‘Sunshine’ laws require transparency and disclosure in government and business. Community associations have their own of “sunshine” requirements. Are there any “sunshine” requirements for the budgeting process? In other words, what parts of the budget process must community boards ensure to make open, available, or transparent to community members?
What notice is required?
Board meetings at which the budget is being considered must be open to all members. In condominium associations and cooperatives, meetings of committees that make recommendations to the board regarding the association budget must be open to all members. For homeowners’ associations, the requirement is for meetings of any committee when a final decision will be made regarding the expenditure of the association funds. Because these meetings must be open to the members, there are certainly notice requirements.
In condominium associations and cooperatives, the board must notify members of any meeting at which the proposed budget will be considered at least fourteen days prior to the meeting by hand delivery, mail, or electronic transmission. The notice must include the date, time, and location of the budget meeting, and last, but definitely not least, a copy of the proposed budget must be sent with the notice. This includes electronic transmission of the notice of the budget meeting, which shall only be effective if a copy of the proposed annual budget accompanies the notice of budget meeting. The notice must also be posted in a conspicuous location on the condominium or cooperative property for at least forty-eight hours prior to the meeting. Condominium associations with 150 or more units have additional notice requirements. Specifically, the notice of the budget meeting and the proposed budget must also be posted on the association’s website or be made available on an application that may be downloaded on a mobile device.
There are lesser restrictions in homeowners’ associations as to notice. Boards are required to post notice of the meeting at least forty-eight hours in advance of the budget meeting. There is no requirement that the notice be sent to the owners, and there is no general website posting requirement for homeowners’ associations in Florida. There is also no requirement for homeowners’ associations to send the members the proposed budget in advance of the budget meeting. It is actually the opposite of condominium associations in that the board must provide each member with a copy of the budget or a written notice that a copy of the budget is available within ten days after the meeting at which the board adopted the budget.
In either case, the governing documents of the community may impose stricter notice requirements than the minimum statutory requirements. For example, if your association bylaws require a longer notice period for the budget meeting, such as thirty days’ notice, the board needs to verify and adhere to the bylaw requirement when setting up the budget meeting.
In addition to the ability to attend budget meetings, what other involvement do community members have in the budget process?
Generally, in community associations, the board alone has the authority to adopt the budget without a vote of the membership. You may consider having association counsel verify that the governing documents do not require membership approval of the budget if you are unsure that the board has the authority to do so.
For condominium associations and cooperatives, the statute allows the membership to get involved in the budgeting process in the event that the board adopts an annual budget which exceeds 115 percent of the assessments for the preceding year. At least ten percent of the members must submit a written request for a special meeting of the owners to consider a substitute budget. For condominium associations, this request must be made within sixty days after the adoption of the annual budget. A proper meeting notice must be sent out and a membership meeting will be held. If there is not a quorum present at the meeting, or if the substitute budget is not adopted, the previously adopted annual budget remains in effect. In cooperatives, the board must call a special meeting within thirty days of receiving such request, and upon not less than ten days’ written notice to each unit owner. At the special meeting, unit owners shall consider and enact a budget. Unless the bylaws require a larger vote, the adoption of the budget requires a vote of not less than a majority of all the voting interests. There are no such provisions in the Homeowners Act.
The board has a fiduciary duty to the members of their community associations. Following the requirements of budget meeting notices and properly adopting the budget are thus critical and association counsel should be consulted when needed.
To read the original FCAP article, please click here.
Karyan San Martano is a member of Becker’s Community Association practice and regularly provides legal counseling to the officers and directors, as well as the property manager, on the operation of condominiums, cooperatives, and homeowners associations.