SB 1490 — Investments by Condominium Associations

(e) If an association invests funds pursuant to paragraph (16)(b), the association must prepare financial statements pursuant to paragraphs (a) and (b).

1.a. The1. The board shallmust annuallyobtain developprior andapproval adoptby a writtenmajority investmentvote policyof statementthe andunit selectowners anor all nondeveloper voting interests at a duly called meeting of the association before investing funds in investment adviserproducts whoother isthan registereda underdepository account described in s.

215.47(1)(h).

2. The board must develop a written investment policy statement and such statement must be annually approved during a budget meeting.

An investment policy statement must, at minimum, address:

a. Liquidity;

b. Safety;

c. Yield;

d. Short-term and long-term goals;

e. Authorized investments;

f. The mix of investments allowed;

and g. The limits of authority relative to investment transactions.

3. The board must select an investment adviser who is registered under s.

b. TheThe investment adviser selected by the board shall invest any funds not deposited into a depository account described in s.

In case of conflict with other provisions of law authorizing investments, the investment and fiduciary standards set forth in this sub-subparagraphsubparagraph shall prevail.

c. Any4. At fundsleast investedonce undereach thiscalendar subparagraphyear, mustthe beassociation heldshall inprovide third-partythe custodialinvestment accountsadviser andwith arethe subjectassociation’s toinvestment insurancepolicy coveragestatement, by the Securitiesmost Investorrecent Protectionreserve Corporationstudy inreport anor a good faith estimate disclosing the annual amount equalof reserve funds which would be necessary for the association to orfully greaterfund thanreserves for each reserve item, and the assetsfinancial held.reports prepared pursuant to subsection (13).

2. At least once each calendar year, the association shall provide the investment adviser with the association’s investment policy statement, the most recent reserve study report or a good faith estimate disclosing the annual amount of reserve funds which would be necessary for the association to fully fund reserves for each reserve item, and the financial reports prepared pursuant to subsection (13).

(f) AtSection least2. Paragraph once(a) eachof calendarsubsection year,(2) theof associationsection must718.3026, selectFlorida aStatutes, certifiedis publicamended accountant to provideread: the association with a statement verifying the invested fund transactions and a report of cash receipts and disbursements for the invested funds.

Section 2. Paragraph (f) of subsection (2) of section 718.112, Florida Statutes, is amended to read:

718.112 Bylaws.— (2) REQUIRED PROVISIONS.—The bylaws shall provide for the following and, if they do not do so, shall be deemed to include the following:

(f) Annual budget.— 1. The proposed annual budget of estimated revenues and expenses must be detailed and must show the amounts budgeted by accounts and expense classifications, including, at a minimum, any applicable expenses listed in s.

718.504(21).

A multicondominium association shall adopt a separate budget of common expenses for each condominium the association operates and shall adopt a separate budget of common expenses for the association.

In addition, if the association maintains limited common elements with the cost to be shared only by those entitled to use the limited common elements as provided for in s.

718.113(1), the budget or a schedule attached to it must show the amount budgeted for this maintenance.

If, after turnover of control of the association to the unit owners, any of the expenses listed in s.

718.504(21) are not applicable, they need not be listed.

2.a. In addition to annual operating expenses, the budget must include reserve accounts for capital expenditures and deferred maintenance.

These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000.

The amount to be reserved must be computed using a formula based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item.

The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance.

This subsection does not apply to an adopted budget in which the members of an association have determined, by a majority vote at a duly called meeting of the association, to provide no reserves or less reserves than required by this subsection.

b. Before turnover of control of an association by a developer to unit owners other than a developer pursuant to s.

718.301, the developer may vote the voting interests allocated to its units to waive the reserves or reduce the funding of reserves through the period expiring at the end of the second fiscal year after the fiscal year in which the certificate of a surveyor and mapper is recorded pursuant to s.

718.104(4)(e) or an instrument that transfers title to a unit in the condominium which is not accompanied by a recorded assignment of developer rights in favor of the grantee of such unit is recorded, whichever occurs first, after which time reserves may be waived or reduced only upon the vote of a majority of all nondeveloper voting interests voting in person or by limited proxy at a duly called meeting of the association.

If a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves and no such result is achieved or a quorum is not attained, the reserves included in the budget shall go into effect.

After the turnover, the developer may vote its voting interest to waive or reduce the funding of reserves.

3. Reserve funds and any earnings interest accruing thereon shall remain in the reserve account or accounts, and may be used only for authorized reserve expenditures unless their use for other purposes, including investing funds pursuant to s.

718.111(16), is approved in advance by a majority vote at a duly called meeting of the association.

Before turnover of control of an association by a developer to unit owners other than the developer pursuant to s.

718.301, the developer-controlled association may not vote to use reserves for purposes other than those for which they were intended, including investing funds pursuant to s.

718.111(16), without the approval of a majority of all nondeveloper voting interests, voting in person or by limited proxy at a duly called meeting of the association.

4. The only voting interests that are eligible to vote on questions that involve waiving or reducing the funding of reserves, or using existing reserve funds for purposes other than purposes for which the reserves were intended, including investing funds pursuant to s.

718.111(16), are the voting interests of the units subject to assessment to fund the reserves in question.

Proxy questions relating to waiving or reducing the funding of reserves or using existing reserve funds for purposes other than purposes for which the reserves were intended, including investing funds pursuant to s.

718.111(16), must contain the following statement in capitalized, bold letters in a font size larger than any other used on the face of the proxy ballot:

WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.

Section 3. Paragraph (a) of subsection (2) of section 718.3026, Florida Statutes, is amended to read:

Section 4. This3. This act shall take effect July 1, 2021.