Of What Commodity Can It Truly Be Said, “You Will Never Have Enough”?
This article has been written 3 times. The first draft talks about “Stand Your Ground Law”, and the second about life in a Florida high rise condominium. Both articles are on the cutting room floor, having been squeezed out by the urgency of the message presented here.
Before I begin, let me say thanks, again to my friends in the rental business for their kind encouragement of these articles. Thanks to Matt Scheel, Rosanna Padova, and Gloria Frazier and Keith Wood for their continuous insight into all things important in the world of Landlord/ Tenant. This article will soon revisit that subject.
Today, the cause of the moment is the end of the year and the beginning of a new one, and these remarks are aimed at association directors, both Condominium and HOA, and their managers.
Remember always that associations (meaning throughout this article, their Boards of Directors) have an express statutory fiduciary duty to their members.
This time of year often raises the personal question, what should I do to prepare for the next 12 months? If personally each of us should ask that, and if Boards should take the business of their associations as seriously as they take their own (the legal essence of a fiduciary relationship), then are there questions that the law and ordinary prudent business management require each board to also raise?
This article says, “yes”.
1. Every person and most associations have annual service contracts. Those contracts are often drawn to renew annually unless prior notice is given of an intent to terminate. If the best interests of the association are served by canceling, reconsidering, or renegotiating some of those contracts, and if they renew instead because someone did not mark the notice date on a calendar, some members will believe, probably accurately, that the Board or its agent was asleep at the switch. That failure to give notice could be said to be a breach of fiduciary.
Advice: Pull every contract and ask whether it contains Notice of Termination requirements that you should mark on your calendar. In that regard you should consider and discuss with your attorney whether Florida Statute 501.165, entitled “Automatic Renewal of Service Contracts”, applies to any of your agreements.
2. Every insurance contract renews annually. Insurance may be your largest single expense. Many association documents require an annual review of coverages and deductibles, and if they don’t, they should. If you don’t compare prices and terms among available insurance alternatives every year, your job is not done.
Advice:Mark your calendar for the dates that will allow insurance advisers to audit your deductibles, coverages, and possible alternatives long before insurance policies expire.
3. Your documents and Florida law require some actions to be taken annually, and they even provide mandatory, not-later-than, dates for those actions. Your annual meeting and budget presentation are the most obvious. Submission to all members of financial reports of operations after the fiscal year (normally the calendar year), are also mandatory and almost all occur during the first 120 days of each year. Board meetings and critical review dates are often also included in your By-Laws.
Advice:Set a team meeting, at least by telephone, with your CAM, your lawyer, and your officers to make sure all legally required action dates are marked on your association calendar.
4. Reserve account computations and balances should be reviewed and reality-checked annually. During some years an engineering report and estimate of replacement cost will be necessary. Those may be long lead time items.
Advice: Every Board should confirm that its reserve accounts are properly calculated and funded at least at the time of presenting each annual budget to the membership. The suspense dates to question reserve balances should be at least 60 days prior to the date for submission of the budget to the membership.
5. The Florida Marketable Record Title Act carries a critical message for every owner in a subdivision, and for every HOA. If property is typically conveyed only by reference to the book and page of a Plat,( i.e., and most are, “lot X, block Z, of the plat of Rocky Bayou Subdivision recorded at Plat Book____, Page____, Public Records of _______ County”) the Protective Covenants of your subdivision probably have a 30-year expiration date. Those covenants must be renewed or they will be lost.
Advice:If the earliest conveyance in your subdivision is nearing 30 years of age, meet with your lawyer with a copy of your Covenants to discuss Florida Statute 712.03, without delay, for a discussion of the legal effect of the Marketable Records Title Act.. Otherwise your Covenants may terminate as a matter of law.
The answer to my riddle, of what commodity will we never have enough, is not food, or houses, or Christmas presents. All those things can be replaced, or even be too much. For this article, on this day, I’ll take “time” as the answer. This time next year, this one will be gone again. Unless you make your calendar your friend, the year cannot go well.
Another answer might be the love of others. We who write in these pages wish that love for you on this New Years, and may you have that in abundance.