“Can Associations Keep Extra Special Assessment Funds?” – News-Press
Q: Last year my condominium association levied a special assessment to fund a project to remodel the building’s lobby. The project is now complete and there is a significant amount of money left over. So, questions are arising as to how the association should handle the surplus funds. What does the association need to do with this extra money? (G.R., via e-mail)
A: Chapter 718, the Florida Condominium Act (the “Act”), specifically regulates how special assessment funds are to be used. Section 718.116(10) of the Act states that funds collected from a special assessment may only be used for the specific purpose or purposes of the special assessment. The purpose, or purposes, of the special assessment must be stated in the notice of the board meeting where such special assessment is levied.
Further, the statute provides that once the stated purpose of the special assessment has been completed, any excess funds are considered common surplus, and the funds must either be returned to the unit owners or must be applied as a credit against future assessments.
Accordingly, the intent of the statute is to require that the unit owners receive the benefit of any surplus special assessment funds once the project has been completed.
Q: The board of directors for my homeowners’ association recently entered into a contract to purchase several thousand dollars’ worth of patio furniture. When questioned, the board stated that the association did not obtain competitive bids related to this purchase and further stated that no such bidding was required. This seems incorrect and shouldn’t my association have obtained multiple bids in order to ensure that the association receives the lowest price for the furniture? (R.F., via e-mail)
A: Not necessarily. Section 720.3055 of the Florida Homeowners’ Association Act specifies when competitive bids must be obtained by a homeowner’s association. Specifically, the statute states that when the association contracts for the purchase, lease, or rental of materials or equipment or for the provision of services, that require payment by the association that exceeds ten percent (10%) of the total annual budget, including reserves, the association must obtain competitive bids for the proposed contract. However, the statute also states that there is no requirement that the association accept the lowest bid.
Therefore, in order to determine whether your association was required to obtain competitive bids for the purchase of the furniture in question, it would be necessary to know the amount of the association’s annual budget, including reserves, and the total purchase price of the furniture. As such, it is possible that this purchase did not exceed ten percent (10%) of the association’s budget, to the extent it did not exceed ten percent (10%) of the budget, no bidding was required.
With respect to condominium associations, governed by Chapter 718, the Florida Condominium Act, the Condominium Act contains similar language, however, the threshold for a condominium association for when competitive bids are required is five percent (5%) of the association’s total annual budget, including reserves.
Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. Send questions to Joe Adams by e-mail to jadams@beckerlawyers.com. Past editions may be viewed at floridacondohoalawblog.com.
