An Overview For Condominium Associations
By Robert L. Kaye, Kaye Bender Rembaum
The topic of “reserves” in condominium associations is one which can be confusing. Chapter 718 (governing condominiums) of the Florida Statutes contains provisions regarding reserves.
For condominiums, reserves are required to be included in all proposed budgets each year, as set forth in Section 718.112(2)(f) F.S.
Budget Details For Reserves
Reserves are required to be included for the roof, painting, paving and any item of deferred maintenance that will cost more than $10,000.
A separate schedule for the reserves is required to be included in the budget and the method of calculating the amount that must be reserved is provided in Section 61B-22.005 of the Florida Administrative Code. Funds held in reserve may only be used for the matter for which they are being held unless a different use is approved in advance by a vote of the unit owners. The Statute also allows an association to consider reducing or entirely waiving the reserves each year. Whether it be for using the funds for a different purpose, or to reduce or waive them, the association must obtain the vote of a majority of the unit owners present at a meeting of the membership at which a quorum has been established. Unless a lower number is provided in the governing documents, a majority of the unit owners constitutes a quorum. The actual number of votes needed in such a vote will therefore depend on how many unit owners participate in the vote.
For cooperatives, Section 719.106(1)(j) F.S. contains substantially the same provisions as for condominiums and should be treated in the same fashion.
For homeowners associations, the issue of reserves was added to the Statute relatively recently, in 2007. For more information on reserves related to HOAs and Cooperatives, go to www.KBRLegal.com.