If you're a Florida resident, there's a good chance you're part of a condo or homeowners association. And if you're part of a condo association, there's an even better chance that you've been wondering what's going on with all the financial turmoil in the news lately. Well, wonder no more! This article will give you all the information you need about the current state of Florida condo associations and their finances.
When you buy a condo, one of the things you agree to is paying your monthly assessments. This mandatory fee helps cover things like the building's insurance, property taxes, reserve replenishment, and common area maintenance.
A condominium association's reserves are its most important financial asset. They are used to cover unexpected expenses and repairs and maintain the common areas and amenities of the complex. To ensure that your condo association's reserves are sufficient, it is important to understand how they are calculated. A deferred maintenance schedule is a plan that lays out all the necessary repairs and updates that need to be done to a facility and assigns estimated dates for completing each task. This helps ensure that important work isn't missed or delayed and allows facilities managers to budget for future repairs.
The expected useful life of a product is the amount of time it is likely to be in service or usable. This can vary greatly depending on the product. The following should be included in both the expected useful life column and the reserve funding accounts: Building Exterior Paint and Powerwashing, Roofs, Pavement, Pools, and Swiming Decks, and Spas, Lobby and Meeting Rooms, Exercise Rooms. An annual reserve study and deferred maintenance schedule will help understand the association's financial stability.
Underfunding reserves can be a serious pitfall for associations. When an association does not have enough money in its reserve fund to cover its operating costs, it can be forced to take out high-interest loans or make drastic cuts to services and maintenance. Some condo owners will vote to waive funding reserves as they feel they will have sold their unit before a costly special assessment comes along.
Ask the condo manager about reserve study, structural inspection, and replacement cost estimates. For High Rises, ask if a licensed engineer or architect has completed the structural inspection.
It is important for condo owners to review their association's financials and ask questions. This will help them understand how their money is being spent and ensure that the board is acting in the community's best interest. If you are a condo owner, review your association's financials and ask questions!