Q: Our condo association wants to switch from the straight-line method to the pooling method for accounting for reserves. We want to have more flexibility with these funds. We have more money in certain reserve accounts that we do not need, and other accounts are lower than they should be with certain repairs that are needed. How do we get this done legally?
A: Ideally, your association would get approval from the membership to switch the accounting method for deserves. The problem is that you might need 2/3, or in some cases 3/4’s of the owners to approve this common change and it is often difficult to get a membership vote on any issue. If your Board wants to make this change without a membership vote, it should at least do so at a properly noticed Board meeting so that the members are aware of the change. Further, the association needs to be extremely careful with the use of the reserve funds that are already in the reserve accounts.
Florida law is clear that a majority of the owners present at a membership meeting need to approve the use of reserve funds for a purpose that they were not collected for. For instance, if the association wants to take money from the roofing reserve account and use that money for painting the condo buildings, the Board needs to ask the membership for approval. However, when the association switches to the pooling method for reserve accounting, it has greater flexibility with reserve funds but only for those funds assessed and collected after a proper switch to the pooling method. I absolutely recommend that your Board consult with the association’s accountant and attorney before making this common but important change.