

Find Upcoming Events all over Florida on our Calendar

Lesson

Board members, beware—or at least, take care! If your Association does not or cannot hold its annual meeting due to quorum problems (for example) it is likely that you will remain on the Board until your successor is elected. Unless you have formally resigned your Board position as set forth in your Bylaws, you are still a director, with all of the duties, obligations, and authority that come along with your position.

Channel View East Condominium Association, Inc. v. Ferguson, 2019 WL 2865987 (Ct. App. Michigan).

By Lydia Chartre

Tags: Condo and HOA, Condo and HOA Elections, Management News

Statutory Limitation on Condominium Transfer Fees

Posted: Nov 04, 2019
By: Admin SFPMA
Comments: 0

Statutory Limitation on Condominium Transfer Fees

A Reminder that the Limit is the Limit

Transfer fees are those fees an association may charge in connection with the sale or lease of a unit. There are significant differences between allowable transfer fees for homeowners’ associations as compared against condominium associations. When it comes to transfer fees for condominium associations, Florida law is patently clear – in no event may such a fee exceed $100 per applicant. In spite of this clear limitation, some condominium associations charge more than the statutory maximum, and doing so is not without significant consequence.

In fact, unit owners of a condominium association recently brought a successful class action lawsuit in Miami-Dade County against their condominium association that charged transfer fees beyond the statutory limit. That association now faces a significant financial impact from the suit. Not only must the association return the money charged over the statutory limit to each member of the class, the settlement stipulated that the association must pay $95,000.00 in attorney fees to the law firm representing the residents. The class period was from 2014 to 2019, and the association may end up paying over $200,000.00 to satisfy all the claims in the class. Yikes!

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Specifically, section 718.112(2)(i), Florida Statutes, provides that “no charge shall be made by a condominium association in connection with the sale, mortgage, lease, sublease, or other transfer of a unit unless i) the association is required to approve such transfer and ii) a fee for such approval is provided for in the declaration. In no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant.” The law does allow the association to require a prospective lessee place a security deposit, not to exceed the equivalent of one month’s rent, into an escrow account maintained by the association.

It is important to note that the statute requires that the condominium’s declaration provide authority to the association to approve a transfer and to impose the transfer fee. If these powers are not granted in your declaration of condominium, the condominium association may not charge any transfer fee. If the declaration of condominium does provide for a transfer fee, then the association must abide by the statutory maximum.

It is not unheard of for more than one condominium association to attempt to circumvent the statutory limitation by changing the name of the fee. Some may call the charges “screening fees” or “move in fees,” but that does not change the fact that the fees are still legally considered transfer fees. Remember, the limit is the limit, regardless of whether the condominium association’s expenses in obtaining credit and criminal history reports exceeds the $100.00 limitation. Any condominium association charging more than the statutory maximum is violating the statute and opens itself up to liability. With the award of attorney fees, there is an incentive for attorneys to bring more cases challenging any transfer fees that violate the statute. Your condominium association could be liable for hundreds of thousands of dollars for charging improper transfer fees.

On the other hand, there is good news for homeowners’ associations, these statutory maximums only apply to condominium associations. However, homeowners’ associations are not without some statutory limitation. Section 689.28, Florida Statutes, declares that transfer fee covenants violate public policy by impairing marketability of real property. However, section 689.28(2)(c)7., Florida Statutes, does allow a homeowners’, condominium, cooperative, mobile home, or property owners’ association to charge a fee if the declaration allows such a charge. So, a homeowners’ association may only charge a transfer fee if the authority is granted to the association in the declaration. Just keep in mind, if your declaration specifies a set fee, your association is limited to the fee provided in the declaration.

Now is a good time for all board members to review their community’s governing documents and seek advice from the association’s lawyer as to whether any existing transfer fee complies with the statutory requirements. A simple check now can help your association avoid costly litigation in the future.

Article written by Jeff Rembaum of KBRLegal.com
with permission for SFPMA to republish for our industry.

Kaye Bender Rembaum, Attorneys at Law

The law firm of Kaye Bender Rembaum, with its 19 lawyers and offices in Broward, Palm Beach and Hillsborough Counties, is a full service law firm devoted to the representation of more than 1,200 community and commercial associations, developers, and their members throughout the State of Florida. Under the direction of attorneys Robert L. Kaye, Michael S. Bender and Jeffrey A. Rembaum, the law firm of Kaye Bender Rembaum strives to provide its clients with an unparalleled level of personalized and professional service that takes into account their clients’ individual needs and financial concerns.

Thank You, SFPMA.COM

Tags: Condo and HOA, Condo and HOA Laws, Management News

Hire and retain skilled community association staff members

Posted: Oct 28, 2019
By: Admin SFPMA
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Talent needed: How to hire and retain skilled community association staff members

Written by Alicia Muraca on May 31, 2019. Posted in General Business.

Recruiting and retaining skilled team members can be challenging for community associations and management companies, especially in a very competitive labor market and with communities limited by tight budgets.

In this reality, it becomes even more important for associations and management companies to highlight their strengths and address organizational shortcomings, says business consultant Bob Begley.

The founder of Golden Sands Management Consultants, LLC, a Florida-based business consulting firm, Begley has been an innovative business thinker for more than 30 years. He has advised hundreds community leaders while serving as the CEO of Golden Sands Community Management, Inc. He’s also authored 27 continuing education courses for CAM’s and board members through his sister company, Florida CAM Courses.

The issue at hand is recruiting in a very different workforce. Begley states, “I noticed that over the past few years, there was a very big disconnect between what the young people that I was hiring wanted from their experience of work and what I needed from them at work, as their employer”. We want to help company leaders understand ways to attract talented workers.

People think that the secret to attracting and retaining talent is little things like, ‘Let’s give them free lunch’ or ‘What perks can we offer?’ or ‘What are our benefits compared to the benefits down the road?’ But at the end of the day, it really comes down to the quality of the organization. Is it successful? Is it high performing? Because good, smart people want to work in those environments.

Here are a three best practices for community associations and management companies for recruiting and retaining talent:

Stop thinking about tactics, and start thinking about the performance of the organization. The focus should be on building an organization that is robust and resilient. Great organizations have no trouble attracting and retaining talent.
Build a culture that people want to work in. The perks and benefits can’t be the only lure for bringing in talented workers. I caution you that if the culture doesn’t reflect what was promised to the manager when hired, you’ll find yourself in bigger trouble.
Be courageous. It’s important to brave a tight labor market to find talented people. It’s also about having the courage to build a high-performing team. A team is only as strong as its weakest link, so we need to be capable of managing the performance of the underperformers or, at times, even having the courage to move people on.
Once you find the perfect new hire, treat them as the valuable resource that they certainly should be in your organization. Practice A.R.E. with all team members – Appreciate, Recognize and Encourage. For more on creating Wonder in Your Workplace, visit the Florida CAM Courses website to download Wonder in the Workplace.

Tags: Education & Licensing, Florida CAM Licensing, Management News

Please make a lifesaving donation to the Leukemia & Lymphoma Society

Posted: Oct 26, 2019
By: Cohen Law Firm
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Please make a lifesaving donation to the Leukemia & Lymphoma Society

Every single penny counts in fundraising for this lifesaving organization. Whether you can donate $1 or $1,000, be certain that your generous contribution will change, and hopefully even save, lives in your community.

To make a lifesaving donation, click here:
https://pages.lls.org/ltn/ncfl/Orlando19/CohenLawGroup

My family, my team at Cohen Law Group, and I sincerely thank you for your continued support and lifesaving generosity.

Many of you know how important the Leukemia & Lymphoma Society (LLS) is to me, my family, and everyone here at Cohen Law Group. For years, you have aided our efforts in raising funds to give back to this lifesaving organization for which we are eternally grateful.

My own family was affected by Leukemia. We are not the only family to experience this journey but we hope, that through supporting LLS, we will be one of the last. This year we were honored to receive artwork from Kay Colton who, at only age 11, is a Leukemia survivor. Kay’s family and my own are just two examples of the thousands upon thousands of lives LLS has impacted.

Last year, we raised over $8,000 for LLS! Today we are asking for you to join us once more in our goal of raising $10,000 and beyond.

With the Utmost Gratitude,
Harvey V. Cohen, President

Here’s how your donation to LLS helps.

LLS is committing $25 million to childhood cancer research over the next five years.
LLS helped advance 34 of the 39 blood cancer treatment options approved by the FDA in 2017 and 2018.
In 2018 alone, LLS provided over $2.5 million in direct financial assistance, helping more than 900 patients in the North & Central Florida Chapter.

This lifesaving work is possible because of the generosity of communities like ours across America. There is still so much to accomplish in defeating blood cancers once and for all and so we hope that you are able to make a donation of any amount to our fundraiser today.

Supporting our Members

Tags: Management News, Members Articles, SFPMA Social Media

HOA Balance Sheets

Posted: Oct 21, 2019
By: Admin SFPMA
Comments: 0

HOA Balance Sheets

The balance sheet in your HOA financial statement is the quickest and easiest way to get a feel for the financial strength of your community association. There are three parts to a balance sheet: assets, liabilities, and equity.

Assets = Liabilities + Equity. This is the basic formula that your HOA balance sheet should follow. It will provide a general snapshot of how well your association is doing financially at a certain point in time whether it be at the end of every month, quarter, or year. It should be included in every official financial statement.

Assets – the positive. Assets are anything of monetary worth owned by your HOA. This includes things like reserve funds, petty cash, bank accounts, property, etc.
Liabilities – the negative. This will be anything owed by the association such as maintenance fees, improvements, or vendor bills. Anything that costs money will be a liability. Depreciation on community structures, vehicles, or equipment also counts as a liability and should also be added to the HOA balance sheet.
Equity – what’s left. Equity is the difference between the value of the assets and the value of the liabilities. To find equity, the formula can be rearranged as: Equity = Assets – Liabilities.

If you follow the formula and your equity is positive, good job! Your association is doing well and is bringing in more money than it owes. If equity is negative, it means that you should quickly reevaluate your finances; more money is being spent than is coming in.

Not all equity is created equal. Having an equity of $5,000 would be great for a small HOA that only brings in $8,000 monthly but not so great if your community collected $100,000 monthly. That’s where equity ratio comes in. Equity ratio can be calculated by taking your total equity and dividing it by total assets: Equity Ratio = Equity / Assets. Using the same example from above, the smaller HOA would have an equity ratio of 63% while the larger HOA’s ratio would be only 5%. When listed as a ratio, it becomes quite clear which HOA is more financially sound despite having the same total equity.

HOA balance sheets, whether prepared monthly, quarterly, or annually, are a good representation of the daily operation of your community association. A negative equity on an annual sheet does not only mean that an HOA has lost money over the year, but it also means that day to day operations are flawed and need to be reconsidered.

Just as with financial statements, the more frequently balance sheets can be made up, the more insight they can provide into the financial workings of a community association. While it is perfectly acceptable to release financial and balance sheets annually, it is preferred to release them monthly or quarterly. The more information your board of directors has to work with, the more effectively they can operate.

Tags: Condo and HOA Accounting, Condo and HOA Budgets, Management News

Building Bridges Through Communications

Posted: Oct 19, 2019
By: Admin SFPMA
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Building Bridges Through Improved Communications

Before you can improve on something, it helps to have a clear picture of where the problems are. Take an honest look at what’s been going on between your HOA board and the association members. Perhaps you’ve already tried (several times) to connect with the members of your HOA, but it just doesn’t seem to work. They won’t listen. Or they seem to listen and then ignore what was said. The board members wonder why they can’t get anything through to the association members.

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What’s wrong with the bridge we already have?

The Bridge to Nowhere, located in Southern California was intended to connect two places, but due to flooding, the original road was re-routed and now the bridge is part of a hiking trail. However, its use as a trail is often hampered because the trail going to it washes out, leaving the bridge practically inaccessible. In building a communication bridge, consider the approach—from both sides.

Be knowledgeable and confident in your purpose for the communication in the first place. Make sure the reason is clear and easy to see. As much as possible, prepare the other end of the bridge as well. Is it evident to the association members why they need to pay attention to the board and welcome the information into their lives? And do they have a clear way to approach the board with reactions to what the board says or to express both related and unrelated concerns that are common to the community? Is the board prepared to welcome what the owners say?

Two lanes

Does your communication bridge accommodate traffic going in two directions? Help your association members be prepared to receive your communication and deliver it in a means that is relevant and relatable.

Speak the same language as the members. If you are trying to communicate an issue that the board has researched in-depth or if it is closely related to your personal interests or profession, it might be easy to slip into using jargon. If the members don’t know what you’re saying or if they think you’re being arrogant, they will likely turn you off.

Be direct

What if bridges meandered the way a scenic road up a mountain does, switching back and forth? While both engineering feats serve a purpose, that purpose is not the same and cannot be achieved by the same means. Know what you have to say and say it as concisely as possible.

Maintenance

Even the best bridges require maintenance. Potholes form; supports and structure are subject to forces of nature and friction; the vehicles using it change in size and shape. Over time, the communication bridge between the board and the association members will need attention. The people on the board and in the association fluctuate, economics change, the social environment changes, and nature can affect the physical environment too.

Monitor the use of your communication bridge and be aware of potential problems as they arise. Different communication modes are appropriate at different times. While communicating through brief, direct emails may work at times, there will be other times a regular newsletter will be necessary or maybe you can use bills posted on bulletin boards. Sometimes phone calls are more helpful and other times just keeping the bridge clear by friendly, personal communication like a “hello” when you meet at a mailbox will support more weighty business communications down the road.

Transparency

A bridge smothered in fog may be daunting to traverse. If your association members feel they can’t see what’s going on, they are less likely to approach and you’re left with a communication gap instead of a bridge. Do not shroud important details in mystery and allow members to stumble onto them. Keep relevant information easily visible and accessible.

Structure

Every part of a bridge must be structurally sound to create a safe, positive transfer from one place to another. Make sure the structure supporting your communication bridge is sound. Are you using a management company? They are an important part of your structure. Make sure they are clear on the intent of the board and that the association members know how to access both the management company and the board with their concerns.

Tags: Business Articles, Condo and HOA, Condo and HOA Board of Directors, Management News

SFPMA Industry Articles | news, legal updates, events & education!

Rental Property Expenses are deductible only in the year they are paid…

End of year Taxes for your property

We have Courses, Meetings and Seminars to help Managers, Board Members with Taxes.

If Your Association Fails to Hold Board Elections at an Annual Meeting, Do You Still Have a Board?