Board to Decide the Disposition of Surplus Funds at the End of the Fiscal Year – new Section 9(c)(5)
The addition of subsection (c)(5) to Section 9 of the Condominium Act gives the board discretion to address a surplus or deficit at the end of the association’s fiscal year and after the association has approved any end-of-year fiscal audit, if applicable. If the fiscal year ended with surplus funds over actual expenses, including budgeted reserve contributions, the board in its discretion can dispose of the surplus funds in one or more of four ways so long as it is not contrary to the association’s governing documents. The board can: put the surplus in reserves; return the surplus to the owners either as a credit to their assessment account or as a payment to the owners; or keep the funds in the operating account to be used as a credit in the next year’s budget.
This new section also provides that if the fiscal year ends in a deficit, the board has the discretion to address it by incorporating it into the next year’s budget so long as it is not contrary to the association’s governing documents.
This section also includes a provision for owners to object to the board’s decision. If a petition signed by 20% of the owners is submitted within 30 days after notice of the board’s action, the board must call a meeting of the owners within 30 days. At the meeting, the owners can vote to select a different option than that chosen by the board. However, unless a majority of the total votes of owners are cast at the meeting to reject the board’s decision and select a different option, the board’s decision is ratified.