This report contains findings related to Structural Integrity Reserve Study (SIRS) requirements under Florida Statute 718. These findings may have legal implications for unit owners, buyers, and lenders.
Obtain from legal counsel a written summary of all active and threatened litigation, confirm the basis for the $3.1M SIRS reserve balance, and request the current reserve study to verify component-level funding adequacy before the next board meeting.
Legal fees exceeded budget by 312% ($68,750 vs. $16,500), indicating active or escalating litigation not disclosed in the financial package.
A $3.1M SIRS Pooled Reserve balance appeared with no supporting reserve study, percent-funded calculation, or component schedule.
Operating cash decreased 54.1% year-over-year ($715K → $328K), potentially indicating cash flow stress.
Combined Coastal Community Bank balances of ~$3.7M exceed FDIC limits. ICS sweep coverage requires confirmation.
One LLC-owned unit (Seaside Holdings) holds 13.5% of total A/R with balances spanning multiple years.
A $214,680 prepaid insurance balance exists but no declarations pages were provided to verify coverage.
Three operating checks from April 2025 (total $2,771) remain outstanding more than 5 months.
SIRS reserves are 42% funded against the study, and traditional reserves 68%. Legal fees 312% over budget suggest possible litigation funding needs. Operating cash is down 54% YoY, reducing the buffer available to absorb unplanned costs without an assessment.
Items required by the Florida Realtors/Florida Bar Condominium Rider (Rider A). Status reflects what was provided with this upload.
Operating cash balance decreased from $715,300 to $328,475 — a $386,825 (54.1%) decline year-over-year. This is a material reduction that may indicate cash flow stress or unbudgeted expenditures.
Accounts payable decreased from $14,380 to $0 year-over-year. While a zero AP balance is possible at period-end, confirm that all September invoices have been recorded and no liabilities are unrecorded.
Prepaid insurance balance of $214,680 represents a material asset. No insurance declarations page was provided to verify coverage types, limits, and expiration dates.
Legal fees of $68,750 YTD exceeded the annual budget of $16,500 by $52,250 (312% over budget). This is the single largest budget variance and suggests active or escalating litigation.
Building repairs of $147,200 exceeded the $92,000 budget by $55,200 (60.0% over). Material unbudgeted repairs may indicate deferred maintenance or emergency work.
Insurance expense of $345,000 exceeded the $298,000 budget by $47,000 (15.8% over). Premium increases of this magnitude warrant review of coverage and broker competition.
Total revenue of $4,875,000 exceeded the $4,720,000 budget by $155,000 (3.3% favorable). The favorable variance is primarily from late fee collections and interest income.
The delinquency rate is 9.7% (18 of 186 units with balances 60+ days past due). While below the 15% FHA/Fannie Mae threshold, the rate warrants monitoring.
LLC-owned unit with a $31,480 balance, of which $24,600 is aged over 180 days. This single unit represents 13.5% of total A/R and spans multiple fiscal years.
The calculated allowance need using standard reserve rates is $36,200. The recorded allowance of $18,000 is 49.7% of the calculated need, below the 80% threshold.
A $3,100,000 SIRS Pooled Reserve balance appeared for the first time in 2025 with no prior-year balance. No reserve study, percent-funded figure, or component schedule was provided to validate this amount.
The traditional (non-SIRS) reserve balance of $842,500 shows no year-over-year change detail. Without a reserve study, it is not possible to assess whether this balance is adequate for projected component replacements.
Management fees of $162,000 represent 3.4% of total operating expenses. The management contract terms and fee structure should be reviewed for reasonableness.
Given the $68,750 legal expense (312% over budget), confirm whether any material legal accruals should be recorded for services rendered but not yet invoiced as of September 30.
Three operating checks from April 2025 (Coastal Notary Services #2187, $215.00; Sunshine Business Solutions #2203, $1,875.50; Harbor Landscape Co #2210, $680.00) are more than 5 months old and remain outstanding.
Combined balances at Coastal Community Bank across operating ($362,800), reserve ($2,940,500), and security deposit ($425,300) accounts total approximately $3.7 million, far exceeding the $250,000 FDIC standard limit per institution.
Reserve account earned $7,840 in interest during September (book adjustment). Full YTD interest earned is not determinable from the reconciliation alone.