Reserve Funding

I don't know Florida specifics but I am sure others will respond to that. In CA there is no law stating how reserves to be funded or at what percentage. In fact many associations (all that I know of) underfund their reserves. This is done for few reasons. If you approach your construction right and don't let your maintenance crew rip you off the cost will always be lower than what reserves budget for and life expectancy of an item is an arbitrary number which is almost always wrong.

Just because a life expectancy of a paint is 7 years it does't mean you have to paint every 7 years, or change concrete every 10, etc.

Are they funding reserves at 55% because they don't more money to put in there or is there another reason? Remember if you wanted to fund reserves at 100% and don't have a revenue stream to support it you'd have to raise your monthly assessment and owners generally don't like that.

Dennis,

While there may not be a state law requiring funding the reserve account, your governing documents may have something to say about it.

Our CC&Rs say, "It shall be the duty of the board to prepare a budget covering the estimated costs of operating the Association during the coming year, which shall include a capital contribution or reserve in accordance with a capital budget separately prepared." Our attorneys have told us that this means that the capital budget must be prepared competently and accurately, and then used to set the annual assessment. We have used this opinion and the CC&R clause to justify the cost of maintaining a reserve to the membership.

Your documents will be different, but may include similar language.

My HOA in Flordia is funding it's Reserves at 55% rather than 100%. My question is this: is there a law or statue that when the useful life is exhausted on the line items and the reserve for that line item is far less than what's required is it law that it has to be at 100%?

Dennis

Actually, Dennis there is a law regarding the ‘full’ funding of reserves and it is quite complicated. You will find it in Chapter 720.
If the Developer started Reserve funds OR the membership has voted to adopt the budget law then it does apply. Please read Chapter 720 and let us know if you have further questions.