Question:
We have a current reserve study for our community. Can funds in the reserve account be used for emergencies and unforeseen, large repairs? I’m told that funds in the reserve account can only be used if the specific item is detailed in the reserve study itself.
If not, do these unplanned expenditures need to come from the operating budget in which case we would need to have an “emergency use” item in budget?
Thank you.
– Kim
Answer:
For condominiums, Section 718.112(2)(f) the Florida Condominium Act stipulates what reserve funds can be used for. This section states: “In addition to annual operating expenses, the budget must include reserve accounts for capital expenditures and deferred maintenance. These accounts must include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000.”
Subsection (g) also goes on to state the following:
“(g) Structural integrity reserve study.—
1. A residential condominium association must have a structural integrity reserve study completed at least every 10 years after the condominium’s creation for each building on the condominium property that is three stories or higher in height, as determined by the Florida Building Code, which includes, at a minimum, a study of the following items as related to the structural integrity and safety of the building:
a. Roof.
b. Structure, including load-bearing walls and other primary structural members and primary structural systems as those terms are defined in s. 627.706.
c. Fireproofing and fire protection systems.
d. Plumbing.
e. Electrical systems.
f. Waterproofing and exterior painting.
g. Windows and exterior doors.
h. Any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such item negatively affects the items listed in sub-subparagraphs a.-g., as determined by the visual inspection portion of the structural integrity reserve study.”
As for homeowners associations, the Florida Homeowners Association Act does not impose a statutory requirement to maintain or fund reserves. If your HOA follows the Florida HOA Act, it is best to refer to your governing documents for guidance. Your CC&Rs and bylaws should tell you what reserve funds can be used for.
Disclaimer: We are not lawyers. The information provided on this website does not constitute legal advice.
