RESERVES CAN SAVE YOUR HOME
November 30, 2012
have been endless articles about the Pro and Con of reserve
funds in community associations.
condominiums reserve funds are strictly regulated [FS
718.112(2)(f)] – and violations of the laws are strongly
pursued by the Bureau of Compliance.
as usual, reserve funds in HOAs may be regulated by the statutes
720.303(6)], but the lack of enforcement of these
statutes is the obvious reason why many HOA boards are using the
reserve funds as their petty cash fund – spending money from
reserve funds like it’s growing on trees. Board members and
their attorneys know full well that homeowners will not risk
thousands of dollars in legal fees in order to protect the
association’s reserve funds. I have seen some
more-than-ridiculous letters written by association attorneys
defending the abuse of reserve funds. In one specific case some
owners complained about the use of reserve funds to pay
outrageous legal fees. The disingenuous response from the
association attorney – the benefactor of this violation of
’s statutes (short version): “Shut up or we will levy a very
high special assessment payable on very short notice!” The
frivolous lawsuit that created these high legal fees never
should have been filed by the association in the first place!
But who cares, when there are reserve funds that can be used for
purposes other than intended?
biggest issue about reserve funds is the unwillingness of many
owners to fund these reserve fund accounts. Year after year we
see owners voting against the funding of reserve fund accounts
– as allowed by the
statutes. We hear many reasons why owners are unwilling to fund
the reserve accounts. Believe me, most of these “excuses”
are plainly ridiculous and make very little sense.
about: “I will be long dead before we need a new roof!” Or:
“I am not paying more to increase my heir’s inheritance!”
You wouldn’t believe some of the reasons given by owners for
voting against reserve funds.
condo owners lost their homes after Wilma – because they
couldn’t come up with the special assessment the association
had to levy to pay for the deductible of the property insurance
policy. Reserve funds could have been used to pay the
deductibles, but since the owners had voted year after year not
to fund the reserves – this lack of foresight backfired
to the detriment of these owners.
no mistake: Community associations without reserve funds are a
serious financial danger for the members of these associations.
Reserve funds are like savings accounts: Good if you have them!
forget: A home/condo in a community association is a lot more
valuable if the association has well-funded reserves. Which
purchaser in his/her right mind wants to buy a home/condo not
knowing if the association may levy a very high special
assessment a short while after the purchase in order to replace
the roof – or anything else normally covered by well-funded
funds can save your home – please remember that when your
association asks you the next time to vote in favor of reserve