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DID YOU CORRECTLY WAIVE YOUR RESERVES?
By
Eric Glazer, Esq.
Published April 27, 2015
As the weather begins
heating up, our thoughts inevitably turn to the hurricane season
that we deal with each and every year.
Associations all across the state hope and pray that
they’re able to escape the wrath of a storm for another year
and that luck remains on their side.
They have their fingers crossed that they won’t have to
pass a special assessment as a result of storm damage, because
they have taken the gamble on waiving reserves.
In both condominiums and HOAs we know that the unit
owners can waive the funding of a reserve account.
In fact, in HOAs, your community may not even need to
take a vote, if reserves were never initiated by the developer,
the unit owners never voted for reserves and your Board
doesn’t care about initiating reserves either.
In a condo however, reserves MUST be included in the
budget and MUST go into effect unless the reserves are voted
down by a majority of the owners present at a meeting where a
quorum is present either in person or by proxy.
In fact, the vote to waive reserves is usually done by
way of proxy. Several
years ago, Florida Statute 718 was amended so that unit owners
automatically get a warning about the dangers of waving a
reserve fund when they are asked to choose whether or not to
waive reserve funding on a proxy form.
Here’s what is now required:
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.
Now, if you vote to waive reserves and a storm hits, and
you are hit with a massive special assessment and complain about
it, this form with your signature on it will be shown to you as
a reminder of the knowing gamble that you took when signing the
form.
I have seen associations using old out-dated proxy forms
that do not contain this language.
If you are not using the correct form, you did not
correctly waive the funding of reserves.
Any incorrect proxy vote you did accept to waive the
reserves is invalid and you need to either retake the vote using
the correct forms or start collecting for reserves in your
budget. If your
budget contains reserves --- smart move.
If it does not, I hope you don’t roll a seven this
hurricane season.
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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 more than 2
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decades
and is the owner of Glazer and Associates, P.A. a seven eight
attorney law firm with offices in Fort Lauderdale, Orlando and
Naples.
The
firm also has satellite offices in Tampa and Fort Myers.
Since 2009, Eric has been the host of Condo Craze and
HOAs, a weekly one hour radio show on 850 WFTL.
See:
www.condocrazeandhoas.com.
He
is the first attorney in the State of Florida that designed a
course that certifies condominium residents as eligible to serve
on a condominium Board of Directors and has now certified more
than 8,000 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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