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Senate Bill 0902: Relating to Community Associations [EPCC] |
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S902 GENERAL BILL/CS by Regulated Industries;
Jones (Similar H
0433, Compare H
1365, H
1373, S
2816) 1 A bill to be entitled 2 An act relating to community associations; 3 creating s. 712.11, F.S.; providing for the 4 revival of certain covenants that have lapsed; 5 amending s. 718.106, F.S.; prohibiting local 6 governments from limiting the access of certain 7 persons to beaches adjacent to or adjoining 8 condominium property; amending s. 718.110, 9 F.S.; revising provisions relating to the 10 amendment of declarations; providing 11 legislative findings and a finding of 12 compelling state interest; providing criteria 13 for consent to an amendment; requiring notice 14 regarding proposed amendments to mortgagees; 15 providing criteria for notification; providing 16 for voiding certain amendments; amending s. 17 718.114, F.S.; providing that certain 18 leaseholds, memberships, or other possessory or 19 use interests shall be considered a material 20 alteration or substantial addition to certain 21 real property; amending s. 718.404, F.S.; 22 providing retroactive application of provisions 23 relating to mixed-use condominiums; amending s. 24 719.103, F.S.; providing a definition; amending 25 s. 719.507, F.S.; prohibiting laws, ordinances, 26 or regulations that apply only to improvements 27 that are or may be subjected to an equity club 28 form of ownership; amending s. 720.302, F.S.; 29 revising governing provisions relating to 30 corporations that operate residential 31 homeowners' associations; amending s. 720.303, Page 1 1 F.S.; revising application to include certain 2 meetings; requiring the association to provide 3 certain information to prospective purchasers 4 or lienholders; authorizing the association to 5 charge a reasonable fee for providing certain 6 information; requiring the budget to provide 7 for annual operating expenses; authorizing the 8 budget to include reserve accounts for capital 9 expenditures and deferred maintenance; 10 providing a formula for calculating the amount 11 to be reserved; authorizing the association to 12 adjust replacement reserve assessments 13 annually; authorizing the developer to vote to 14 waive the reserves or reduce the funding of 15 reserves for a certain period; revising 16 provisions relating to financial reporting; 17 revising time periods in which the association 18 must complete its reporting; repealing s. 19 720.303(2), F.S., as amended, relating to board 20 meetings, to remove conflicting versions of 21 that subsection; creating s. 720.3035, F.S.; 22 providing for architectural control covenants 23 and parcel owner improvements; authorizing the 24 review and approval of plans and 25 specifications; providing limitations; 26 providing rights and privileges for parcel 27 owners as set forth in the declaration of 28 covenants; amending s. 720.305, F.S.; providing 29 that, where a member is entitled to collect 30 attorney's fees against the association, the 31 member may also recover additional amounts as Page 2 1 determined by the court; amending s. 720.306, 2 F.S.; providing that certain mergers or 3 consolidations of an association shall not be 4 considered a material or adverse alteration of 5 the proportionate voting interest appurtenant 6 to a parcel; amending s. 720.307, F.S.; 7 requiring developers to deliver financial 8 records to the board in any transition of 9 association control to members; requiring 10 certain information to be included in the 11 records and for the records to be prepared in a 12 specified manner; amending s. 720.308, F.S.; 13 providing circumstances under which a guarantee 14 of common expenses shall be effective; 15 providing for approval of the guarantee by 16 association members; providing for a guarantee 17 period and extension thereof; requiring the 18 stated dollar amount of the guarantee to be an 19 exact dollar amount for each parcel identified 20 in the declaration; providing payments required 21 from the guarantor to be determined in a 22 certain manner; providing a formula to 23 determine the guarantor's total financial 24 obligation to the association; providing that 25 certain expenses incurred in the production of 26 certain revenues shall not be included in the 27 operating expenses; amending s. 720.311, F.S.; 28 revising provisions relating to dispute 29 resolution; providing that the filing of any 30 petition for arbitration or the serving of an 31 offer for presuit mediation shall toll the Page3 1 applicable statute of limitations; providing 2 that certain disputes between an association 3 and a parcel owner shall be subject to presuit 4 mediation; revising provisions to conform; 5 providing that temporary injunctive relief may 6 be sought in certain disputes subject to 7 presuit mediation; authorizing the court to 8 refer the parties to mediation under certain 9 circumstances; requiring the aggrieved party to 10 serve on the responding party a written offer 11 to participate in presuit mediation; providing 12 a form for such offer; providing that service 13 of the offer is effected by the sending of such 14 an offer in a certain manner; providing that 15 the prevailing party in any subsequent 16 arbitration or litigation proceedings is 17 entitled to seek recovery of all costs and 18 attorney's fees incurred in the presuit 19 mediation process; requiring the mediator or 20 arbitrator to meet certain certification 21 requirements; removing a requirement relating 22 to development of an education program to 23 increase awareness of the operation of 24 homeowners' associations and the use of 25 alternative dispute resolution techniques; 26 providing effective dates. 27 28 Be It Enacted by the Legislature of the State of Florida: 29 THE VIOLATION OF PRIVATE PROPERTY RIGHTS!
THIS HAS TO GO! THERE IS NO EXCUSE FOR THIS OUTRAGEOUS PROVISION!
5 Section 2. Subsection (5) is added to section 718.106, 6 Florida Statutes, to read: 7 718.106 Condominium parcels; appurtenances; possession 8 and enjoyment.-- 9 (5) A local government may not prohibit condominium 10 unit owners or an association from permitting guests, 11 licensees, or invitees access to a public beach adjacent to or 12 adjoining the condominium property. 13 Section 3. Effective October 1, 2007, subsection (11) 14 of section 718.110, Florida Statutes, is amended to read: 15 718.110 Amendment of declaration; correction of error 16 or omission in declaration by circuit court.-- 17 (11) The Legislature finds that the procurement of 18 mortgagee consent to amendments that do not affect the rights 19 or interests of mortgagees is an unreasonable and substantial 20 logistical and financial burden on the unit owners and that 21 there is a compelling state interest in enabling the members 22 of a condominium association to approve amendments to the 23 condominium documents through legal means. Accordingly, and 24 notwithstanding any provision to the contrary contained in 25 this section: 26 (a) As to any mortgage recorded on or after October 1, 27 2007, any provision in the declaration, articles of 28
incorporation, or bylaws that requires
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30 mortgagees of units or any other portion of the condominium 31 property to or in amendments to the declaration, articles of Page5 1 incorporation, or bylaws or for any other matter shall be 2
enforceable only as to the following matters: 3
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9 1. Those matters described in subsections (4) and 10
(8). 11 2. Amendments to the declaration, articles of 12 incorporation, or bylaws that adversely affect the priority of 13 the mortgagee's lien or the mortgagee's rights to foreclose 14 its lien or that otherwise materially affect the rights and 15 interests of the mortgagees. 16 (b) As to mortgages recorded before October 1, 2007, 17 any existing provisions in the declaration, articles of 18 incorporation, or bylaws requiring mortgagee consent shall be 19 enforceable. 20 (c) In securing consent or joinder, the association 21 shall be entitled to rely upon the public records to identify 22 the holders of outstanding mortgages. The association may use 23 the address provided in the original recorded mortgage 24 document, unless there is a different address for the holder 25 of the mortgage in a recorded assignment or modification of 26 the mortgage, which recorded assignment or modification must 27 reference the official records book and page on which the 28 original mortgage was recorded. Once the association has 29 identified the recorded mortgages of record, the association 30 shall, in writing, request of each unit owner whose unit is 31 encumbered by a mortgage of record any information the owner Page6 1 has in his or her possession regarding the name and address of 2 the person to whom mortgage payments are currently being made. 3 Notice shall be sent to such person if the address provided in 4 the original recorded mortgage document is different from the 5 name and address of the mortgagee or assignee of the mortgage 6 as shown by the public record. The association shall be deemed 7 to have complied with this requirement by making the written 8 request of the unit owners required under this paragraph. Any 9 notices required to be sent to the mortgagees under this 10 paragraph shall be sent to all available addresses provided to 11 the association. 12 (d) Any notice to the mortgagees required under 13 paragraph (c) may be sent by a method that establishes proof 14 of delivery, and any mortgagee who fails to respond within 60 15 days after the date of mailing shall be deemed to have 16 consented to the amendment. 17 (e) For those amendments requiring mortgagee consent 18
on or after October 1, 2007,
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20 consent is provided other than by properly recorded joinder, 21 such consent shall be evidenced by affidavit of the 22 association recorded in the public records of the county where 23 the declaration is recorded. Any amendment adopted without the 24 required consent of a mortgagee shall be voidable only by a 25 mortgagee who was entitled to notice and an opportunity to 26 consent. An action to void an amendment shall be subject to 27 the statute of limitations beginning 5 years after the date of 28 discovery as to the amendments described in subparagraphs 29 (a)1. and 2. and 5 years after the date of recordation of the 30 certificate of amendment for all other amendments. This 31 Page 7 1 provision shall apply to all mortgages, regardless of the date 2 of recordation of the mortgage. 3 (f) Notwithstanding the provisions of this section, 4 any amendment or amendments to conform a declaration of 5 condominium to the insurance coverage provisions in s. 6 718.111(11) may be made as provided in that section. 7 Section 4. Section 718.114, Florida Statutes, is 8 amended to read: 9 718.114 Association powers.--An association has the 10 power to enter into agreements, to acquire leaseholds, 11 memberships, and other possessory or use interests in lands or 12 facilities such as country clubs, golf courses, marinas, and 13 other recreational facilities. It has this power whether or 14 not the lands or facilities are contiguous to the lands of the 15 condominium, if they are intended to provide enjoyment, 16 recreation, or other use or benefit to the unit owners. All of 17 these leaseholds, memberships, and other possessory or use 18 interests existing or created at the time of recording the 19 declaration must be stated and fully described in the 20 declaration. Subsequent to the recording of the declaration, 21 agreements acquiring these leaseholds, memberships, or other 22 possessory or use interests not entered into within 12 months 23 following the recording of the declaration shall be considered 24 a material alteration or substantial addition to the real 25 property that is association property, and the association may 26 not acquire or enter into agreements acquiring these 27 leaseholds, memberships, or other possessory or use interests 28 except as authorized by the declaration as provided in s. 29 718.113. The declaration may provide that the rental, 30 membership fees, operations, replacements, and other expenses 31 are common expenses and may impose covenants and restrictions Page 8 1 concerning their use and may contain other provisions not 2 inconsistent with this chapter. A condominium association may 3 conduct bingo games as provided in s. 849.0931. 4 Section 5. Subsections (1) and (2) of section 718.404, 5 Florida Statutes, are amended to read: 6 718.404 Mixed-use condominiums.--When a condominium 7 consists of both residential and commercial units, the 8 following provisions shall apply: 9 (1) The condominium documents shall not provide that 10 the owner of any commercial unit shall have the authority to 11 veto amendments to the declaration, articles of incorporation, 12 bylaws, or rules or regulations of the association. This 13 subsection shall apply retroactively as a remedial measure. 14 (2) Subject to s. 718.301, where the number of 15 residential units in the condominium equals or exceeds 50 16 percent of the total units operated by the association, owners 17 of the residential units shall be entitled to vote for a 18 majority of the seats on the board of administration. This 19 subsection shall apply retroactively as a remedial measure. 20 Section 6. Subsections (18) through (27) of section 21 719.103, Florida Statutes, are renumbered as subsections (19) 22 through (28), respectively, and a new subsection (18) is added 23 to that section to read: 24 719.103 Definitions.--As used in this chapter: 25 (18) "Equity facilities club" means a club comprised 26 of recreational facilities in which proprietary membership 27 interests are sold to individuals, which membership interests 28 entitle the individuals to use certain physical facilities 29 owned by the equity club. Such physical facilities do not 30 include a residential unit or accommodation. For purposes of 31 this definition, the term "accommodation" shall include, but Page 9 1 is not limited to, any apartment, residential cooperative 2 unit, residential condominium unit, cabin, lodge, hotel or 3 motel room, or other accommodation designed for overnight 4 occupancy for one or more individuals. 5 Section 7. Section 719.507, Florida Statutes, is 6 amended to read: 7 719.507 Zoning and building laws, ordinances, and 8 regulations.--All laws, ordinances, and regulations concerning 9 buildings or zoning shall be construed and applied with 10 reference to the nature and use of such property, without 11 regard to the form of ownership. No law, ordinance, or 12 regulation shall establish any requirement concerning the use, 13 location, placement, or construction of buildings or other 14 improvements which are, or may thereafter be, subjected to the 15 cooperative or equity facilities club form of ownership, 16 unless such requirement shall be equally applicable to all 7 buildings and improvements of the same kind not then, or 18 thereafter to be, subjected to the cooperative or equity 19 facilities club form of ownership. This section does not apply 20 if the owner in fee of any land enters into and records a 21 covenant that existing improvements or improvements to be 22 constructed shall not be converted to the cooperative form of 23 residential ownership prior to 5 years after the later of the 4 date of the covenant or completion date of the improvements. 25 Such covenant shall be entered into with the governing body of 26 the municipality in which the land is located or, if the land 27 is not located in a municipality, with the governing body of 28 the county in which the land is located. 29 Section 8. Subsections (4) and (5) of section 720.302, 30 Florida Statutes, are amended to read: 31 720.302 Purposes, scope, and application.-- Page 10 1 (4) This chapter does not apply to any association 2 that is subject to regulation under chapter 718, chapter 719, 3
or chapter 721 4 under chapter 723, except to the extent that a provision of 5 chapter 718, chapter 719, or chapter 721 is expressly 6 incorporated into this chapter for the purpose of regulating 7 homeowners' associations. 8 (5) Unless expressly stated to the contrary, 9
corporations 10 homeowners' associations in this state shall be governed by 11 and subject to chapter 607, if the association was 12 incorporated under that chapter, or to chapter 617, if the 13 association was incorporated under that chapter, and this 14 chapter. This subsection is intended to clarify existing law. 15 Section 9. Subsections (2), (6), and (7) of section 16 720.303, Florida Statutes, are amended, and paragraph (d) is 17 added to subsection (5) of that section, to read: 18 720.303 Association powers and duties; meetings of 19 board; official records; budgets; financial reporting; 20 association funds; recalls.-- 21 (2) BOARD MEETINGS.-- 22 (a) A meeting of the board of directors of an 23 association occurs whenever a quorum of the board gathers to 24 conduct association business. All meetings of the board must 25 be open to all members except for meetings between the board 26 and its attorney with respect to proposed or pending 27 litigation where the contents of the discussion would 28 otherwise be governed by the attorney-client privilege. The 29 provisions of this subsection shall also apply to the meetings 30 of any committee or other similar body when a final decision 31 will be made regarding the expenditure of association funds Page 11 1 and to meetings of any body vested with the power to approve 2 or disapprove architectural decisions with respect to a 3 specific parcel of residential property owned by a member of 4 the community. 5 (b) Members have the right to attend all meetings of 6 the board and to speak on any matter placed on the agenda by 7 petition of the voting interests for at least 3 minutes. The 8 association may adopt written reasonable rules expanding the 9 right of members to speak and governing the frequency, 10 duration, and other manner of member statements, which rules 11 must be consistent with this paragraph and may include a 12 sign-up sheet for members wishing to speak. Notwithstanding 13 any other law, the requirement that board meetings and 14 committee meetings be open to the members is inapplicable to 15 meetings between the board or a committee and the 16 association's attorney, with respect to meetings of the board 17 held for the purpose of discussing personnel matters. 18 (c) The bylaws shall provide for giving notice to 19 parcel owners and members of all board meetings and, if they 20 do not do so, shall be deemed to provide the following: 21 1. Notices of all board meetings must be posted in a 22 conspicuous place in the community at least 48 hours in 23 advance of a meeting, except in an emergency. In the 24 alternative, if notice is not posted in a conspicuous place in 25 the community, notice of each board meeting must be mailed or 26 delivered to each member at least 7 days before the meeting, 27 except in an emergency. Notwithstanding this general notice 28 requirement, for communities with more than 100 members, the 29 bylaws may provide for a reasonable alternative to posting or 30 mailing of notice for each board meeting, including 31 publication of notice, provision of a schedule of board Page 12 1 meetings, or the conspicuous posting and repeated broadcasting 2 of the notice on a closed-circuit cable television system 3 serving the homeowners' association. However, if broadcast 4 notice is used in lieu of a notice posted physically in the 5 community, the notice must be broadcast at least four times 6 every broadcast hour of each day that a posted notice is 7 otherwise required. When broadcast notice is provided, the 8 notice and agenda must be broadcast in a manner and for a 9 sufficient continuous length of time so as to allow an average 10 reader to observe the notice and read and comprehend the 11 entire content of the notice and the agenda. The bylaws or 12 amended bylaws may provide for giving notice by electronic 13 transmission in a manner authorized by law for meetings of the 14 board of directors, committee meetings requiring notice under 15 this section, and annual and special meetings of the members; 16 however, a member must consent in writing to receiving notice 17 by electronic transmission. 18 2. An assessment may not be levied at a board meeting 19 unless the notice of the meeting includes a statement that 20 assessments will be considered and the nature of the 21 assessments. Written notice of any meeting at which special 22 assessments will be considered or at which amendments to rules 23 regarding parcel use will be considered must be mailed, 24 delivered, or electronically transmitted to the members and 25 parcel owners and posted conspicuously on the property or 26 broadcast on closed-circuit cable television not less than 14 27 days before the meeting. 28 3. Directors may not vote by proxy or by secret ballot 29 at board meetings, except that secret ballots may be used in 30 the election of officers. This subsection also applies to the 31 meetings of any committee or other similar body, when a final Page 13 1 decision will be made regarding the expenditure of association 2 funds, and to any body vested with the power to approve or 3 disapprove architectural decisions with respect to a specific 4 parcel of residential property owned by a member of the 5 community. 6 (d) If 20 percent of the total voting interests 7 petition the board to address an item of business, the board 8 shall at its next regular board meeting or at a special 9 meeting of the board, but not later than 60 days after the 10 receipt of the petition, take the petitioned item up on an 11 agenda. The board shall give all members notice of the meeting 12 at which the petitioned item shall be addressed in accordance 13 with the 14-day notice requirement pursuant to subparagraph 14 (c)2. Each member shall have the right to speak for at least 3 15 minutes on each matter placed on the agenda by petition, 16 provided that the member signs the sign-up sheet, if one is 17 provided, or submits a written request to speak prior to the 18 meeting. Other than addressing the petitioned item at the 19 meeting, the board is not obligated to take any other action 20 requested by the petition. 21 (5) INSPECTION AND COPYING OF RECORDS.--The official 22 records shall be maintained within the state and must be open 23 to inspection and available for photocopying by members or 24 their authorized agents at reasonable times and places within 25 10 business days after receipt of a written request for 26 access. This subsection may be complied with by having a copy 27 of the official records available for inspection or copying in 8 the community. If the association has a photocopy machine 9 available where the records are maintained, it must provide 30 parcel owners with copies on request during the inspection if 31 the entire request is limited to no more than 25 pages. Page 14 1 (d) The association or its authorized agent is not 2 required to provide a prospective purchaser or lienholder with 3 information about the residential subdivision or the 4 association other than information or documents required by 5 this chapter to be made available or disclosed. The 6 association or its authorized agent may charge a reasonable 7 fee to the prospective purchaser or lienholder or the current 8 parcel owner or member for providing good faith responses to 9 requests for information by or on behalf of a prospective 10 purchaser or lienholder, other than that required by law, if 11 the fee does not exceed $150 plus the reasonable cost of 12 photocopying and any attorney's fees incurred by the 13 association in connection with the response. 14 (6) BUDGETS.-- 15 (a) The association shall prepare an annual budget 16 that sets out the annual operating expenses. The budget must 17 reflect the estimated revenues and expenses for that year and 18 the estimated surplus or deficit as of the end of the current 19 year. The budget must set out separately all fees or charges 20 paid for by the association for recreational amenities, 21 whether owned by the association, the developer, or another 22 person. The association shall provide each member with a copy 23 of the annual budget or a written notice that a copy of the 24 budget is available upon request at no charge to the member. 25 The copy must be provided to the member within the time limits 26 set forth in subsection (5). 27 (b) In addition to annual operating expenses, the 28 budget may include reserve accounts for capital expenditures 29 and deferred maintenance for which the association is 30 responsible to the extent that the governing documents do not 31 limit increases in assessments, including reserves. If the Page 15 1 budget of the association includes reserve accounts, such 2 reserves shall be determined, maintained, and waived in the 3 manner provided in this subsection. Once an association 4 provides for reserve accounts in the budget, the association 5 shall thereafter determine, maintain, and waive reserves in 6 compliance with this subsection. 7 (c) If the budget of the association does not provide 8 for reserve accounts governed by this subsection and the 9 association is responsible for the repair and maintenance of 10 capital improvements that may result in a special assessment 11 if reserves are not provided, each financial report for the 12 preceding fiscal year required by subsection (7) shall contain 13 the following statement in conspicuous type: THE BUDGET OF THE 14 ASSOCIATION DOES NOT PROVIDE FOR RESERVE ACCOUNTS FOR CAPITAL 15 EXPENDITURES AND DEFERRED MAINTENANCE THAT MAY RESULT IN 16 SPECIAL ASSESSMENTS. OWNERS MAY ELECT TO PROVIDE FOR RESERVE 17 ACCOUNTS PURSUANT TO THE PROVISIONS OF SECTION 720.303(6), 18 FLORIDA STATUTES, UPON THE APPROVAL OF NOT LESS THAN A 19 MAJORITY OF THE TOTAL VOTING INTERESTS OF THE ASSOCIATION. 20 (d) An association shall be deemed to have provided 21 for reserve accounts when reserve accounts have been initially 22 established by the developer or when the membership of the 23 association affirmatively elects to provide for reserves. If 24 reserve accounts are not initially provided for by the 25 developer, the membership of the association may elect to do 26 so upon the affirmative approval of not less than a majority 27 of the total voting interests of the association. Such 28 approval may be attained by vote of the members at a duly 29 called meeting of the membership or upon a written consent 30 executed by not less than a majority of the total voting 31 interests in the community. The approval action of the Page 16 1 membership shall state that reserve accounts shall be provided 2 for in the budget and designate the components for which the 3 reserve accounts are to be established. Upon approval by the 4 membership, the board of directors shall provide for the 5 required reserve accounts for inclusion in the budget in the 6 next fiscal year following the approval and in each year 7 thereafter. Once established as provided in this subsection, 8 the reserve accounts shall be funded or maintained or shall 9 have their funding waived in the manner provided in paragraph 10 (f). 11 (e) The amount to be reserved in any account 12 established shall be computed by means of a formula that is 13 based upon estimated remaining useful life and estimated 14 replacement cost or deferred maintenance expense of each 15 reserve item. The association may adjust replacement reserve 16 assessments annually to take into account any changes in 17 estimates of cost or useful life of a reserve item. 18 (f) Once a reserve account or reserve accounts are 19 established, the membership of the association, upon a 20 majority vote at a meeting at which a quorum is present, may 21 provide for no reserves or less reserves than required by this 22 section. If a meeting of the unit owners has been called to 23 determine whether to waive or reduce the funding of reserves 24 and no such result is achieved or a quorum is not present, the 25 reserves as included in the budget shall go into effect. After 26 the turnover, the developer may vote its voting interest to 27 waive or reduce the funding of reserves. Any vote taken 28 pursuant to this subsection to waive or reduce reserves shall 29 be applicable only to one budget year. 30 (g) Funding formulas for reserves authorized by this 31 section shall be based on either a separate analysis of each Page 17 1 of the required assets or a pooled analysis of two or more of 2 the required assets. 3 1. If the association maintains separate reserve 4 accounts for each of the required assets, the amount of the 5 contribution to each reserve account shall be the sum of the 6 following two calculations: 7 a. The total amount necessary, if any, to bring a 8 negative component balance to zero. 9 b. The total estimated deferred maintenance expense or 10 estimated replacement cost of the reserve component less the 11 estimated balance of the reserve component as of the beginning 12 of the period for which the budget will be in effect. The 13 remainder, if greater than zero, shall be divided by the 14 estimated remaining useful life of the component. 15 16 The formula may be adjusted each year for changes in estimates 17 and deferred maintenance performed during the year and may 18 include factors such as inflation and earnings on invested 19 funds. 20 2. If the association maintains a pooled account of 21 two or more of the required reserve assets, the amount of the 22 contribution to the pooled reserve account as disclosed on the 23 proposed budget shall not be less than that required to ensure 24 that the balance on hand at the beginning of the period for 25 which the budget will go into effect plus the projected annual 26 cash inflows over the remaining estimated useful life of all 27 of the assets that make up the reserve pool are equal to or 28 greater than the projected annual cash outflows over the 29 remaining estimated useful lives of all of the assets that 30 make up the reserve pool, based on the current reserve 31 analysis. The projected annual cash inflows may include Page 18 1 estimated earnings from investment of principal. The reserve 2 funding formula shall not include any type of balloon 3 payments. 4 (h) Reserve funds and any interest accruing thereon 5 shall remain in the reserve account or accounts and shall be 6 used only for authorized reserve expenditures unless their use 7 for other purposes is approved in advance by a majority vote 8 at a meeting at which a quorum is present. Prior to turnover 9 of control of an association by a developer to parcel owners, 10 the developer-controlled association shall not vote to use 11 reserves for purposes other than those for which they were 12 intended without the approval of a majority of all 13 nondeveloper voting interests voting in person or by limited 14 proxy at a duly called meeting of the association. 15 (7) FINANCIAL REPORTING.--Within 90 days after the end 16 of the fiscal year, or annually on the date provided in the 17 bylaws, the association shall prepare and complete, or 18 contract with a third party for the preparation and completion 19 of, a financial report for the preceding fiscal year. Within 20 21 days after the final financial report is completed by the 21 association or received from the third party, but not later 22 than 120 days after the end of the fiscal year or other date 23
as provided in the bylaws, the association shall 24
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26 forth in subsection (5), provide each member with a copy of 27 the annual financial report or a written notice that a copy of 28 the financial report is available upon request at no charge to 29 the member. Financial reports shall be prepared as follows: 30 (a) An association that meets the criteria of this 31 paragraph shall prepare or cause to be prepared a complete set Page 19 1 of financial statements in accordance with generally accepted 2 accounting principles as adopted by the Board of Accountancy. 3 The financial statements shall be based upon the association's 4 total annual revenues, as follows: |