Waiving Reserves in a Florida Condominium

NicholasL2 (Florida)
Posts: 5

Posted:

What is the process to waive reserves in a Florida Condominium? We are having our annual budget meeting next month and would need to include this with the mailing? What would be the percentage that we would need to approve the waiving of the reserves?

SureshD
Posts: 268

Posted:

718.112 Bylaws.--

(2) REQUIRED PROVISIONS.--The bylaws shall provide for the following and, if they do not do so, shall be deemed to include the following:

(f) Annual budget.--

2. In addition to annual operating expenses, the budget shall include reserve accounts for capital expenditures and deferred maintenance. These accounts shall 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 for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000. The amount to be reserved shall be computed by means of a formula which is based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance. This subsection does not apply to an adopted budget in which the members of an association have determined, by a majority vote at a duly called meeting of the association, to provide no reserves or less reserves than required by this subsection. However, prior to turnover of control of an association by a developer to unit owners other than a developer pursuant to s. 718.301, the developer may vote to waive the reserves or reduce the funding of reserves for the first 2 fiscal years of the association's operation, beginning with the fiscal year in which the initial declaration is recorded, after which time reserves may be waived or reduced only upon the vote of a majority of all nondeveloper voting interests voting in person or by limited proxy at a duly called meeting of the association. If a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves, and no such result is achieved or a quorum is not attained, the reserves as included in the budget shall go into effect. After the turnover, the developer may vote its voting interest to waive or reduce the funding of reserves.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Nicholas,

It is mandatory under Florida law to include reserves for roof replacement, painting of the building and pavement resurfacing. The proposed budget sent to unit owners must include these reserve items. The board, however, may send supplemental information showing a comparison with reserves being partially funded or waived if unit owners vote to do so. If a vote is held and proxies are used, they must contain the following in capitalized bold letters: "Waiving of reserves, in whole or in part, or allowing alternative uses of existing reserves may result in unit owner liability for payment of unanticipated special assessments regarding those items."

To find how that vote should be taken, see Florida Statutes 718.112(2)(b)1 and 718.112(2)(f)2 and 4