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 I’m predicting. So I went.
I won’t
name the community and I won’t 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 that’s about 240 units in total. They have about
$59.000 per building in reserves. They think they’re doing
great. The meeting is breezing along and I’m thinking to myself
that these poor senior citizens have no idea what’s coming. A
lot of time was spent on towing cars and feeding the ducks and I
couldn’t 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.
Let’s
just say this is one of the more well-known communities run by
one of the more well-known management companies. My thought
was………….if this community doesn’t know what’s going on and
what’s about to happen, then who does?
I know
management companies are prohibited from teaching the law as per
an opinion of Florida’s Supreme Court. Since that’s the case,
management companies have an obligation to ask the association’s
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 – now is that time.
I
certainly hated ruining the morning of those wonderful women who
serve on my mom’s 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
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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.
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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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