surplus

with operating budget surplus money at end of fiscal. who decides basically what to do with it?a majority of the unit owners or is it a strictly a board decision ? we are a fl condo assoc and we are fully funded for our resrves plus we have a large general reserve.

Clifford,

The right thing to do is to refigure the Reserve amounts going into the fund from the membership dues. Reducing the dues is always a popular thing with the membership.

Unless this surplus is an astronomical number, never return it to the membership. Are you in a hurricane area? I have a villa in S. Florida that is responsible for roof repair and replacements, that gave back a large portion of a Reserve Fund a while back. Along came Francis, Jeannie and Wilma within 13 months which meant 3 times, the roof reserve was used until it ran out. We are talking $475,000 in the fund so they learned to never let the funds be less than maximum amounts to be reserved.

I'd say a balance at the end of the year of 4 - 6 months of operational costs is a safety net, not a surplus.

That's why I asked, how much?

hi we are talking about 18000 at end of fiscal year which will be mar 31. question who decides what to do with it?

Well, yes if it is a condo.

I have not (yet) found similar for HOAs (FL SS720).

Clifford,

The 718 Statutes do not address returning Reserve money to the owners. The normal policy will be to
waive funding to the members until the Reserve balance is in sync with how it is set according to your annual budget. Returning is not a sound financial move to the members because if you try to return money, all members should receive an equal amount of refund. That is an owner who has lived there for 6 months and an owner who has lived there for 6 years, as all must be treated equally.

718.301, the developer may vote to waive the reserves or reduce the funding of reserves for the first 2 fiscal years of the association's operation, beginning with the fiscal year in which the initial declaration is recorded, after which time reserves may be waived or reduced only upon the vote of a majority of all nondeveloper voting interests voting in person or by limited proxy at a duly called meeting of the association. ((((If a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves, and no such result is achieved or a quorum is not attained, the reserves as included in the budget shall go into effect. )))

The surplus belongs to the unit.
The unit belongs to the owner of record.
Any refund goes to the owner of record.

Do your CC&R's say anything on the matter? Before Ohio changed the Condo Law to allow any surplus to be added to reserves our CC&R's stated any surplus would be returned to the homeowners in the form of reduced assessments until the surplus was eliminated.