Crisis in Florida Condo

Our board of directors has renogotiated our insurance policy and is using the saved money on a host of very expensive projects that are not necessary to the operation of the building ($20K on a granite sign, $27K to upgrade a perfectly functional security camera system). None of this has been discussed or voted on. They just announced at a board meeting that they are doing all of these things.

They think that any money they save on budget items is theirs to spend in any way they want. However its likely that they've increased the Association's exposure by increasing deductables and reducing some insurance coverages. Our PM is clueless and afraid of getting fired. What can we do? Because more than 1/2 of the building is snowbirds, there aren't enough people around to do a recall.

The board has the authority to change the deductables. They are twisting the legality to fit their agenda. But they still have a duty to manage funds appropriately, and to do whats in the best interest of the Association. Increasing deductables to get money for projects they can't get votes for certainly isn't right.

Obviously thats not the only remedy. Hopefully someone else will know the options.

Some condo docs restrict the amount of money that the board can spend on discretionary projects. Maybe you should look into that, rather than where the money came from.

First off, I am glad to see a HOA that HAS reviewed their insurance options. Not many do until it's too late. I know from my own experience that there are many options in insurance policies a HOA may or may not need. Ours provided insurance to a HOA vehicle. We don't own a HOA vehicle. So why pay for it?

Unfornately, HOA's are NOT easy to insure. There are only a handful of insurance companies nationwide that does provide liability insurance to HOA's. I've heard the number to be as low as 12. So shopping and comparing rates is hard to do and the options vary amongst every insurer. You get what you pay for as well.

I bring this up because your HOA may have found a way to save money on their HOA insurnance. The installation of the security camera's may get them a discount. The upgrades they plan to do may accomplish the overall reduction in the insurance rates. So the money they are spending to upgrade may be necessary if they are to receive more money off in the future. You can't tell that if you just hear reports of an "increase" or "Upgrade".

As far as the sign is concerned. If they have the money and there is a need for a legible clear sign then I don't see a problem with installing one. It can help emergency personnell identify the building and give owner's a way of easily identifying the building for bringing in purchasers.

If your HOA isn't financially strapped then it should be able to spend money on little upgrades now and then. However, if they have an amenity ready to fall apart and they put up a sign instead, I would be upset. If the situation is that the HOA turned down YOUR request for an item that would personally benefit you or a few, for this work, then that's the HOA business.

wow, this is terrible. I'm looking for legal means. A board may spend 20K on a new doorknob that is completely within their rights according to the bylaws, but its a breach of fiduciary responsibility. You guy are board members, right? So you understand that you can operation within the bylaws and still breach your responsibility?

Whats happened here is that the Board has increased deductables to extract money from the budget to get money for projects that they don't have the votes for. They've done it on purpose. Its a calculated effort. So its not something we're going to be able to point out at a meeting and have them change it. Its going to take getting the ombudsman or management company's director involved. This is not a fiscally responsible move as melissa suggests.

JosephC2,

I bet the real problem you have is trying to get enough input from the absentee owners to establish a power base to confront the board or make changes. I do not know the answers but this situation is going to effect the governance at the State level and beyond. The country is rapidly added another layer of government of the people and no end in sight. You have statues at the state level, then somewhere around there comes governance at the HOA or Condo level or whatever. Who controls this level varys all over the place from, federal, state, county, PUD or city, and god knows what else. Most levels seem to want the other level to manage the rules, no one knows nothing for sure and if you want a ruling on a applicable law you have to hire a lawyer for an "Opinion", and any question beyond that the lawyer has to take it to the courts. Think about all these absentee owners owning for investment purposes or second homes (also investment). A huge tidal wave of change is coming in the home management business. Florida appears to be trying to catch this shooting start, but what about all the coast, all the resort areas? Booming once and now are hurting. There has got to be a better way. If you doubt it, go to your County Council's office and ask them how much control they have over gated communities. But absentee owners and other residents of these places can just about do what ever they feel they can get away with.
Case in point is your post JosephC2

Joseph:

I don't know if there are any legal limits for insurance in Florida, however, I don't see anything wrong with what they did. Many times BOD work with their budget to cut corners here to pay for projects here, if they didn't go over the original budget amount and your documents are not specific on how they can spend I don't see any recourse other than to vote them out or to try and recall them with votes.

Most of us at one point or time have saved money on a line item and used that money for another project.