Q&A:Setting Up Reserves

Q I am the president of our condo association and I am in favor of creating  reserves. Over the last 40 years, our residents have voted down the establishment of a  reserve fund. I would like to recommend to the owners a general pool of  reserves. Do I first hold a vote on if the owners want a reserve, or must I  first conduct a study to establish an estimated cost?  

 —Reserves Proponent  

A “Section 718.112(2)(f) of Florida Statutes provides that the annual budget of an  association must include full reserves,” says Robert L. Kaye, Esq., managing member of Kaye Bender Rembaum, based in  Fort Lauderdale. “Whether or not to present the option to the membership to waive all or a portion  of the full reserves is first up to the board of directors. If the board does not wish to reduce the reserves, there is no requirement in  the law that it be offered for membership vote. Each year, the proposed budget must include the formula for computing the full  reserves set forth in Section 61B-22.005 of the Florida Administrative Code,  which requires an indication of the estimated replacement cost of each of the  items that must be included in reserves. This suggests the need to undertake a reserve study on a periodic basis.”    

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