That's really my question, whether the new Florida requirements will apply to properties owned by trusts and to the reserves collected by those trusts, regardless of their location. Obviously it will apply to the Florida properties themselves – which would mean that all Florida properties would be subject to the new rules – but what about a Florida trust which owns property interests in other states and is collecting and paying into reserves on those underlying ownerships? It all gets a bit complex. But I think pretty much all of the MVC trusts, including the various Vistana Flex trusts, are domiciled in Florida, even things like Westin Flex (which has no Florida property deeds.)
And when we are asked, as Abound Trust owners, to vote for a waiver of full funding, are we only voting for that waiver for the trust's ownership of Florida properties? Or does it apply to properties in other states too?
I guess I'm a bit confused (and I go back to assuming that the best way to avoid the need for special assessments is to fully fund your reserves.)
Most other states already have existing reserve requirements in place and they cannot be waived. The FL law regarding waiver applies only to the properties that are in FL. So, when the BI owners are asked to vote to waive it, that will only apply to the components in FL.
Keep in mind that the Trust itself has statutory reserve obligations imposed under the statutes that allowed the creation of the Trust. So, as is stated in the annual budget documents for the Trust, it must comply with the statutes under which it was created. IDK if the excerpt included in this post includes this wording, but here is the info from the 2024 budget:
"As required by Florida law, the table below provides the following information for the non‐Florida sites in the MVC Trust: (i) the amount of reserve funding required by the law of the situs state for the interests at such component owned by MVC Trust, and (ii) the amount of reserve funding actually provided (if any) in the MVC Trust Association’s budget for such interests. The Association is responsible for paying a portion of the amounts necessary for reserves under the Component Association’s budget and the Association’s budget includes these reserve items in the Component Expenses."
Then there is a list of properties where the Trust owns components as of 9/7/23, with a column identifying the "reserve funding required by the situs state", a column with the 2024 budgeted reserve funding required by the Trust, and the variance. So, for 2024 as an example, the situs states required reserves totaling $31,259,189, but the Trust had budgeted reserve funding of $76,936,621.
The audited financials statements of the Trust for year ended 12/31/2022, include the following disclosure regarding reserves: "Florida law requires the Association to accumulate funds for future repairs and replacements. The Association pays a portion of the amounts budgeted for reserves under each component associations' budget, and this amount is included within the Association's common assessment expenses."
"MRHC, on behalf of the Association's Board, estimated the remaining useful lives of the components of common property listed in the table below. The estimate replacement costs and funding requirements of the Association are expected to be zero because, as noted above, reserve funding is provided in the budgeted reserves of each component association."
The financials also include this wording: "The Association is responsible for paying a portion of the amounts necessary for reserves under each component association's budget. The Association's budget includes these reserve items in the component expenses (see Note 4); provided however, that some component association may determine to provide less than full funding of reserves to the extent permitted under applicable law."
So, all that being said, per the financial statements it seems as though the Trust's analysis of the reserves it is required to maintain are categorized as "component expenses". And, the 2024 budget listed "component expenses" at $528,696,801. Then there is a note attached to that number that includes the following wording: "For most Trust Properties, the Association is responsible for paying a portion of the amounts necessary for reserves under the Component Association’s budget, and the Association’s budget includes these reserve items in the Component Expenses. However, for some Trust Properties, the Association may budget for, and separately accrue, funds for reserve expenses which are not reflected in Component Expenses."
Hope that helps.
