M.I. from Florida writes:
Dear Mister Condo,
FS 718 requires the Board to create a budget with funding reserves. Is the same required for an HOA? If the developer did not create reserves in an HOA can the Board do so on its own?
Mister Condo replies:
M.I., I am not an attorney and offer no legal opinions on whether or not laws pertain to a particular type of common interest community. You should speak with a qualified HOA attorney for a legal answer. I will say that Florida Statute 718 is specific to condominiums. Statute 720 is specific to HOAs. Again, I am not an attorney but my understanding is that if the developer did not establish a budget with funding reserves, it is up to the HOA to do so, meaning that the Board should create a funding plan and introduce it to the homeowners for a vote. As a practical matter, it is a very dangerous practice for an HOA not to have a well-funded Reserve Fund to replace the common elements owned by the HOA. These elements begin the cycle of decay and replacement the moment they are introduced. It is never a question of “if” but rather “when” they will need replacement. A well-funded Reserve Fund is the peace of mind owners need to know that their association is well-funded when that time comes. All the best!