Chapter 11 Reserves

What is a reserve schedule?

- A list of all required deferred maintenance and capital expenditure reserve items - The estimated useful life of each item -The estimated remaining useful life of each item -The estimated cost of deferred maintenance and capital equipment replacement for each item. -The estimated fund balance for each item as of the end of the current fiscal year. -The required funding amount for each budget year for each item.

Types of Reserves Accounts

- Roofing - Painting - Paving - Any other deferred maintenance or capital expenditure items that are expected to cost more than 10,000

Pooled Reserves

A condominium, cooperative, or HOA is permitted to form pooled reserve accounts instead of, or in addition to, segregated reserve accounts. That is, if the association establishes a pooled reserve accounts for roof replacement, building painting and pavement resurfacing, funds may be drawn from this account to pay for any of those three items. The association must get member approval to expend funds from the pool for any items that are not included in the pool. If the association has segregated reserves, it must obtain member approval to create pooled reserves.

Segregated reserves

Each item is calculated separately. For example, roofing , paving , painting and elevator maintenance all appear separately on the schedule. The amount that is required for each item is listed separately and totaled into the reserve schedule for each specific year. The funds from one reserve category cannot be used to fund another reserve item without a vote of the members.

Reserve Budget

Reserves are monies that are set aside for specific future expenditures, usually for the cost of major repairs to, or replacements of, the association property. The DBPR defines reserves as "any funds, other than operating, that are restricted to deferred maintenance and capital expenditures (capital maintenance)" and any other funds that are restricted as to use by the association or its documents. Reserve funds are restricted for specific purposes and may not be used for routine maintenance without a vote of the members.

Condominium or Cooperative

The association must provide a copy of the proposed budget, fully funded reserve schedule, and unit assessments (budget package) to all members no less than 14 days in advance of the budget meeting. A detailed agenda must be included as part of the notice. The association may mail, hand deliver, or email the budget package to each member, as discussed in the previous chapter. To show that the association has complied with the 14-day notice requirement, an affidavit be must be executed by the person who provided the notice of the meeting. The affidavit must be filed in the association's official

Homeowner association reserve

The board cannot establish, reduce, or wavier reserve without a vote of the member. A vote to waive or reduce reserves is only applicable for a specific budget year.

What is fully funded?

The statutes require that condominium and cooperative proposed budgets fully funded reserves. This means that the proposed budget must include sufficient funds in each reserve account to ensure that deferred maintenance and capital expenditures may be carried out without special assessment or loans. The costs of items are estimated in today's dollars, without future projections for inflation or other increases. When an association creates a reserve budget schedule during its annual budgets development, it must update the cost for each reserve item.