The firm’s Gary M. Mars authored an article that appeared in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper. Gary’s article, which was titled “Ruling Reminds New Associations to Watch for Developers Waiving Reserves,” focuses on a recent appellate ruling regarding the issue of developers waiving their funding of reserves prior to the turnover of an association for a new community from the developer to the unit owners. His article reads:
A recent appellate ruling shined a spotlight on the all-too-common issue of developers improperly waiving their funding of reserve accounts while they retain control of an association for a new community before its turnover to the unit owners.
The ruling served as an important reminder for the owners at new developments of the careful vigilance that they need to exercise for any questions involving the funding and use of reserves by developers.
The ruling was filed by the Fifth District Court of Appeal in the case of Meritage Homes of Florida v. Lake Roberts Landing Homeowner Association. Meritage, the developer of the subdivision located in Winter Garden, appealed the trial court’s final judgment in favor of the homeowner association, which found that the requirement for HOA reserve accounts in the city code of Winter Garden cannot be waived as Meritage had attempted.
Meritage based its appeal on its contention that the lower court’s ruling created an impermissible conflict with section 720.303(6)(f), Florida Statutes, which expressly grants homeowner associations the right to waive reserves. The developer’s initial annual budget planned for the HOA’s operating expenses as well as an $11,000 deferred maintenance reserve account, but it later approved a budget that completely waived its funding of the reserves.
Meritage asserted that it issued written notice to all of the association members, which included several homeowners at that point, but none of the members other than Meritage attended the budget meeting in which the board members approved the budget sans reserves.