State bill could force homeowner associations to build up emergency funds

Article Courtesy of the Sun Sentinel

By Joe Kollin
Posted April 26, 2006


Homeowner associations that lack reserve funds would have to establish them, if a majority of residents approve, under legislative bills that appear to be on their way to becoming law.

Many Broward and Palm Beach county communities last year regretted not having reserves after Hurricane Wilma. The damage left behind forced boards to impose huge special assessments for cleaning up debris and replacing landscaping.

Under current law, homeowner associations do not need reserves unless they are required in their bylaws. In condo associations, reserve funds are required unless owners vote to waive them.

At least three bills [SB 957, HB 839 and HB 391] allow homeowners groups to establish reserve funds if a majority of owners vote to do so. The bills also require associations without reserves to notify owners of their right to request the vote. And they spell out the procedures for voting and dealing with the money.

Donna Berger, executive director of the Community Association Leadership Lobby, said she supports the proposals because they allow homeowners to make their own decisions. Associations with buildings, such as clubhouses, can opt for reserves while those with no commonly owned buildings can skip them. "People must ask for it," she said. "In condos it is passive because you're stuck with a reserve unless you opt out."

Jan Bergemann, president of the grassroots Cyber Citizens for Justice, said he would have preferred homeowners to follow the condo model of waiving reserves. But he likes that for the first time, homeowner associations would have guidelines for reserves.

"Anything that gives guidelines is good because without them, anyone can do what they want," he said.

The state Legislature's annual 60-day session ends May 5 and only a few of the dozens of condo and homeowner association proposals being considered are likely to be sent to Gov. Jeb Bush.

Among those failing to make headway, for the second consecutive year, was a proposal [SB 586] to prohibit boards from bringing liens against condo owners for unpaid assessments of less than $2,500.

Also looking dead for this year is a bill [HB 1227] that would require the state to investigate complaints of abuse by boards; limit board members to four-year terms; require buildings be inspected every five years for safety; and force boards to put items on their meeting agendas when 20 percent of owners request it.

Berger supports what the Legislature is doing because she doesn't want any new laws that would discourage residents from volunteering to serve on boards.

But Bergemann was upset.

"The powers that be in Tallahassee at the moment obviously aren't interested in protecting condo and homeowner associations owners despite the problems we've seen," he said.