By Jan Bergemann

Published November 30, 2012


There have been endless articles about the Pro and Con of reserve funds in community associations.


In condominiums reserve funds are strictly regulated [FS 718.112(2)(f)] – and violations of the laws are strongly pursued by the Bureau of Compliance.


But, as usual, reserve funds in HOAs may be regulated by the statutes [FS 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 Florida ’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?


The 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 Florida 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.


How 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.


Many Florida 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.


Make 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!


Never 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 reserves?


Reserve funds can save your home – please remember that when your association asks you the next time to vote in favor of reserve funds!

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Jan Bergemann

Jan Bergemann is president of Cyber Citizens For Justice, Florida 's largest state-wide property owners' advocacy group. CCFJ works on legislation to help owners living in community

associations. He moved to Florida in 1995 - hoping to retire. He moved into a HOA, where the developer cheated the homeowners and used the association dues for his own purposes. End of retirement!


CCFJ was born in the year 2000, when some owners met in Tallahassee - finding out that power is only in numbers. Bergemann was a member of Governor Jeb Bush's HOA Task force in 2003/2004.


The organization has two websites to inform interested Florida homeowners and condo owners:

News Website:

Educational Website:

We think that only owners can really represent owners, since all service providers surely have a different interest! We are trying to create owner-friendly laws, but the best laws are useless without enforcement. And enforcement is totally lacking in Florida !

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