Your Condo or HOA is Over-Budget. Now What?

First, do not panic. Having a discrepancy between the estimated expenses and the actual expenditures is not an unusual situation for an association board to find itself in. This can be caused by a lack of planning – something to be addressed at the next annual meeting for sure. But it can also be a result of necessary expenses that couldn’t have been predicted.

Time to Raise Funds

Regardless of how you found yourself with a budget shortfall, it’s happened. And now you have to deal with it in order to financially get through the rest of the year. There are two main methods association boards can use for increasing revenue mid-year.

The first is to amend the budget. In most cases your association’s bylaws provide an allowance for the board – as opposed to the owners – to approve an amended budget. An amended budget will need to be executed the same way the original was adopted. You will need to provide timely notice of a proposed amended budget by mail to all owners. 

The biggest benefit of going this route is that funds received from a budget increase would be allocated to your general operating account. This means the association can generally spend the funds as they see fit. However, if this creates a situation where the association is running a major deficit, it might not be the best option. You should also be cautious of a general budget increase if you know you have an upcoming project and you won’t be able to wait for regular assessment funds to come in. 

Pass a Special Assessment

If there’s an urgent need for money, passing a special assessment is an option the board should consider. Your governing documents should set out the details needed for adopting a special assessment. It could be a majority vote of your board, a majority vote of owners present at the meeting, or some other specification. Per Florida law you will need to provide adequate notice of a meeting to propose a special assessment. Adequate notice means at least 14 days in advance. This notice will need to specify that assessments will be considered along with the details about cost and purposes. Keep in mind that funds collected via a special assessment can only be used for the specific purposes stated in the notice. 

If your association has an attorney on retainer, they should be very helpful in this process. If you don’t, I have years of experience working with association boards and budgets and am happy to help you. Give me a call anytime to ask your questions.