• jimshorkey

Understanding Florida Condominium Reserve Accounts


Under Florida law, condo associations must maintain reserves for repairs or replacement costing more than $10,000. For each identified project, the association must identify the anticipated date and cost of the project. The association must calculate annually the amount it needs to contribute to its reserve accounts and include this amount in the budget. Generally, associations will collect one maintenance fee payment from each unit owner and deposit it into an operating account. From there, the percentage of fees allocated to reserves per the budget is transferred to a separate reserve account.


Reserve Study


Associations can use a reserve study to determine what projects more than $10,000 need to be done, when they need to be done and when they need to be done. A reserve study is a professional engineering survey of the property. The reserve study firm will examine the property and determine what major capital maintenance and replacement projects will need to be done in the next 30 years. The study provides expected costs of each project and expected timeframe for completion. There is no specific requirement in Florida law that associations obtain a professional reserve study.


Waiving Reserve Contributions


To successfully reduce or waive reserve funding, a majority of the membership (51% of unit owners) must vote in favor of the reduction/waiver.


Every year, the board must present a proposed budget to the community assuming full reserve funding. If a majority vote is not obtained, the board must approve the budget with full reserve funding. If a majority vote is obtained, the board must proceed with waived or reduced reserve funding. Any vote to waive or reduce reserves is only effective for one annual budget.


Why Fund Reserves?


Associations putting little to no money aside for reserves are focusing on low maintenance fees. To do this, is losing sight of the big picture and creates the need for special assessments down the road. Special assessments have negative outcomes:

  • Hesitancy to issue a special assessment or difficulty collecting the special assessment may lead to delays in project completion and further deterioration of the item requiring repair or replacement.

  • Special assessments are a burden on the unit owners.

  • Special assessments are unfair in that prior unit owners did not have to contribute any money and the full cost is passed on to the current owners.

  • Limited reserve funds and a history of special assessments will drive away buyers.


It is important for condominium associations to have a long-term plan and to fully fund reserves.



Map of Florida