It’s Good to Be Ahead of the Game

It’s Good to Be Ahead of the Game

By Ryan D. Poliakoff / Published May 2019

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       I have been a seasonal renter in Florida for many years. During that time, I have seen overly strict and sometimes incompetent HOAs that failed to plan for future maintenance. I am now shopping the market for a condominium, and I wonder what questions I should ask about the prospective associations and what financial and other documents I can obtain from them?


       You’re already ahead of the game by thinking about these issues—many, many people jump into purchasing a condominium or home governed by an HOA without even looking at the governing documents or asking a single question about how the association is run.

     The Condominium Act, at Section 718.503, provides that each prospective purchaser of a condominium unit who has entered into a contract is entitled to a current copy of the declaration of condominium, the articles of incorporation, the bylaws, the rules of the association, the latest end of year financial report, and a frequently asked questions and answers sheet. The buyer is also entitled to receive a governance form drafted by the Division of Condominiums. Either the seller has to provide these documents to you prior to execution, or you will have three days to void the contract after the documents have been provided. That should give you plenty of time to do a thorough review of the governing documents and the financials.

     With respect to the governing documents, you should review them carefully to look for any provisions that may conflict with how you intend to use the unit. If you have dogs, make sure there are no pet restrictions (or find a good psychologist to write you an assistance animal letter). If you intend to rent seasonally, make sure that short-term rentals are allowed. If you’re hoping to bring your family to the pool every weekend, make sure there is no limitation on how many guests you can have at any given time, and check whether they can use the pool if you are not at home. You are going to have a lot of reading to do, but it is important reading, and I recommend that you take it seriously. You will be on record as having received notice of the declaration and the other governing documents, and you will be bound by them whether or not you have read them.

     Next, take a look at the financials. The most important question is whether the association collects reserves and the level of those reserves. The Condominium Act provides that every condominium budget must include reserves for painting, repaving, and roof replacement, and also for any deferred maintenance item over $10,000 in cost. A reserve specialist will typically prepare a report evaluating the condominium property and creating a reserve schedule that instructs the association how much money it must collect each year to fund these projects. However, while the board is obligated to promulgate a budget with full reserves, the membership of the association can vote to waive collecting reserves entirely or to collect less than the full reserve amount. So, you need to not only take a look at the size of the existing reserve but also look at the financial statement to see whether the association collects the full amount each year. The decision whether to waive reserves is a “pay now or pay later” decision. If your association does not collect reserves, you can be sure you will be specially assessed for those repairs down the road. Personally, I would always choose to pay over time and know that the funds are there, rather than wait to get hit with a huge special assessment.

     Also, take a look at the line items in the budget to see if any seem unusually high or low. Does the association have a sky-high legal bill? That may indicate that there are lawsuits or other problems that need further investigation. Most counties have an online court docket that you can search to see what kinds of lawsuits are affecting an association, and whether they are run of the mill slip and fall cases, or whether there are more complicated legal battles that might impact your future assessments (the FAQ is required to list any cases where the association may face liability in excess of $100,000, but there may be others that are below that threshold and are still relevant). Or, maybe the association spends an unreasonably low amount on maintenance, which might suggest that the property is not properly kept. It’s admittedly difficult for a lay person to parse out this kind of data, but you’re better off being an informed consumer, even if you don’t catch every possible variable.

    Finally, if you intend to mortgage your property, realize that many loans are not available in condominiums that have certain restrictions. For example, the FHA will not insure a loan in a condominium that has the right to disapprove leases or where there are substantial delinquencies. If you are limited to certain types of loans (particularly those backed by the FHA, Freddie Mac, or Fannie Mae), you need to see if the project you are considering is pre-approved and whether you are going to be able to borrow money to buy the property. An experienced realtor will typically have a handle on whether certain buildings are eligible for government-backed loans, but this is an issue that comes up at every condominium from time to time.

Ryan D. Poliakoff

Partner of Backer Aboud Poliakoff & Foelster

Ryan D. Poliakoff is a partner of Backer Aboud Poliakoff & Foelster and serves as general counsel to condominiums, homeowners associations, and country clubs throughout South Florida. He is the co-author of New Neighborhoods —The Consumer’s Guide to Condominium, Co-Op, and HOA Living. In addition to representing associations, he is a frequent contributor at seminars and workshops for attorneys and board members, and he has written hundreds of articles for magazines and newspapers throughout the United States. He can be reached at
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