Gary Poliakoff is a founding principal of Becker & Poliakoff, P.A., based in Fort Lauderdale.  He is an adjunct professor at the Shepard Broad School of Law of Nova Southeastern University and is past chairman of the State of Florida Condominium Advisory Board.  You can write to him c/o The Palm Beach Post, P.O. Box 24700, West Palm Beach 33416-4700.  The following question was published in the Palm Beach Post  of September 25, 2000 in Mr. Poliakoff's column.

Question:  Can the board use surplus funds to replace street signs?  In the past surplus funds were used to reduce assessments.  We are of the impression that street signs are the responsibility of the county. - J.T., Ormond Beach

Answer:  As a general rule, all common ownership housing communities must operate on a balanced budget basis.  That is, the budget should reflect actual anticipated expenses.  Occasionally, because of cost savings realized through economy of scale purchasing or market competition, an association will find itself with an operating surplus.

Some boards feel that surpluses can be used for repairs or improvements, even though the improvement contemplated is a material alteration or addition of the kind requiring unit owner approval.  If in fact a proposed improvement is deemed to be a material alteration, then unit owner approval is required, regardless of the fact that a special assessment would not be required because the association has an operating surplus.  

The surplus, on the other hand, can be used for routine maintenance, which would otherwise have to be covered by a special assessment.  If at the end of a fiscal year there is a surplus, then the unit owners must either approve use of the surplus as a credit against future assessments, or the board must refund the surplus to the unit owners.  Otherwise, the surplus will be subject to corporate tax as accumulated surplus.

Last modified: June 13, 2001

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