2024 Budget Meeting - January 11, 2023 6:00 PM via ZOOM
Dear Owners: The purpose of this article is to provide the Villas at Somerset membership information regarding the impact of Florida laws on budget and reserve funding requirements for our community. Included with this letter is a Limited Proxy, which will allow you to vote in favor of a 2024 Budget with “less than full reserve funding.” At the Villas of Somerset’s last Annual Budget Meeting held on October 30th, 2023, the Association inadvertently voted on a proposed annual budget that did not fully fund the required reserve accounts without obtaining a majority vote of the total voting interests of the Association as required by § 718.112Florida Statutes.
Due to this requirement, the Association has improperly adopted the Annual Budget and will therefore be required to undergo a subsequent Budget Meeting to assess different options (e.g.,adopt a fully funded budget or obtain a majority vote of Unit Owners to adopt a budget that does not fully fund the reserve accounts)). Furthermore, § 718.112(2)(e), Florida Statutes, requires the Association to provide at least 14 days’ notice to each Unit Owner with a copy of the proposed Annual Budget.
Therefore, the Association is providing this subsequent notice to inform all Unit Owners of the Board’s intention to hold a subsequent budget meeting that will consider a different proposed budget that complies with the requirements of Florida Statutes. In general, reserves are monies set aside for specific expenditures that will be incurred in the future. Florida Statute requires the Association to establish reserves for roofing, painting, paving, and any other deferred-maintenance or capital-expenditure items expected to cost more than $10,000 to replace. In addition to the specific deferred maintenance and capital-expenditure reserves required by the law, the Association may establish other reserves.
A fully funded reserve schedule must be included in a proposed budget. The term “fully funded” means that when the proposed budget is provided to the Owners, it must show the amount of money that will be required to ensure that, when the time comes, sufficient funds will be available for deferred maintenance or a capital expenditure of each required reserve fund item. Associations may waive the requirement that reserves be funded or reduce the amount of the proposed funding. To do this, the Association must prepare an alternate budget, which shows the reserve items receiving less money than on the “fully funded” budget. This budget with “less than full funding” must then be provided to the membership as well.
After the proposed “less than full funding” budget is provided to the Owners, the Owners may vote to approve that lesser budget. The board has the unilateral authority to adopt a budget that fully funds the reserve accounts; However, only the Unit Owners can authorize adoption of a budget with “less than full funding” by a majority vote of the Owners. Once the Owners have approved that lesser budget, the Board has the authority to adopt it. (Note that such membership vote is not required for the Board to adopt a “ fully funded” budget.) What does this mean for Villas at Somerset? Enclosed please find two Budgets and a Limited Proxy for your review. One budget provides for fully-funded reserves while the other budget does not.
Please review the proposed Budgets and complete the Limited Proxy with your vote to either approve or disapprove the “less than full funding” budget. At this time RealManage is recommending that the association approve a fully funded budget in order to have much needed maintenance items done, including total roof replacement. To fully fund the reserves the monthly assessments will be brought up to $545.00 a month. A non-fully funded budget will be at $437.00 a month. Please remember to sign and date your proxy after you indicate your vote. The completed proxy can then be sent to:
The Villas at Somerset Condominium Association, Inc. c/o REALMANAGE 270 W Plant Street, Suite 340, Winter Garden, FL 34787 or to the Association’s email at This email address is being protected from spambots. You need JavaScript enabled to view it. Thank you!