A PERSONAL LETDOWN

By Eric Glazer, Esq.

Published September 19, 2022

So this week, my mom asks me to attend her Board meeting because the agenda says they will speak about the budget for 2023.  She knows I have been babbling a lot lately about how assessments are going to soar and she wants to know if her community is set for the troubles Iím predicting.  So I went.

 

I wonít name the community and I wonít name the management company.  The point here is not to embarrass anyone.  The point has always been that we all learn something each week.

 

So the association has six buildings, each with about 40 units.  Do the math and thatís about 240 units in total.  They have about $59.000 per building in reserves.  They think theyíre doing great.  The meeting is breezing along and Iím thinking to myself that these poor senior citizens have no idea whatís coming. A lot of time was spent on towing cars and feeding the ducks and I couldnít help but think that they better re-focus their priorities or the ducks will be living in their apartments while they are on the outside looking in.

 

I certainly did not want to be rude.  Again, I wanted to politely educate.  They truly had no idea what was going on in terms of the new laws.  They heard some rumor that costs were going up in a year or two but that it would be totally manageable.

 

I waited for my turn to speak and then broke the bad news.  I told them that in about two o three years they have to do a Phase One Study of each of their four story buildings by a licensed architect or engineer who will look for signs of deterioration and that this cost will knock their savings in about half.  I then told them that they would have to do a Phase Two Study that allows the Phase Two Architect or Engineer to do destructive testing.  That brings their savings down to zero.  I then informed them that the Phase Two inspector will likely leave them with a laundry list of repairs to make that will then unfortunately result in a special assessment and/or the borrowing of money from a bank over a long period of time.  Panic was setting in as none of this was included in the budget or reserves.

 

I then told them that it was going to get worse as in two years they had to have a structural integrity reserve study prepared by an architect or engineer that will no longer include reserving for 3 categories, but 10, and that the cost of this study will certainly be  5 figures per building!  I finally concluded with informing them that the reserves could not be waived and that each of these categories will need to be completely funded going forward.  Shock and awe.  Again, the cost for this engineer was not being reserved for either.

 

Letís just say this is one of the more well-known communities run by one of the more well-known management companies.  My thought wasÖÖÖÖ.if this community doesnít know whatís going on and whatís about to happen, then who does?

 

I know management companies are prohibited from teaching the law as per an opinion of Floridaís Supreme Court.  Since thatís the case, management companies have an obligation to ask the associationís attorney to come and teach the board the financial issues that are coming quickly. Rest assured that when the annual budget spikes dramatically in one year, without proper advanced notice from the management company, that Management Company will be gone.   In addition, management companies should not disgrace themselves by telling their board members to get certified by signing that stupid form that says I read my governing documents.  Reading the governing documents will not educate anyone on the new laws that are coming and the preparation that is required.  Tell them they should get certified by taking an educational course and that if there was ever an important time to take the course Ė now is that time.

 

I certainly hated ruining the morning of those wonderful women who serve on my momís board of directors.  But someone had to do it.  And management companies and association counsel better start ruining some mornings as well instead of answering questions two years from now about why our budget has suddenly tripled and we no longer have a reserve account.

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About HOA & Condo Blog

Eric Glazer

Eric Glazer graduated from the University of Miami School of Law in 1992 after receiving a B.A. from NYU. He has practiced community association law for three decades and is the owner of Glazer and Sachs, P.A. a five attorney law firm with offices in Fort Lauderdale and Orlando.

Eric is Board Certified by The Florida Bar in Condominium and Planned Development Law.

 

Since 2009, Eric has been the host of Condo Craze and HOAs, a weekly one hour radio show that airs at 11:00 a.m. each Sunday on 850 WFTL.

   

See: www.condocrazeandhoas.com.

   

Eric is the first attorney in the State of Florida that designed a course that certifies condominium and HOA residents as eligible to serve on a Board of Directors and has now certified more than 20,000 Floridians all across the state. He is certified as a Circuit Court Mediator by The Florida Supreme Court and has mediated dozens of disputes between associations and unit owners. Eric also devotes significant time to advancing legislation in the best interest of Florida community association members.



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