Article Courtesy of The Sun Sentinel

By Daniel Vasquez

Published April 1, 2009

It's time again to answer your questions, with help from attorneys from the Palm Beach County Bar Association.

Q: Does the board of directors of a condo have the right to use reserve account funds to augment general funds?

A: Generally, no. The Condominium Act, §718.112(2)(f)3 Fla. Stat. (2008), requires reserve funds to be utilized only for the purpose for which the reserve fund was created, with one exception — when the expense is approved in advance by a majority vote of members at a duly called meeting of the membership.

Q: Can a community board legally turn off water or cable service to a unit of a member who does not pay association fees?

A: Generally a condo association cannot turn off water and cable service to a delinquent unit owner if the service is provided to all owners, and the utilities are a common expense for the association. Homeowners associations, however, have the authority to suspend certain rights if the association's "governing documents" provide that right. As a practical matter, usually contractual or tariff requirements for water and cable television service providers prohibit an association from interfering with either services.

Q: A new state law requires candidates for a condo board to submit a signed form stating they have read and understand state laws and governing documents. What are the consequences if this form is not submitted?

A: The Condominium Act, §718.112(2)(d), Fla. Stat. (2008), does not state consequences; however, from the statute's context it would appear that a candidate who fails to provide a form will not have his or her name printed on a ballot.

Q: Our co-op is trying to get an opinion about who "owns" and controls the dock space. Some of us think it is limited common area and the board can set rules and regulations. Others think the dock owner has control.

A: The answer is normally found within a community's "governing documents." There is no default or general provision that communities automatically follow.

Q: I understand a new state law requires all condos with a budget over $400,000 to have a certified financial audit. Our association has a budget of $545,000. However, more than $300,000 goes directly to the master association. Our budget is then under $400,000. Must we have a certified audit?

A: The Florida Condominium Act does not normally differentiate the purpose of expenditures when considering what type of financial statement must be provided. The Condominium Act, in §718.111(13)(a), Fla. Stat. (2008), mandates the preparation of financial statements on the basis of revenue, not expenditures.

Q: In our homeowner association meetings, homeowners are asked to leave when the board and management company need to discuss legal matters. I would like to know why we must leave.

A: The Florida Homeowners Association Act provides an exception to the requirement that directors' meetings be open to all members. The exception is "for meetings between the board and its attorney with respect to proposed or pending litigation where the contents of the discussion would otherwise be governed by the attorney/client privilege." The Legislature permitted this exception as a practical necessity so that an association can consider legal strategy without making the strategy known to an opposing party.

It is necessary to note that these answers are not legal counsel, questions, representation or advice. A person or organization with these types of questions should consult Florida legal counsel.

UPDATE: Lawmakers this session could pass sweeping community association laws. Rep. Julio Robaina's House Bill 1397 passed the Civil Justice & Courts Policy Committee by a 9-0 vote on Friday. It still needs to pass more votes, but under some of the provisions, the state would have the authority to examine an association's books without having to obtain a subpoena and could create a law enforcement division to investigate crimes involving association management.

Daniel Vasquez can be reached at:

[email protected] or at 954-356-4558 (Broward) or 561-243-6686 (Palm Beach County). His condo column runs every Wednesday in the Local section and at www.sunsentinel.com/condos. You also can read his consumer column every Monday in Your Money and at www.sunsentinel.com/vasquez