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FULLY FUNDED RESERVES?
By
Jan Bergemann
Published August 23, 2024
Since more than 20 years Florida Statutes 718.112 call for
funding reserves, but left the option open for owners to vote
down reserves in the budget. And many did!
That’s why we are seeing and hearing so much from owners
complaining about huge assessments after their building was
inspected and found in terrible structural
shape. Repairs are expensive – we are talking here about hi-rise
buildings.
Condo owners living in buildings that were always well
maintained and reserve funds were fully funded have absolutely
no problems with the requirements of the new condo law.
But judging by the complaints of many owners, associations loved
to live on the cheap, kicking the can down the road.
Latest after hurricane Wilma owners should have realized how
important it is to fully fund reserves. We saw lots of
foreclosures on units where owners were unable to pay the
special assessment that had to be levied to pay for the
deductible for the necessary repairs after Wilma made landfall
in South Florida. Remember: The 5% deductible goes for the value
of the whole building, not just the amount of the repair for the
damage!
It seems that many condo owners didn’t learn the lesson and
continued to vote down reserves and refused to pay for necessary
maintenance.
Just look at the pictures of some of the condos that have been
red-tagged and evacuated. The pictures clearly show that the
damages to the buildings were obvious, but board members and
owners looked the other way.
Starting in 2006 I attended some town hall meetings down South,
where panel members were attempting to “sell” the idea of fully
funded reserves to owners. You should have heard the responses –
especially from seniors. Main excuse: “I’m long dead before our
building needs serious repairs or a new roof.”
It seems it didn’t work out that way.
Many folks complain about the much higher cost of living – and
many more will after the reports from the engineers come in,
showing the amount of money needed to get their building back
into safe shape.
I absolutely agree with other folks claiming that these bills
should have been enacted many years ago. But believe me: The
same condo owners would have complained.
Since many years we have preached: BUYER BEWARE! When
buying a condo make sure the building – not just the unit – is
in great shape and that the reserve funds are fully funded. We
told everybody who was willing to listen that the lack of
reserves would seriously decrease the property value. But in
many cases our advice fell on deaf ears – and now the owners are
paying the price.
Imagine the legislature wouldn’t have enacted the condo bills
SB 4-D (2022) and HB 1021 (2024) and another building
would have collapsed with a high death count. Guess who would
have been blamed: The Governor and the Legislature!
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Jan Bergemann is president of Cyber Citizens For Justice,
Florida
's largest state-wide property owners' advocacy group.
CCFJ works on legislation to help owners living in
community
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associations. He moved to
Florida
in 1995 - hoping to retire. He moved into a HOA, where the
developer cheated the homeowners and used the association dues
for his own purposes. End of retirement!
CCFJ was born in the year 2000, when some owners met in
Tallahassee
- finding out that power is only in numbers. Bergemann was a
member of Governor Jeb Bush's HOA Task force in 2003/2004.
The organization has two websites to inform interested
Florida
homeowners and condo owners:
News Website: http://www.ccfj.net/.
Educational Website: http://www.ccfjfoundation.net/.
We think that only owners can really represent owners, since all
service providers surely have a different interest! We are
trying to create owner-friendly laws, but the best laws are
useless without enforcement. And enforcement is totally lacking
in
Florida
!
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