The dreaded condo HOA special assessment (FL)

By Deborah Goonan, Independent American Communities

If you own a condominium that is at least 25 to 30 years old, it probably requires some major renovation.

Typically, after about three decades of normal wear and tear, a housing complex will need a one of more of the following: a new roof, replacement of windows or doors, new exterior siding or substantial repairs to brick or stucco, replacement of wooden decks, resurfacing of parking lots and sidewalks, and more.

None of these renovations come cheap.

But since the majority of condo associations don’t set aside a sufficient portion of monthly assessments in reserve, most condo boards will discover that, when the time comes to do the work, there’s nowhere near enough money to make necessary repairs.

That’s what’s happening for owners in Fountain Gate Condominium near Jacksonville.

Money with wings
(Pixabay.com free image)

Fountain Gate Condo owners opposed to proposed $20k special assessment fee

The HOA is securing a loan for a $1.5 million project.
To pay back the loan it is imposing a special assessment, approximately $20K per unit, to be paid monthly over seven years.

Author: Kenneth Amaro
Published: 5:46 PM EDT July 30, 2018
Updated: 7:59 PM EDT July 30, 2018
JACKSONVILLE, Fl — The Fountain Gate Condominium community was built in the 1980s and now some of the buildings are in need of repair. The wood siding is rotting.

Many of the property owners are aware of the need, but there is growing outrage over a special assessment fee to meet that need.

“They feel like we’re being railroaded in this because most of the homeowners are on a limited budget,” said Jody Kilgore, “they’re retired.”

Kilgore owns a unit, she is also a director on the Homeowners Association Board. But Kilgore is against the current proposal to impose a fee on the owners for repair.

“I think we need to listen to the people’s vote,” she said.

She acknowledged the need for the repairs but believes the unit owners are being left out of the decision-making process.

“Whenever there’s a material change, the community should provide 75% of the vote to say ‘yes’ or ‘no,’ but the board voted and not the community,” said Kilgore.

The HOA is securing a loan for the $1.5 million project. To pay back the loan, it is imposing a special assessment, approximately $20 thousand per unit, to be paid monthly over seven years.

Read more (video):
https://www.firstcoastnews.com/article/news/local/fountain-gate-condo-owners-opposed-to-proposed-20k-special-assessment-fee/77-578777486

 

The First Coast News report doesn’t tell the viewer the interest rate on the seven-year loan. But $20,0000 divided by 84 months amounts to an assessment increase of at least $238 per month. That’s in addition to regular assessments.

Ouch!

The community is apparently divided between retired condo owners living on limited budgets and other owners, perhaps investors, who are willing and able to make higher assessment payments.

According to Jody Kilgore, a condo board member interviewed for the First Coast News segment posted above, she and another board member voted against the $1.5 million renovation contract and loan. But the other 5 board members vote for moving forward with the project.

Kilgore says the condo board broke the law by not obtaining a vote of all members on the renovation project.

Roofers asphalt shingles

Technically, the Florida Condominium Act states that the association must obtain a vote of approval from 75% of total membership, before proceeding with a “material alteration.”

But the condo board says Florida Statute also obligates the board to see to it that the common elements are maintained.

So when the condo association was unable to obtain the required number of votes in favor on installing new roofs and siding, the board simply voted on the matter themselves.

Which side is “right?”

Well, that’s a tough call.

Can the board legally vote override the unsuccessful attempt to get 75% of owners to vote in favor of the roof and siding renovation?

Can condo members all agree on what a “material alteration” is? Quite often, the answer it no.

Did the condo board make every effort to get a good deal on the extensive work contract? Did they obtain competitive bids? Did they entertain more than one option for the scope of work to be done, or the materials to be used? Did they get a fair deal on terms of the $1.5 million loan? We simply don’t know.

At what point do repairs and renovations become absolutely necessary to protect the health and safety of residents? Is the condo board right to rush into a $1.5 million construction contract and a 7-year loan?

So many questions.

And Florida Statute provides no clear answers, as noted in the reference section below.

 

Confusion hands up

What’s next?

Predictably, the special assessment at Fountain Gate prompted opposition from a group of stressed-out, cash-strapped owners, including an attempt to recall the board. Kilgore says the owners hope that a new condo board can explore other less costly options.

But there’s no guarantee that the recall will succeed. Nor is it guaranteed that a new condo board will identify a more practical renovation plan, without assessment increases.

In the end, perhaps no decision will be made, and no action will be taken. The result might be several more years of deferred maintenance, until the point that the roof starts to leak, as seen in this Fox13 News report on Bridgeton North Condos in St. Petersburg.

What will happen next at Fountain Gate?

Your guess is as good as mine.

 

 

References:

Applicable portions of Florida Condominium Statute (718.113)

718.113 Maintenance; limitation upon improvement; display of flag; hurricane shutters and protection; display of religious decorations.

(1) Maintenance of the common elements is the responsibility of the association. The declaration may provide that certain limited common elements shall be maintained by those entitled to use the limited common elements or that the association shall provide the maintenance, either as a common expense or with the cost shared only by those entitled to use the limited common elements. If the maintenance is to be by the association at the expense of only those entitled to use the limited common elements, the declaration shall describe in detail the method of apportioning such costs among those entitled to use the limited common elements, and the association may use the provisions of s. 718.116 to enforce payment of the shares of such costs by the unit owners entitled to use the limited common elements.
(2)(a) Except as otherwise provided in this section, there shall be no material alteration or substantial additions to the common elements or to real property which is association property, except in a manner provided in the declaration as originally recorded or as amended under the procedures provided therein. If the declaration as originally recorded or as amended under the procedures provided therein does not specify the procedure for approval of material alterations or substantial additions, 75 percent of the total voting interests of the association must approve the alterations or additions before the material alterations or substantial additions are commenced. This paragraph is intended to clarify existing law and applies to associations existing on July 1, 2018.
(b) There shall not be any material alteration of, or substantial addition to, the common elements of any condominium operated by a multicondominium association unless approved in the manner provided in the declaration of the affected condominium or condominiums as originally recorded or as amended under the procedures provided therein. If a declaration as originally recorded or as amended under the procedures provided therein does not specify a procedure for approving such an alteration or addition, the approval of 75 percent of the total voting interests of each affected condominium is required before the material alterations or substantial additions are commenced. This subsection does not prohibit a provision in any declaration, articles of incorporation, or bylaws as originally recorded or as amended under the procedures provided therein requiring the approval of unit owners in any condominium operated by the same association or requiring board approval before a material alteration or substantial addition to the common elements is permitted. This paragraph is intended to clarify existing law and applies to associations existing on July 1, 2018.

(c) There shall not be any material alteration or substantial addition made to association real property operated by a multicondominium association, except as provided in the declaration, articles of incorporation, or bylaws as originally recorded or as amended under the procedures provided therein. If the declaration, articles of incorporation, or bylaws as originally recorded or as amended under the procedures provided therein do not specify the procedure for approving an alteration or addition to association real property, the approval of 75 percent of the total voting interests of the association is required before the material alterations or substantial additions are commenced. This paragraph is intended to clarify existing law and applies to associations existing on July 1, 2018.

 

See also:

Do you need a membership vote for material alterations?

Legal Matters By Rob Samouce Published 7:02 a.m. ET Sept. 30, 2017

Excerpt:

There are some noted exceptions Florida courts have found that do not require a membership vote for material alterations.

These include alterations or modifications that are incidental to the repair, preservation or replacement of existing improvements, such as installing a new sea wall to protect the property or if an engineer finds the alteration is a better replacement for longevity and protection of the property, such as replacing river rock with tile, replacing asphalt with pavers or replacing real cedar shake roof shingles with faux shake shingles.

Source:

https://www.naplesnews.com/story/money/real-estate/2017/09/30/do-you-need-membership-vote-material-alterations/700448001/

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