The main objective of the proposed reform is to achieve that the communities and the management of their funds are properly handled.
|
Senator Ana Maria Rodriguez |
Rodriguez believes
that the board members of associations and condominiums
should have the same instruction that a Community
Association Manager has. This will prepare them for their
managerial, financial, and legal responsibilities. If this
change is approved, Florida will be the first and only state
that requires that the board members get educated this way.
The second aspect that is being highlighted by Rodriguez is
the creation of a database in the Department of Business and
Professional Regulation (DBPR). This database would contain
all the information regarding associations and condominiums,
including the names of the board of directors, documents,
rules and regulations of the communities, approved budgets,
and any special assessment if they exist. “All of this
information must be public record.”
Financial transparency and avoiding fraud are also a
priority for Senator Ana Maria Rodriguez. The third
fundamental aspect of her proposal is to achieve that the
DBPR gets more power over the associations and condominiums
and can make them comply with the law.
The DBPR is a mere administrative entity; it is in charge of
granting licenses and regulating businesses and
professionals in the State of Florida. “Ideally, the DBPR
(initially in Miami Dade, Broward, and Monroe Counties)
would be able to investigate cases, impose sanctions and
fines, and have the power to make the law be respected.”
MANDATORY RESERVES?
Even when the possibility of homeowner associations and
condominiums having mandatory reserves is not one of the
proposals of Senator Rodriguez, this in another of the
issues that is being analyzed as one of the reforms, and one
that causes the most controversy. It directly affects the
finances of each one of the homeowners, together with the
decision-making of new buyers.
The reality is that all buildings deteriorate with time, and
for this reason, associations must reserve funds in a
consistent way to mitigate and remediate any structural
situation that might require attention. The condominium
board of directors must keep the rest of the owners informed
about all the structural and safety needs and prioritize
these over the aesthetic renovations.
If the above situations require an increase in the monthly
maintenance fee or the imposition of special assessments
throughout the years, these adjustments must be considered
as necessary so that the property does not lose its value
and to keep the residents safe. This is not easy to
understand for those that are paying the increase.
They are very few residents that attend the condominium
meetings. When there is the need to present a proposed
monthly increase or any special assessment, there are
multiple financial conflicts that arise, and these are
difficult to deal with because no one wants to pay more.
The idea behind this reform is to help the owners understand
the importance to save money for future repairs and
maintenance of the buildings and the community. The idea is
to increase the maintenance fee gradually, trying to build
reserves up to 3% of the annual budget and keep on
increasing them until they reach 10%, which will, at the
same time build financial stability and better options to
get good insurance.
Nowadays, the insurance industry is less willing to
underwrite insurance for condominiums and homeowner
associations with affordable premiums and reasonable
deductibles because these are considered high risk clients.
To keep the premiums at low costs, a lot of the boards of
directors chose to buy insurance with low coverage and high
deductibles, because with this, any excess in the costs
becomes the obligation of the owners.
A reserve fund is designed to finance the maintenance,
repair, and replacement of the main components of a complex
due to normal wear and tear. Keeping the condominiums and
homeowner associations in good shape will allow the board to
get better and more affordable insurance policies.
A lot of owners are opposed to reserve funds, but not just
because of whether or not they can afford them. Most of the
owners of houses or condominiums simply do not trust their
board of directors. They do not believe that they are able
to safeguard these funds and they are afraid that their
collective funds will be spent in the future in projects
that are not important.
Under this optic, the proposal of Senator Rodriguez becomes
more relevant, because the best way to generate trust among
the owners is by eliminating possible conflicts of interests
in the management of these communities. This could be
achieved by having all registries become public and
controlled by the DBPR.