By Mariann Gerwig, CFO, Primary Qualifier, CGC, HI, CFCAM / Published April 2020
Most association boards of directors are prepared for the responsibility of the normal day-to-day operations they are responsible for. Association documents usually state that the board is responsible to run the daily operations and has the authority to do so. However, most documents do not address, or at best are vague on, the responsibilities or procedures for unexpected events.
Normally, the documents are not reviewed periodically to make sure that they comply with changes in State statutes and to incorporate addendums that have been filed over the years. Many are still the same documents created by the developer decades ago. Over the years boards have become aware of situations that were never addressed in the association’s current documents and bylaws that could have prevented conflicts with unit owners and legal fees.
The following is a list of a few ways to help the board become more comfortable in knowing what to do in unexpected situations and to eliminate some conflicts with the members of the association.
There may also be wording like this regarding special assessments.
An example—An association of 200 units had maintenance dues of $250 per month. The documents allowed the board to issue a special assessment no more than once per year, not to exceed $250 per unit. Being a small association, the membership voted not to maintain reserve funds. This decision led to the result that the board was only allowed to issue one special assessment for a total of $50,000. Several years ago, when South Florida was affected by several hurricanes, it made it very difficult to quickly repair damages that posed immediate danger.
These appraisals will give you a report of the replacement value, expected life, and remaining life of your replacement items and improvements. This is a great tool for the board to make sure that they have sufficient reserve funds for property improvements. For the associations that do not have existing or adequate reserve funds, it will allow you to plan how to go about funding them.
In closing, you may find that creating a special committee for this purpose alone is a big advantage. The committee can create a list of projects and meet with the board to prioritize the list. Having a committee of owners involved in this manner helps two-fold. First, the membership does not get the impression that the board comes up with projects due to some self-serving agenda; and second, the committee answers to the board, so control of what projects have priority is still a board decision.
Mariann Gerwig, CFO, Primary Qualifier, CGC, HI, CFCAM
Promar Building Services LLC
Mariann Gerwig, CFO, Primary Qualifier, CGC, HI, CFCAM, is with Promar Building Services LLC CGC 060027 You can contact her at Mgerwig@Promar Building.com or learn more about the company by visiting www.PromarBuilding.com.