How much should Associations have in reserve? Here are the rules for Florida!
Florida Condo & HOA Reserve Rules (2025 Update)
After the Surfside collapse in 2021, Florida overhauled condo and HOA reserve rules. The newest 2025 updates tighten structural requirements while giving boards flexibility through the pooled reserve system. Here’s what boards, owners, buyers, and agents need to know.
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 near the coast).
- Frequency: SIRS every 10 years; milestone inspections at statutory ages.
📌 Example: A 1995 Sunny Isles condo (12 stories, oceanfront) now must complete both a milestone inspection and SIRS due to its age and coastal location.
B. Mandatory Reserve Funding
- As of Dec 31, 2024, reserves for structural items cannot be waived.
- Applies when replacement/deferred costs exceed $25,000 (roofing, painting, paving excluded).
📌 Example: A $1.5M plumbing riser replacement in Brickell must be included in the reserve plan, funded at 100% before the useful life ends.
C. How Reserves May Be Funded
- Funding options: regular assessments, special assessments, or loans/credit lines (membership majority approval required for non-regular methods).
D. Recent Legislative Adjustments (2025)
- Loans and credit lines explicitly permitted.
- Temporary pauses in reserve contributions allowed for urgent repairs.
- Smaller buildings exempted from some requirements.
- Enforcement of full reserves delayed until Jan 1, 2026.
⚠️ True Story: In Hallandale Beach, a 1970s tower assessed $60,000 per unit in 2023 for structural repairs. Under today’s rules, that cost would have been built into reserves over years, avoiding a sudden financial shock.
2. Homeowners’ Associations (Chapter 720)
A. Reserve Accounts: Voluntary vs. Statutory
HOAs are not required to hold reserves unless the membership votes to create them. Once created, they must follow the same 100% funding standards as condos.
B. Disclosure Requirements
If no reserves are maintained, the annual financial report must state in bold: “No reserve accounts have been provided.”
📌 Example: A Weston HOA with a community pool but no reserves must disclose this every year. If members vote to add reserves, a $200,000 resurfacing every 10 years requires $20,000 saved annually (straight-line method).
3. Reserve Calculation Methods
Method 1: Straight-Line
Each item is funded separately at 100% over its useful life. 📌 Example: A $100,000 roof with 10 years life = $10,000/year reserved.
Method 2: Pooled (Cash-Flow)
- All components share a single fund.
- New law (2025) clarifies boards can use pooling for SIRS components.
- Boards may switch between straight-line and pooled without membership vote.
- The pooled plan must keep reserves above zero across the projection period.
📌 Example: A condo with roofs, elevators, and plumbing in one pool may contribute less annually in early years, but must show projections where the account never falls below zero while still covering 100% of long-term costs.
4. Summary Table
| Association Type | Reserve Study? | Mandatory Funding? | Funding Options |
|---|---|---|---|
| Condos (≥3 stories) | SIRS every 10 years | 100% by 2026 (no waivers) | Assessments, loans, specials; pooling or straight-line |
| Condos (<3 stories) | No | No statutory mandate | As per governing docs |
| HOAs | No | Not unless voted in | Budget, waived, or adopted reserves (100% if created) |
5. Context in South Florida
South Florida is at the epicenter of these changes. Aging coastal condos face rising costs. Some owners have seen monthly fees double (from $600 to $1,200) within two years. Lenders are also requiring proof of reserve compliance before approving loans.
⚠️ True Story: In Aventura, several owners rushed to sell after assessments and new reserve obligations raised fees sharply, showing how legislation impacts the resale market.
6. Takeaways
- Boards: Complete SIRS and set funding strategies early — don’t wait until 2026.
- Owners: Expect higher dues but better-maintained, safer buildings.
- Buyers/Agents: Always check SIRS reports and reserve schedules before committing.
💬 Message Joaquin on WhatsApp for help with condo budgets, reserve schedules, or HOA disclosures.