Florida Community Association Manager Practice Exam

What is one of the permissible actions for a community association concerning income according to FS 617?

1. Distributing profits among members

2. Generating income to offset future assessments

3. Investing incomes in real estate

4. Using income for social events

The correct answer is: Generating income to offset future assessments

Generating income to offset future assessments is a permissible action for a community association according to Florida Statutes Chapter 617, which governs not-for-profit corporations, including community associations. This ensures that the community has adequate financial resources to maintain and enhance common areas, fund necessary services, and undertake future projects as needed. This approach to generating income directly supports the financial stability of the community association, allowing it to effectively manage ongoing operational expenses and unforeseen costs without an undue burden on the members through sudden increases in assessments. Sustainable financial planning, including the generation of income, is critical for the long-term functioning and upkeep of community facilities and services that benefit all members. In contrast, distributing profits among members is generally not appropriate for community associations, as they are structured to serve the collective needs of the community rather than to generate profit for individual members. Similarly, investing incomes in real estate may not align with the primary purposes of a community association, which focuses more on the maintenance of common areas and community welfare rather than direct investment and profit-making ventures. Lastly, using income for social events can be a valid activity but is not a primary financial action; it often falls under ancillary or discretionary expenditures rather than a foundational purpose of generating income for the association.