Bylaws Condo Association With Low Reserves In Phoenix
Description
Form popularity
FAQ
It requires associations to have sufficient reserves to cover major repairs and to conduct a survey of reserves every decade. Because of the law, older condos—found largely in South Florida, ing to state records—are facing hefty increases to association payments to fund the reserves and repair costs.
The Federal Housing Administration (FHA) has weighed in by requiring approved inium projects to have at least 10% of the annual operating budget set aside for reserves. However, that percentage is arbitrary and is usually never enough for an association that has to paint and replace roofs.
Answer: As of 2024, Florida law requires all condos over three stories to conduct mandatory building inspections and a Structural Integrity Reserve Study (SIRS) every 10 years. Additionally, associations can no longer waive or reduce reserve funds, ensuring they are fully funded to cover future repairs.
New laws and regulations FL Statutes further allows condos to use reserve funds as collateral for loans and provides for a partial waiver for reserves not needed for more than 10, 15, or 20+ years.
Reserves are like savings accounts – an accumulation of funds for a future purpose. The source of funding for a reserve might be surpluses from operations, or scheduled transfers that have been planned and budgeted.
How often does my HOA require a Reserve Study? In the state of California, most HOAs are required to conduct an on-site Reserve Study at least once every three years. Off-site reserve studies should be conducted annually.
So how much should your HOA have on hand to address these inevitable repair and replacement costs? A good rule of thumb is for Reserves to be funded at 70% or higher of the property's calculated deterioration.
A reserve fund is savings or a liquid asset set aside to cover unexpected costs or future financial obligations. Many governments, financial institutions, and individuals regularly set aside funds into accounts that earn interest.
