Florida is known for its sunshine and beautiful weather. Unfortunately, part of Florida’s weather can also include devastating hurricanes. The damage caused by these storms can be severe and seriously damage structures in its path. To absorb those costs, condominium associations generally reserve funds through annual payments from condo owners. The board can then use these funds to cover the costs that result from the damage done by a hurricane or other severe weather.
State law requires condo boards to determine a reasonable fee to build these reserve funds. Boards should generally use “business judgment” to build these funds.
What is business judgement?
A recent analysis published in the Naples Daily News provides an example, using the need to replace a roof due to damage caused during a hurricane to outline how business judgement works.
In Florida, the law generally requires the condo’s board to consider the estimated remaining life of the object that may require repair, the estimated replace cost at the end of that estimated useful life and inflation to determine the cost of condo association fees. The board may use the experience of a roofing expert or engineer to provide an opinion on the cost of each factor. These estimates can then be used to help guide the board in determining the proper fee to expect from each resident and can result in increased condominium fees.
What if I do not agree with the fees?
It is important to be fully aware of the fees that are associated with a condominium before purchasing a unit. An attorney experienced in real estate law in Florida can review the purchase agreement and other documents and discuss these and other fees to help mitigate the risk of a surprise after you purchase the unit.