Addition to an existing clubhouse

The BOD would like to add an addition to the existing clubhouse however the majority of the development are against it. They will be borrowing against our reserves. Can this be done or does section 718.113 2 a florida statues pertain to this? Do they need 75 percent of the members to ok this? Our BOD claim that they can spend and do whatever they want without the ok of the members. Is this true. There are 550 homes in this development.

Are you Condo or HOA?

You cite FLSS718 but then say "...homes in this development." which sounds like an HOA (FLSS720).

Assuming for now that you are in fact a Condo, I believe your interpretation of 718.113 (2)(a) is CORRECT.

I also believe it is further bolstered in your case (the proposed use of reserves) by 718.112 (2)(f) (3) & (4), copied below:

"3. Reserve funds and any interest accruing thereon shall remain in the reserve account or accounts, and may be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a duly called meeting of the association. Prior to turnover of control of an association by a developer to unit owners other than the developer pursuant to s. 718.301, the developer-controlled association shall not vote to use reserves for purposes other than that for which they were intended without the approval of a majority of all nondeveloper voting interests, voting in person or by limited proxy at a duly called meeting of the association."

"4. The only voting interests that are eligible to vote on questions that involve waiving or reducing the funding of reserves, or using existing reserve funds for purposes other than purposes for which the reserves were intended, are the voting interests of the units subject to assessment to fund the reserves in question. Proxy questions relating to waiving or reducing the funding of reserves or using existing reserve funds for purposes other than purposes for which the reserves were intended shall contain the following statement in capitalized, bold letters in a font size larger than any other used on the face of the proxy ballot: WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS."

Cheers!

Candace

I see this as a Capital Improvement so the question is can your BOD do Capital Improvements without owner approval? I say no.

Borrowing money from a Reserve Fund is a common practice as long as there is a repayment plan.

Although it may be against your CCR/Bylaws, if the BOD really wants to do something, they "can". They have the power. Its unfortunate, but there are little to no repercussions for doing whatever you want.

IMO that type of thinking (advice???) creates, if not contributes, to apathy.

The truth CAN really be different in Florida.
Especially when dealing with elections and MONEY!!!

Though I would not expect a non-Fl resident to research it, there are many and recent cases of Directors convicted of, well let's just lump it in a pile called, breach of fiduciary duty.

It seems to a few of us lay people that there are several FL statutes which would appear to disallow the conduct the OP has stated as fact.

There is also an Ombudsman which will work with FDLE and DBPR to assist given sufficient evidence.

Once the BOD has been made aware, and corroborated with evidentiary documentation, that there 'proposal' is against Florida statutes the Condo D&O insurance and their 'voluteer' status will no longer personally protect them.

Of course to this takes time, effort, and patience.

For the less ambitious, there is... whatever the Board wants to do.

Cheers!

Gregg I asume you are a layperson with respect to law like myself and that you understand the hierarchy such as: Federal laws, State statutes, County/City ordinances, Plat, CC&Rs, Articles of Incorporation, By-Laws, and finally Rules and Regulations, etc.

With regards to this discussion only, and as the statutes cited do not have provisions for 'unless the controlling documents state otherwise', or SIMILAR, then one need not argue the lower precedent position i.e. CC&Rs.

These statutes were created, among other reasons, due to the antiquated nature of condo and HOA controlling documents and as a response to abuse and mismanagement therin with respect to the current legal landscape (if you will).

I can surely agree to disagree with you on this and always have an open mind, but I see no supporting documantation for your arguement.

Cheers!

Gregg, you wrote: " ... yes the board can probably do this assuming the clubhouse is listed as a reserve item prior to the start of the year that the expense is planned to be incurred. If it is not listed by your accounting firm, no they cannot!"

Even if the clubhouse is listed as a reserves component, an "addition," by its very nature, is not listed as a reserves item.

And if FL is like CA and most if not all other states in this regard, state laws do trump local CC&Rs if the caveat "unless otherwise ..." isn't in the higher level document. (I'm not in the legal profession either.)

JohnC46 says Boards can borrow from reserves and they can in CA too. Can Boards in FL borrow from reserves under any and all circumstances? Would the board need homeowner vote?

JohnB26 gives tough but solid advice if your Board ignores the law. So far, it's just talk, right Candace?

AGAIN, what does the OP Doc's say? At this point no one seems to know. Narmally improvements that require an owner's vote are determined by the CCR's generally is in terms of dollars spent in relation to "something".
And RwT, I am no lawyer but not exactly a lay person either as I have been down this exact road before.

Are you a condo owner?

You may see the validity in that arguement. I don't. No hard feelings. Really!

But to be fair, can you share the experiences you are referring to here: "...down this exact road...".

Cheers!

GreggT,

Thanks for that, well this:

"Our Condo Doc's specify the threshold as in excess 15% of our yearly expenses including reserves which the painting and concrete restoration project easily exceeds. So to put it simply, ANY change no matter how minor that exceeds our monetary limit of 15% will require an owners vote.

If we used the exact same paint, shade, flooring we would not have to go to the owners (based upon OUR Docs), if we did not exceed the 15% again we would not have to get a vote,..."

Let me test my understanding...

A) Your membership's vote is required for an alteration (new color, different flooring).

B) Your membership's vote required for any maintenance costs >15% annual budget (same color, same flooring).

That's what the OP wants. Membership approval of an addition further complicated by concerns of the possible misuse of reserve funds (without member approval).

And finally:
" I cannot imagine a set of Doc's not covering issues such as the OP brought up under Maintenance, Alteration, and Improvement."

If your right, either way, statutes or Docs. IMO there should be a vote.

Don't we a agree?

I think we're good here.

If not then well, hey let's call it a week and have a great weekend!

Cheers!

Cheers!