“New Laws Governing Condo Budgets” – Naples Daily News
Q: My condominium association is beginning to prepare the proposed 2026 budget. I heard there were new laws which impact condo budgets. What impact will they have on my condo? T.P. Naples
A: The new law you reference became effective July 1, 2025, and it will impact condominium associations only. If a condominium association board proposes an annual budget which exceeds the prior year’s budget by 115 percent or more, the board must simultaneously propose a substitute budget that does not include any “discretionary expenditures that are not required to be in the budget.” Under the old law (pre-July 1, 2025), if a proposed budget exceeded 115 percent of the prior year’s budget, unit owners had to petition the board to present the unit owners’ substitute budget for approval. In my several decades of community association law experience, this “old” procedure was rarely utilized.
This means that boards must proactively provide a substitute budget for an owner vote at the same time as the budget that is typically proposed and adopted by the board, if the above-referenced monetary threshold is exceeded.
The first part of the analysis is to determine whether the board’s proposed budget exceeds 115 percent of the prior year’s budget. The statute clarifies that certain expenses, such as insurance premiums, mandatory reserves, and anticipated repair costs for specific building components which are not expected to be incurred on an annual basis, are excluded from this calculation.
The next part of the analysis is to determine what is considered “discretionary.” The new statute, unfortunately, does not define “discretionary.” The Florida Condominium Act (Chapter 718, Florida Statutes) does mandate that certain expense categories be included in the budget, with the condominium documents providing additional requirements.
If the proposed budget your condominium association is considering adopting exceeds the above-referenced monetary threshold, both the board’s proposed budget and the “substitute budget” without the “discretionary expenditures” must be sent to unit owners at least 14 days in advance of the subject meeting (some condominium documents require more than 14 days’ notice). A unit owner meeting must be held to vote on the substitute budget before the board convenes to adopt its proposed budget. If the proposed budget does not exceed the above-referenced monetary threshold, you don’t have to worry about dealing with these “substitute budget” procedures.
The bottom line is (if this statute is triggered based on the monetary amount of the budget) if the owners vote to approve the “substitute budget,” that is the adopted budget. If the members reject the substitute budget, then the board meets to approve its proposed budget. The substitute budget requires approval by a majority of the entire voting interests (not just those who vote), or any greater percentage specified in the bylaws.
Q: What happens in a condo election when there is a tie vote? J.J., Marco Island
A: The Florida Administrative Code specifically addresses what happens in the event of a tie vote in a condominium association election. A runoff election must be noticed and held in compliance with the requirements contained in the Florida Administrative Code unless another procedure is mandated in the Bylaws. Within 7 days of the date of election at which the tie vote occurred, the Board shall mail to the voters a notice of runoff election, which shall include a ballot, and shall include copies of any candidate information sheets submitted by the candidates to the Association before the election. Only the candidates who tied are listed on the ballot. The runoff election must be held not less than 21 days nor more than 30 days after the date of the election at which the vote occurred.
It is common for the candidates who tie for the final spot to simply flip a coin or draw straws to decide the matter. This practice is not specifically mentioned or validated in the law. If all candidates are willing to live with the results of drawing straws, it may be a way to avoid the expense of a runoff election. There is a risk with this approach, of course, as one of the candidates may later decide to challenge the fact that a runoff election was not conducted as required by law, though it would seem they would have a hard time showing they did not give up their right to the run-off.
David G. Muller is a Board-Certified Attorney in Condominium and Planned Development Law with Becker & Poliakoff, P.A. in Naples. Send questions to him by e-mail to dmuller@beckerlawyers.com.
