What do I need to know about Condo Reserves?

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Florida Condo & HOA Reserve Rules (2025 Update) | The Adept Agent

Florida Condo & HOA Reserve Rules (2025 Update)

The rules for condominium and homeowners’ association reserves in Florida have changed dramatically since the Surfside tragedy in 2021. These changes affect monthly condo fees, resale disclosures, board responsibilities, and buyer decisions, especially in South Florida where many buildings are older and coastal.

1. Condominium Associations (Chapter 718)

A. Structural Integrity Reserve Studies (SIRS) & Milestone Inspections

  • Who’s affected: Condos 3+ stories, or 30 years old (25 years if within 3 miles of the coast).
  • Frequency: SIRS every 10 years; milestone inspections at age thresholds.

📌 Example: A 12-story tower in Sunny Isles built in 1995 must undergo a milestone inspection and SIRS now, because it is over 30 years old and near the coast.

B. Mandatory Reserve Funding

  • As of Dec 31, 2024, reserves for structural items can no longer be waived.
  • Applies when replacement/deferred costs exceed $25,000 (roofing, painting, paving excluded).

📌 Example: If plumbing risers in a Brickell condo cost $1.5 million to replace, the reserve schedule must allocate funding so that 100% of the cost will be available when due.

C. How Reserves May Be Funded

Associations can fund reserves through regular assessments, special assessments, or loans/credit lines (requires full membership approval).

D. Recent Legislative Adjustments

  • Loans and lines of credit allowed.
  • Temporary pauses in reserve contributions permitted to prioritize urgent repairs.
  • Smaller buildings exempted from some rules.
  • Full enforcement delayed to Jan 1, 2026.

⚠️ True Story: In Hallandale Beach, a 1970s condo faced a $60,000 per-unit special assessment in 2023 for structural repairs. New laws would have required those funds to be reserved over time, instead of hitting owners with sudden bills.

2. Homeowners’ Associations (Chapter 720)

A. Reserve Accounts: Voluntary vs. Statutory

HOAs are not required to have reserves unless members vote them in. If approved, reserves must be included in the budget annually and funded or waived with proper procedure.

B. Disclosure Requirements

If reserves are not maintained, the annual report must state in bold: “No reserve accounts have been provided.”

📌 Example: A Weston HOA that maintains a community pool without reserves must disclose that fact annually. If later voted in, and the pool resurfacing costs $200,000 every 10 years, the HOA must save $20,000 annually (straight-line method).

3. How Reserves Are Calculated

Method 1: Straight-Line

Each item funded at 100% over useful life. 📌 Example: A $100,000 roof with a 10-year life requires $10,000 saved each year.

Method 2: Pooled (Cash Flow)

All items share one reserve account; contributions must ensure the balance never drops below zero. This lowers yearly costs but still funds 100% of needs.

4. Summary Table

Association Type Reserve Study Required? Mandatory Funding? Funding Options
Condos (≥3 stories) SIRS every 10 years 100% structural reserves by 2026 Assessments, loans, specials (with vote)
Condos (<3 stories) No No mandate As per documents
HOAs No No unless voted in Budget or waived by membership

5. Context in South Florida

South Florida is ground zero for these laws due to aging coastal buildings. Fees have jumped 30–50% in many Miami-Dade condos. Retirees on fixed incomes are feeling the strain, while buyers are more cautious and lenders more strict.

⚠️ True Story: In Aventura, one condo’s monthly fees rose from $600 to $1,200 in two years due to reserve funding. Several units hit the market immediately, showing how legal changes directly impact sales activity.

6. Takeaways

  • Boards: Get inspections and SIRS done early; don’t wait for 2026 deadlines.
  • Owners: Expect higher dues, but safer, better-maintained buildings.
  • Buyers/Agents: Always review SIRS and reserve disclosures before buying.

💬 Message Joaquin on WhatsApp for help reviewing condo budgets, reserve schedules, or HOA disclosures.

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