Reading without Understanding

By Betsy Barbieux, CAM, CFCAM, CMCA / Published April 2024

There are a lot of questions and misunderstandings that owners, board members, and CAMs have because they’re reading words that in our industry have a peculiar meaning or legal significance. And sometimes it is easy to read over a simple word and misunderstand the meaning of the whole sentence or paragraph—for example, the word “must” and the word “may.” Not paying close attention to those words can lead you down the wrong path.

     Conversation and explanation are vitally important to reading with understanding. Studies have already shown that distance learning is ineffective. That is because there is no conversation or opportunity to receive an explanation. So, it concerns me that with the online self-study CAM prelicensing and CE courses the CAM applicants and CAMs are not really learning anything. They are just doing the time to get the credit.

     A situation that comes to mind is a group of owners who read the phrase, “10 percent  of the members can call a special meeting for the purpose of recall.” They took that to mean that if they got six people, which would be 10 percent  of their membership, to sign a piece of paper, the board of directors would be recalled. But that’s not what that means. It means that 10 percent of the membership may petition the board to schedule a special membership meeting for the purpose of recall with the appropriate notice, agenda, and the sending of the limited proxies. At the special membership meeting to recall, there is a statutory percentage of affirmative votes needed to recall the board member or members. (Special note—the DBPR/Division of Condominiums prefers the written agreement to recall rather than recall at a meeting.)

     Reading without understanding can create a mess. That group of six owners continued to believe they had recalled the current board, appointed themselves as board members, changed the information on Sunbiz (which is a third-degree felony as provided in Section 817.155, Florida Statutes), opened a bank account, and told owners to redirect their monthly payments to them. This is stealing other people’s money. They finally contacted an attorney who told them they had to give the money back to management. Then the bona fide board authorized the manager to correct the Sunbiz report and restore bona fide board members’ names.

     In the above case, though fraudulently changing the Sunbiz information is a third-degree felony, it is so far down the food chain at the state attorney’s office that they’re not going to prosecute this group.

     So, circling back, the whole reason for this story is to explain that if you don’t understand what you’re reading, the misunderstanding could lead to legal issues.

     In the prelicensing course and the board certification training, the statement is made that board meetings are the business meetings of the corporation. That likely goes in one ear and out the other until it is explained that board meetings are the business meeting of the board members as opposed to an informational meeting for the owners. The board meeting is not an informational meeting for the owners. It is not a Q&A session. The board meeting is for the board to get its business done. It makes financial and contract decisions and deals with vendors, violations, maintenance, collections, and any other business. The board members have an obligation to protect the property and its value, maintain the common property, and enforce the covenants. Board members do not serve a constituency; they serve the governing documents and statutes.

     Another misunderstanding is the development of the budget, its purpose, and owners’ obligations. For community associations a budget is only a guide. Board members must spend whatever it takes to protect the property and its value, maintain the common property, and enforce the covenants even if it spends over the amount allocated for that budgeted item.

     Community association budgeting is the opposite of the regular business world. The laws and documents require that the board of directors maintain the property and all the amenities just as the developer turned them over to you. That means the board must spend “whatever it takes” to protect the value of the property, maintain the amenities, and enforce the covenant restrictions. If the board needs more money than is budgeted, they can amend the budget and change the regular assessment payment or special assess the owners. When purchasers buying a unit, lot, or share sign the closing documents, they have pre-agreed to pay “whatever it takes” to meet the annual and future expenses of the association.

     The goal of some board members is to never raise the assessment amount due from owners. If the regular assessment amount does not go up every year, the board is likely not performing its fiduciary duty. Assessments should go up at least as much as the inflation rate.

     In other words, association budgets are created differently than the regular business, corporate, social, or charitable organization. These other organizations look at trends, market analyses, historical income, charitable giving, etc. and guesstimate their income. Then they fit their anticipated expenses under that income. When a budgeted line item runs out of funds, spending in that category is shut down. In community associations the calculation is opposite. The anticipated expenses are calculated first, and the total of those expenses will be the amount of income that is divided among the owners and paid to the association monthly, quarterly, or annually. If the association needs more money than budgeted for, the board is obligated to get that money from the owners. All expenses must be covered.

     If you are not sure of the meaning of what you are reading, ask. 

Betsy Barbieux, CAM, CFCAM, CMCA

Florida CAM Schools

      Betsy Barbieux, CAM, CFCAM, CMCA, guides managers, board members, and service providers in handling daily operations of their communities while dealing with different communication styles, difficult personalities, and conflict. Effective communication and efficient management are her goals. Since 1999 Betsy has educated thousands of managers, directors, and service providers. She is your trainer for life! Betsy is the author of Boardmanship, a columnist in the Florida Community Association Journal, and a former member of the Regulatory Council for Community Association Managers. Subscribe to CAM Matters^TM at www.youtube.com/c/cammatters. For more information, contact Betsy@FloridaCAMSchools.com, call 352-326-8365, or visit www.FloridaCAMSchools.com.