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Paying for Emergency Repairs to Florida Condominiums
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Paying for Emergency Repairs to Florida Condominiums

November 10, 2017 Community Association Industry Legal Blog, Construction Industry Legal Blog

Reading Time: 3 minutes


Florida is synonymous with condominium living as a way of life. It’s also synonymous with hurricanes. Hurricanes have largely shaped Florida’s construction industry in that the building code is shaped and modeled after the building of structures that can withstand the storms.  The building code creates certain high wind zones near the coastline that carry different structural requirements. Sometimes, however, the storm surge and winds can overtake structures, leading to catastrophe.   When this happens, condominium associations are required to act and act quickly to complete emergency repairs.

Emergency Funding: Paying For Emergency Repairs To Florida Condominiums Damaged By Hurricanes

How Emergency Powers Under Florida Law Impact Who Pays For Emergency Repairs

Chapter 718 provides for certain emergency powers for florida’s condominium associations.   The association’s emergency powers are located in Section 718.1265 of the Florida Condominium Act.  Sometimes additional association emergency powers are also listed in an association’s declaration.  You may want to review your association’s governing documents to determine the total authority of your board of directors in emergency situations.

There are only two sections of the emergency powers statute which refer to association funds.

  • Section 718.1265(1)(l), which states that “Regardless of any provision to the contrary and even if such authority does not specifically appear in the declaration of condominium, articles, or bylaws of the association, [condominium associationas have the power to] levy special assessments without a vote of the owners.”
  • Section 718.1265(1)(m), which states that ‘without unit owners’ approval, [condominium associations have the power to] borrow money and pledge association assets as collateral to fund emergency repairs and carry out the duties of the association when operating funds are insufficient.”

The options for a condominium association when faced with funding emergency repairs are the following: (1) special assessments; (2) borrow money; (3) utilize existing cash; or (4) utilize insurance proceeds.  Many associations want to know if they can pull from reserves to pay for emergency repairs.  The use of reserve funds to make up for operating account deficiencies is not allowed.  Florida law on reserves is that funds in reserve accounts can only be used for the reserve item and cannot be used for any other purpose unless approved by a majority vote of the owners.  There is nothing in the emergency powers section of the Florida Condominium Act that changes this requirement.

Conclusion

Therefore, an option provided by the statutory emergency powers is for the board of directors to borrow money from a bank to make up for any deficiencies in the operating account.  Based on the amount borrowed, the board can then levy a special assessment to pay back the loan (or wait for insurance payments).  Many banks will lend hurricane relief loans to businesses that are waiting for insurance payments.  It is also recommended that a community association establish a relationship with a financial institution and set up a line of credit before the emergency happens.  There is no emergency provision that allows the association to dip into reserve funds to pay for non-reserve assets in an emergency without prior member approval by a majority vote.


For additional information about Florida Condominium Association emergency powers, read https://www.jimersonfirm.com/blog/2017/10/florida-condominium-association-emergency-powers/

 

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