Q&A: Must an HOA Board Provide Reserve Schedules to Residents?

Q When must the board for a homeowners’ association provide the reserve schedules to the members? Can this information be provided at the annual meeting, or does it need to be included with the pre-meeting notice?

—Confused in Clearwater

A “It depends,” says Joseph E. Adams, an office managing shareholder attorney with the law firm of Becker & Poliakoff in Ft. Meyers and Naples. “Chapter 720 of the Florida Statutes, often called the “Florida Homeowners’ Association Act” provides that an association is “deemed to have provided for reserve accounts” if reserve accounts have been initially established by the developer or if the membership of the association affirmatively elects to provide for reserves by a majority vote of the owners. Such reserves are often referred to as “statutory reserves,” although this term is not actually used in the statute.

“If the association maintains statutory reserves, Section 720.303(6)(e) of the Act requires that reserves shall be computed by a formula based upon the estimated remaining useful life and established replacement cost or deferred maintenance expense of each reserve item. This calculation is usually contained in a document called the “reserve schedule,” which would need to be part of the proposed budget.

“However, unlike the law for condominiums, there is no requirement that an HOA send out the proposed budget in advance of the meeting where it will be adopted. Rather, Section 720.303(6)(a) of the Act simply states that the association “shall provide each member with a copy of the annual budget or a written notice that the budget is available upon request at no charge to the member.” This is generally interpreted to mean the adopted budget, as opposed to the proposed budget, must be sent, or made available to, the homeowners.

“If the association does not maintain “statutory reserves,” any reserve funds included in the budget are usually referred to as “non-statutory reserves.” There is essentially no regulation in the Act as to such funds, except that Section 720.303(6)(b) of the Act states that the funding of non-statutory reserves “is limited to the extent that the governing documents limit increases in assessments.”

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Comments

  • The condo HOA only requires 5% down to purchase a property however per FHA requirements, the community reserves fund is $400 short than what it should be. Is the HOA liable?