Reserves

Started by WilliamH20 • 3 replies • 1230 views

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WilliamH20 (Florida)
Posts: 2

Posted:

From the current Florida State Statutes, I understand a Reserve must be voted for by a majority of the membership (I see that as 51% of the total membership). None of our Reserves have been voted for or against by the membership. Does this mean we must plan to vote for them at the next Budget meeting, or do we just keep what we have and vote if we want any removed?

SheliaH (Indiana)
Posts: 6,964

Posted:

When was the law enacted and does it apply to all HOAs or those established after a certain date? If you already had your reserves before that went into effect, you shouldn't have anything to worry about. The law may refer more to the establishment of a reserves as opposed to voting to have one year after year - keep reading the statute.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

DouglasK1 (Florida)
Posts: 2,046

Posted:

I'ts not 100% clear what clause you're referring to, but the most likely one is this:
"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."

This assumes you are an HOA and governed by statute 720, Condo associations are governed by 718, which I am not very familiar with.

The first thing to determine is when the reserves were established. If the developer explicitly created reserves, or even if the developer turned over more money than needed for the operating budget, I would say that the reserves are established by the first clause and no member assent is needed.

If the reserves were established before that particular clause was added to the statute, then my take would also be that no after the fact member assent is needed. I don't have time to dig back into older versions of 720, but they are available on-line if you search around.

Finally, if the reserves don't meet either of those criteria, getting member assent might be a good idea. I would guess this requires over 50% of the entire membership, (not just attendees at a given meeting) but the statute isn't very clear on that. Getting an opinion from your attorney might be useful in this case.

Just to make this a bit more complex, some counties have requirements for reserves in some cases (in my county gated associations are required to maintain 5 dedicated reserves, http://orangecounty-fl.elaws.us/code/coor_ptii_ch34_artviii_div2_sec34-291). If this applies to you, not having those reserves would be violating county law so not having them isn't a good option.

Escaped former treasurer and director of a self managed association.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By WilliamH20 on 10/27/2016 9:37 PM
From the current Florida State Statutes, I understand a Reserve must be voted for by a majority of the membership (I see that as 51% of the total membership). None of our Reserves have been voted for or against by the membership. Does this mean we must plan to vote for them at the next Budget meeting, or do we just keep what we have and vote if we want any removed?

How old is the HOA? Mine was formed in 1990 well before FS 720 was enacted. Boards here have resisted the classification of our reserves as "statutory reserves" under 720. That way they can underfund the reserves contribution every year without a homeowner vote. For next year, the calculations under FS 720 show we should set aside approx. $140,000 for reserves. We're actually going to set aside $90,000. This has been going on for years and nobody wants to hear about the Special Assessment Train that's coming down the tracks at us in about 8 years. They're too busy applauding the board for "working hard" to keep assessments down. We've never had a vote, as 720 would require, to only partially fund the reserves.

Maybe your HOA is doing something similar.

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