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Cost To Alter Bylaws Varies Greatly

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By RICHARD WHITE, Tribune correspondent

Published: January 5, 2008

How difficult and how expensive is it to change our bylaws to eliminate rentals in our single-family homeowners community? We have a few rentals now, which could be grandfathered in.

We would like to stop rentals in the future.

J.S.

St. Petersburg

Your first step is to find out if the members of the community would want the change. Since you must have the guidance of an attorney, why spend the money for legal expenses if the members would not vote for the change?

If the members would vote for the document change, then engage an attorney to draft the proposed change, which the members would need to approve. The attorney would review your documents to determine the necessary votes to approve the amendment to the deed restrictions.

You would need to communicate the information to the members and schedule a meeting of members to vote on the amendment.

If the members approve the amendment, it must be recorded in the county records. Your attorney should handle this recording.

Then the association should provide a copy of the change to all the members to add to their documents.

As to the costs, I cannot tell you the legal fees but estimate that a simple change would begin at $2,000 to $5,000. But this figure would greatly depend on the change; a complex one could cause the expenses to exceed $10,000. Then you have communication expenses, meeting expenses and copy costs.

As to recording fees, that is very little compared with the other expenses.

We are developing our condominium budget for next year. Although most of the expense figures seem to be the same as last year, some of our directors say we are putting too much in reserves.

Can you provide any suggestions or guidance on how the reserves are set up?

J.P.

Miami

The statutes, FS 718.112, for condominiums address the process of reserves. Homeowners associations do not have the same requirements.

I would suggest that all associations look at possible expenses that can occur in future years. Develop the years of useful life and the estimated cost to replace the item. From this, you can develop the figures that you need to input for the reserve budget.

A more detail answer can be found at www.talkwithcam.com, Pod 003.

Directors should not take the creation of the reserve budget lightly. They have an obligation to create a proper budget with reserves.

Your comments regarding an expense budget increase stated: If the expense budget (not including reserves) increases more than 115 percent, the members can petition to call a meeting and approve an alternate budget. My question regards the 115 percent.

Example: If the baseline is $100, must it increase to more than $115, or do you mean it must increase to more than $215?

D.W.

Naples

It is straight out of the statutes. What it means is a 15 percent increase added to the past expense budget. Here is the reason; say you had your $100 fee each month and it was increased 15 percent. That means 15 percent of $100 is $15; your fee would be only $15. If you take 115 percent of $100 it is $115.

Many people do not understand the math percentage. Plug in the 15 percent, and add it to the past expense budget if you find it easier.

Our board of directors holds fairly regular meetings open to the members. It provides an agenda prior to the meetings, and the members can speak only to the agenda items, not about a problem.

However, very often, when the open meeting is adjourned, the board will reconvene a closed meeting open only to the directors to discuss confidential business. Is this legitimate in light of Florida Sunshine Laws?

C.A.

Hudson

The statutes regulate closed meetings by the board when a quorum of directors is present. The only closed meeting is to discuss pending legal matters when the association's attorney is present.

The rule is simple: If a quorum of directors meets to discuss business, it must be in the open and conducted as a board meeting.

The Sunshine Laws do not apply to condominiums or homeowner associations, but other statutes do. Those statutes have requirements as listed above. The key again is quorum; if there is a quorum, it must be open.

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