REMBAUM'S ASSOCIATION ROUNDUP | The Community Association Legal News You Can Use

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Webinar | Dollars and Sense | Milestone Inspections & Structural Integrity Reserve Studies

Dollars and Sense | Milestone Inspections & Structural Integrity Reserve Studies

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Recorded while presented live on March 21, 2023.

Milestone Inspections and Structural Integrity Reserve Studies (SIRS) | Senate Bill 4-D…What’s Next: Today’s Requirements vs. Proposed Legislation. Our panel of experts and professionals answered your questions concerning the new condo reserve laws, proposed legislation, responsibilities and roles of those involved.

This webinar does not satisfy any requirements for manangers or board members, nor should it be considered legal advice.

(Written by Jeffrey Rembaum and reprinted with permission from the March 2023 edition of the “Florida Community Association Journal”.)

NBC NEWS Reports Condo Could Have Been Repaired Faster Under Prior Law | July 7th Building Maintenance Video Now Online

The Champlain Towers South collapse is a heartbreaking tragedy. While it may be months before the cause or causes of the collpase are determined, NBC News reporters Jon Schuppe and Phil Prazan look back at Florida’s laws governing condominium associations to determine if they could have made a meaningful difference. KBR attorney Jeffrey Rembaum provides input for this NBC Report.

Click Here to read this important article (“Collapsed Florida Tower Could Have Been Repaired Faster Under Repealed Law, Experts Say” | by Jon Schuppe and Phil Prazan, NBC News | published July 8, 2021).

Click anywhere on the image below to view our July 7th webinar:

The Reserve Process – To Fund or Not to Fund, That is the Question

As the end of 2015 nears, so too does the end of the fiscal year for many condominium associations throughout Florida. Most condominium association boards have begun to prepare their association’s annual budget for the upcoming year. Sometimes there is confusion amongst condominium association boards as to whether or not they must fully fund reserves as part of the budget adoption process and the timing as to when it is appropriate to present the opportunity to waiver or reduce the reserves to the unit owners. In short, the condominium association’s budget, with the reserves fully funded, must be presented to the unit owners. At that time, alternative budgets may also be presented that show the effects of waiving or reducing the reserves, too. At the sole discretion of the board, the unit owners can be presented the opportunity to waive or reduce the reserves before or after the board’s adoption of the budget.

A reserve must be established for roof replacement, building painting, pavement resurfacing and any other project that has an anticipated cost of greater than $10,000. Pursuant to section 718.112(2)(f) of the Florida Statutes and Rule 61B-22.005 of the Florida Administrative Code, Florida condominium associations must fully fund reserve accounts for deferred property maintenance and replacement projects. Only after the budget has been presented to the owners with fully funded reserves can the board, if it so desires, present to the unit owners the opportunity to vote to waive or reduce the reserves.

At the discretion of the board, the owners should be presented with the opportunity to waive or reduce the reserves based on the presented budget that establishes the reserves as fully funded. Pursuant to section 718.112(2)(f), Florida Statutes, in order for reserves to be either waived or reduced by the unit owners, at least a majority of those unit owners present, in person or by proxy, at the meeting at which a quorum of the unit owners is attained must approve the waiver or reduction of reserves. The amount or percentage of the reserve reduction that is presented for vote is set at the discretion of the board. Moreover, the vote to waive or reduce reserves can be with regard to all reserve items or for only select reserve items. It would not be correct for the board to present the budget without reserves and then provide the owners the opportunity to partially or fully fund the reserves. Remember, that the process requires the board present the budget with reserves fully funded and then the unit owners can have the opportunity to waive or reduce.

If voting by limited proxy is used, the proxy must include the following disclosure in bold, capital letters and in a font size larger than any other font used in the limited proxy:


If the unit owners do not approve the waiver or reduction of reserves, the reserves must be fully funded as presented in the budget. If the unit owners do approve the waiver or reduction of reserves, the waiver or reduction is only good for the budget year in question. If the following year the condominium association board would like to propose waiving or reducing reserves, the opportunity to waive or reduce reserves must be presented to the unit owners once again.

How much is needed for a reserve account will depend on several factors, including, for example, the estimated remaining useful life of the asset and its replacement cost. Additionally, the manner in which the reserve funds are to be maintained will depends on whether the reserves are keep as separate line-item reserve accounts or as “pooled” reserves. In any event, the budget adopted by a condominium association board must first and foremost include fully funded reserves.

A multicondominium association must adopt a separate budget of common expenses for each condominium the association operates and adopt a separate budget of common expenses for the association. This can accomplished as sub-parts of the same master budget.

Reserve funds and any interest accruing thereon must remain in the reserve account or accounts, and may be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote at a duly called meeting of the association. The only voting interests that are eligible to vote on questions that involve waiving or reducing the funding of reserves, or using existing reserve funds for purposes other than purposes for which the reserves were intended, are the voting interests of the units subject to assessment to fund the reserves in question. To pass any vote regarding waiving, reducing, pooling or using the reserves for a different purpose requires a majority of a quorum of the unit owners present, in person or by proxy, at a membership meeting. In the case of a multicondominium, a majority of a quorum of the unit owners comprising a particular condominium, in the same percentage as a quorum of the members is otherwise established, present, in person or by proxy, at a membership meeting may approve the waiver or reduction of reserves.

It’s Budget Time at Grizwalds and Goblins Community Association

It’s Halloween time, and that means it is that time of year for boards of community associations everywhere to prepare next year’s association budget.  A good budget is reflective of good financial planning.  In practice, it is anything but an exact science.

When examining the community association budget process, there are a few subtle nuisances and a couple of glaring distinctions between those budget related laws set out within Chapter 720 that governs homeowner associations (HOAs) as compared to Chapter 718 that governs condominium associations (CAs).  Let’s take a look.

Notice Requirements:

  •   HOA board meeting notices must include a statement that assessments will be considered and, as per statute, “the nature” of the assessments. There is no definitive advance HOA board budget meeting notice requirement set out in Chapter 720, so be sure to check your HOA’s bylaws for any specific requirements. (As an aside, please do not confuse this with the special assessment procedures where it is required for any meeting at which special assessments will be considered that written notice must be mailed, delivered, or electronically transmitted to the members and parcel owners and such notice must be posted conspicuously on the property or broadcasted on closed-circuit cable television not less than 14 days before the meeting.
  •  At least 14 days before any CA board meeting at which a proposed annual budget of an association will be considered, the board must hand deliver to each unit owner, or mail to each unit owner at the address last furnished to the association by the unit owner, or electronically transmit to the location furnished by the unit owner for that purpose 1) a notice of such meeting and 2) a copy of the proposed annual budget (that includes fully funded reserves).

Committees and Workshops:

  •  The HOA’s notice requirements apply to the meetings of any HOA committee or other similar body, when a “final decision” will be made regarding the expenditure of association funds.
  •  Meetings of a CA committee to make recommendations to the board regarding the association budget are subject to the Notice Requirements, above.

Providing Copies:

  •  The HOA must provide each member with a copy of the annual budget OR a written notice that a copy of the budget is available upon request at no charge to the member.
  •  The CA must send a copy of the proposed budget (showing reserves fully funded for the year) with the board’s budget meeting notice.  Limited proxies for unit owner vote must include a statutory proscribed disclaimer regarding the inherent financial risk in rendering such a decision.

Budgetary Considerations:

  •  The HOA’s budget must reflect the estimated revenues and expenses for that year, along with expected deficits (bad debt) and surpluses.  The budget must also set out separately all fees or charges paid for by the association for recreational amenities, whether owned by the association, the developer, or another person.
  • The CA’s proposed annual budget of estimated revenues and expenses must be detailed and must show the amounts budgeted by accounts and expense classifications. The CA can only assess for such items as authorized by statute or the CA’s own governing documents.


  •  HOA reserves are not mandatory but can be mandatorily required only IF they were initially created by the developer or were voted on, and approved, by a majority of the total voting interests of the community. Both of these types of HOA reserves are loosely referred to as “statutory” reserves.  If your HOA assesses for “statutory” reserves, then the assessment revenues collected must only be used for authorized reserve expenditures unless their use for other purposes is approved in advance by majority vote at a meeting at which a quorum is present. If your HOA assesses for “non-statutory” reserves, (meaning that the budget may have a line item called “reserves”, but they are not “statutory” reserves), then there are no limitations on the board’s expenditure of these monies.
  •  CA reserves are initially mandatory in that all residential CA boards must pass the budget with reserves included. After, the unit owners can vote to waive or reduce the reserves. CA reserves can only be spent for their designated purpose unless otherwise approved by a majority of a quorum comprising the voting interests.

PRACTICAL TIP 1: Compare last year’s actual expenditures to last year’s budget, and also compare it to what is set out in the upcoming year’s budget.  This simple comparison can be most illuminating.

PRACTICAL TIP 2: Take a look at the existing “bad debt” and see how aged it is. Determine whether it is time to “write it off”.  In practical terms, this means that the dues paying members in good standing have to make up that shortfall as required to meet the ongoing expenses of the association. In the event that your community association budget does not include a bad debt line item, then consider adding a “bad debt” line item at this time.

Reserves, Reserves, Reserves

It’s election season again and you know what that means,  right? If you live in a condominium, then typically at your annual meeting, in  addition to the election, the association’s opportunity to vote to waive or  reduce reserves takes place, too. Here are a few helpful hints to keep in mind:

Condominium association budgets must include fully funded  reserves in their annual budget for each item whose replacement costs are  greater than $10,000.00. Each such item is required to have its own line item  reserve in the budget, unless the association decides to “pool” their  reserves. This means that there is one line item for all items within the  “pooled” reserve. Reserves must only be used for their designated  purpose unless the unit owners vote to use them for a different purpose. If the  unit owners do not vote to waive or reduce the reserves, then, pursuant to  state law, the fully funded reserves go into effect.

Reserves should be budgeted based on a straight line  method. This means that if the cost to replace the roof is $100,000 and its  life is 30 years, the association should include $3,333.33 per year for  reserves (100,000 30). If repairs are made that affect the remaining useful  life, then the association can take that into account, too. Effective July 1,  2010, the requirement to have a reserve study was deleted from Chapter 718,  Florida Statutes, the Condominium Act.

To waive or reduce condominium reserves requires an  affirmative vote of the majority of the unit owners at a members’ meeting where  a quorum was present. To use condominium reserves for a different purpose other  than for which they were accrued or to begin “pooling” reserves, a  majority of all unit owners must vote in favor of this  change. The requirement that a developer controlled board cannot raise the  budget by greater than 115% over the previous year does not, amongst a few  other things, include the tabulation of the reserves in the budget calculation  that determines whether the increase is greater than 115% over the prior year.

Homeowners’ association reserves are a bit different. There  is no requirement that forces an HOA to include reserves in the budget unless  the developer initially includes them, or the majority of the entire membership  votes in favor of accumulating reserves. Therefore, if your HOA’s budget  includes a line item called “reserves” but neither the members voted  to accumulate them, nor did the developer initially vote to establish them,  then the HOA’s reserves are more akin to a voluntary savings account.

Regardless of whether you live in an HOA or a condominium,  it pays to be circumspect as to how your association board presents the choice  to waive or reduce the reserves. More often than not, the limited proxy/ ballot  provides the choice to fully waive or to reduce by either a certain percentage  or by leaving it up to the discretion of the board. Providing more than one  choice means that your association is less likely to accomplish either result,  and the unintended, but very real result, is that the required votes to pass  either option is diluted. If the Board is going to provide the option to waive  or reduce, then consider presenting only one option.

Keep in mind that, reserves are forced savings accounts to  replace items that have a limited life so that the money is accrued by the time  you need to replace the reserved item. While waiving or reducing reserves may  seem like it’s saving you money, consider the fairness of the following  scenario: Mr. Jones lives in a condominium where reserves are waived year after  year. After 20 years of enjoying his home, Mr. Jones moves. Six months later a  new roof is required. The result is that Mr. Jones enjoyed the roof for those  20 years and never had to contribute towards the savings for a new roof.  Meanwhile, the person that bought his unit is stuck with the special assessment  bill!