The Association

Throughout this site, you will see reference to “The Association”. Rather than just “assume” you know what this means, we shall explain it here.

Canada House is made up of two entities — Canada House Beach Club Condominium Association, Inc. (the East side) and Canada House Beach Club West Condominium Association, Inc. (the West side).

In the East building, there are 57 units. There are 51 weeks available for ownership in each unit (our Documents designate one week in each unit as a “Maintenance Week”), so there are 2,907 unit/weeks in the East building. Consequently, there are 2,907 unit/week owners in the East building. (The numbers for the West building are 35 units and 1,785 unit/weeks and owners.) The “Association” is made up of those 2,907 (1,785) unit/week owners. Each year, an election is held in order to seat a Board of Directors for the Association. The Board of Directors represents the Association in business matters, such as hiring a manager, signing contracts on behalf of the Association, etc.

If this sounds a lot like a corporation and its shareholders and Board of Directors, that’s because that’s exactly what it is. (Notice the “Inc.” in the names of each Association above!) However, it is also important to note the words “Condominium Association” in the names. This is because a “Condominium Association” is a “not-for-profit corporation”. Which is exactly what it sounds like. While the idea of a “for profit corporation” is to make money for the shareholders, a not-for-profit corporation is legally prohibited from making a profit. The job of the Board of Directors is to make sure that the income and expenditures are as close as possible to the same by the end of each year. And if there is a profit – or a loss – that has to be made up for in a future year.

The business purpose of the Association is the operation of the property. So each year, the Board sits down and figures out approximately how much money will be needed to do that in the following year. How many rooms will need to be cleaned and what kind of supplies will be required to do that? How much staff is needed and how much will they be paid? How many sheets and towels will need to be replaced because they are worn out, torn, stained, or stolen? What will the utilities cost? Insurance? Office Supplies? And on, and on, and on, through all the budget items. These projected amounts are typically based on the amount of money that has been spent so far in the current year, plus the amount that was spent for the same item in the previous year.

In addition to the so-called “operating” costs (the everyday stuff like mentioned above), there are long-term items. A refrigerator can only be repaired so many times before it just has to be replaced. Ditto stoves, air conditioning units, microwaves, etc., etc. Paint can be touched up as needed, but eventually it starts looking patchy and the whole building has to be repainted. The Canada House buildings were built in 1965, so there are infrastructure issues to consider. Galvanized pipe and copper wiring doesn’t last forever, especially on the beach. Furniture has to be replaced from time to time. Units need new paint and carpet. All of these items have to be considered in the budget, as well. And Florida statute requires the Association to save up money for these items over a period of several years, so that when it’s time to spend the money, it’s there. This money is called “reserves”, and they appear in a separate section of the budget.

Here’s a practical example of how reserves are calculated. Let’s say that a new roof costs $100,000, and it’s expected to last for 20 years. That means that if the roof was put on this year, the Board now has 20 years to raise $100,000 for the next new roof. So $5,000 needs to be collected every year for 20 years. If the $100,000 roof is 10 years old, then there should be $50,000 already put away for the new roof. After the 20 years, if the roof is still good, then the money can just sit in the bank until the old roof needs to be replaced.

One very important item that the Board has to consider when making the budget is the number of owners who won’t pay their maintenance. If the Association needs $1,000,000 to operate for the year, and 5% of the owners don’t pay, then the Association will be short $50,000 for the year. So that money has to be put back in the budget as an allowance for bad debt. That’s a very fancy way to say that if some people aren’t paying their maintenance fees, everyone else is paying extra to make up for it. This is why our Board has such a stringent collections policy, wherein those who do not pay are sent to a collection agency, and eventually to an attorney for foreclosure proceedings.

So! That’s a brief overview of what “The Association” is and what your place, as an owner, is in it. If you still have any questions, please feel free to contact us!