Florida HOA Reserve Funding: Why Waiving Reserves Has Finally Caught Up With Thousands of Communities

For years, the vote to waive reserves at the annual Florida condo meeting was about as controversial as voting on the color of the pool furniture. Owners would gather, the board would present the option to waive reserve contributions for another year, and most rooms would vote yes without much discussion. Who wants to pay more in dues when you can kick the can down the road?

The answer, which Florida is learning in real time, is that the can eventually hits a wall. And in a lot of communities right now, that wall has arrived in the form of special assessments ranging from tens of thousands to hundreds of thousands of dollars per unit, dues increases of 40% to 60% or more, and in some cases buildings that cannot get insurance or financing because their reserves are so depleted.

The Surfside collapse in 2021 did not create this problem. It revealed it. And the legislation that followed did not cause the financial pain communities are feeling now. Decades of annual waiver votes caused it. The law simply removed the option to keep pretending the problem does not exist.

Here is what actually happened, what the law now requires, and what communities that are behind can do about it.

How the Waiver Practice Worked and Why It Felt Reasonable at the Time

For most of Florida's condo history, reserve funding was presented to owners as optional. The Florida Condominium Act allowed owners to vote at the annual budget meeting to waive reserve contributions entirely or to reduce them below the recommended level. The only requirement was a majority vote of the owners present and voting at a properly noticed meeting.

The logic felt sound at the individual level. Why collect money now for a roof that has fifteen years of life left when owners can invest that money themselves and get a better return? Why increase dues when the building looks fine? Why fund reserves when you might sell before the roof needs replacing anyway?

The problem is that the logic works for individual owners and fails for communities. When everyone reasons the same way, no money accumulates. When the roof eventually needs replacing, nobody has set anything aside. The only option is a special assessment that hits everyone at once, including owners who bought recently at a price that assumed low dues and no looming assessments.

In communities where this pattern repeated for ten or fifteen years, the deficits became enormous. The Surfside condo collapse investigation revealed that reserves were just 7% funded at the time of the collapse, which meant the association had roughly one dollar in reserves for every fourteen dollars of structural replacement costs it should have been saving for. That is an extreme case but it is not unique in direction, only in degree.

What Changed and When

The post-Surfside legislative response fundamentally ended the era of structural reserve waivers for most Florida condo buildings.

Under the framework established by SB 4-D in 2022 and refined in subsequent sessions, condominium associations with buildings three stories or taller can no longer allow owners to vote to waive or reduce reserves for the structural components identified in their Structural Integrity Reserve Study. Those reserves must be fully funded based on the SIRS recommendations. No vote can override that requirement.

The key date is January 1, 2025. For any budget adopted on or after that date by a qualifying condo association, the SIRS structural reserves must be included and cannot be waived. Boards that fail to include mandatory SIRS funding in their budgets may be in breach of their fiduciary duty to the association.

What does fully funded mean? It means the association must follow the baseline funding plan produced by the SIRS, which calculates how much must be set aside each year so that when each covered structural component reaches the end of its useful life, the money is in the account to replace it. The balance can dip low but it cannot go negative. You cannot spend money you have not collected yet.

The components that must be funded include the roof, the load-bearing structure, the fireproofing systems, the plumbing, the electrical systems, the waterproofing and exterior painting, and the windows and exterior doors, along with any other component with a deferred maintenance or replacement cost above the statutory threshold of $25,000, adjusted annually for inflation from February 2026 forward.

HOA Communities: Still Have Options But Face Consequences

For homeowners associations governed by Chapter 720 and for condo associations in buildings two stories or fewer, the ability to waive reserves still exists. A majority vote of the total voting interests at a properly noticed membership meeting can still authorize waiving or reducing reserve contributions for a given year.

But the ability to waive is not the same as a sound reason to do so, and boards in these communities need to understand what they are voting on when they present the waiver option.

Every year of waived reserves is a year where the gap between what the association has and what it will eventually need grows wider. The longer the waiver continues, the larger the special assessment will be when the project can no longer be deferred. A roof that would have cost $8,000 per unit if funded over twenty years through reserves will cost $12,000 to $15,000 or more as a one-time special assessment, because construction costs inflate over time and because a lump-sum payment draws on capital that has not had years to grow.

If your HOA community regularly votes to waive reserves, the board has an ethical obligation to communicate what that decision means in writing to every owner, every year. Not as a legal disclaimer buried in the meeting notice but as a plain-language explanation of how much money will be needed and when, and that the association will not have it when the time comes. Owners have the right to make this choice. They also have the right to understand what they are choosing.

What Underfunded Communities Can Do Right Now

If your community is in a condo building three stories or taller and has been waiving reserves for years, you are likely facing a significant gap between your current reserve balance and where the SIRS says you need to be. Here is the realistic menu of options.

Gradual assessment increases over multiple years. Rather than hitting owners with one enormous special assessment, some boards have successfully phased in reserve contributions over three to five years through incremental annual dues increases. This spreads the pain and gives owners time to plan. It requires the board to be completely transparent about the funding gap, the timeline, and why the increases are necessary. Owners who understand the math tend to accept gradual increases better than they accept sudden large ones.

Special assessments targeted at the reserve deficit. Some boards have levied a specific reserve replenishment assessment alongside the ongoing monthly dues. The advantage of this approach is transparency: owners see exactly what they are paying for and why. The disadvantage is that it can create hardship for owners on fixed incomes or those who bought recently without anticipating a major assessment.

Reserve loans and lines of credit. Under HB 913, Florida condo associations subject to the SIRS requirement may now use loans, lines of credit, and special assessments as a source of reserve funding. If a majority of all unit owners authorize the board to obtain or use one of these financial vehicles, the association can budget for reserve funding based on anticipated funds even if they have not yet been deposited into the bank account. Any such loan or line of credit must be disclosed in the annual financial statement distributed to owners. This option requires careful evaluation of interest costs and repayment terms and should involve the association's attorney and a financial advisor before committing.

Selling before the catch-up is complete. Some owners facing large reserve catch-up costs have chosen to sell rather than absorb the increases. This is a legitimate personal financial decision. However, boards have a responsibility to disclose the reserve situation accurately to prospective buyers. A buyer who purchases without understanding the reserve deficit and then gets hit with a large assessment has grounds for a complaint and potentially legal action.

The one option that is no longer available for qualifying condo buildings is simply continuing to waive. The law has closed that door.

The Budget Transparency Requirement That Changed in 2025

One more development from the 2025 legislative session that directly affects how reserve shortfalls are communicated.

Under HB 913, if a Florida condo association proposes a budget that increases by more than 15% compared to the prior year's budget, the board must proactively schedule and hold a vote of the membership before adopting that budget. The board must also prepare a substitute budget that excludes any discretionary expenditures not required by law, and both the proposed budget and the substitute budget must be distributed to owners before the membership vote.

This switch now requires the board to seek permission before adopting significant budgetary increases, in contrast to the previous statute which authorized the membership to request an alternative budget only after the fact if the membership objected.

For communities that are beginning to fund SIRS reserves for the first time, or that are phasing in reserve catch-up contributions, this 15% threshold is likely to be triggered. Plan for it. Prepare the substitute budget, schedule the vote, and communicate clearly to owners why the increase is happening and why the substitute budget, while lower, does not adequately address the community's financial obligations.

What the Reserve Numbers Actually Mean for Your Specific Community

The reserve math is not abstract. Let me show you what it looks like in practice with real numbers.

A condo building with a roof that cost $150,000 to replace in 2025 has a 20-year roof. Assuming 4% annual construction cost inflation, that roof will cost approximately $329,000 to replace in 20 years. To fund that replacement over 20 years the association needs to collect roughly $16,450 per year in roof reserves. For a ten-unit building that is $1,645 per unit per year or about $137 per month per unit just for the roof.

Add the pavement, the exterior painting, the structural concrete, the plumbing, and whatever other components the SIRS identifies, and the total monthly reserve contribution per unit in a properly funded community can easily reach $200 to $400 or more in an older coastal Florida building.

For communities where dues have been $300 to $400 per month total, moving to a fully funded reserve structure can feel like a doubling of assessments. That is an enormous financial adjustment for owners who were not expecting it and who may have made purchasing decisions based on the artificially low dues that years of waiving reserves produced.

This is not a comfortable truth. But it is the truth that every Florida condo board and every prospective buyer needs to understand before deciding how to proceed.

A final note for owners who are sitting in underfunded communities right now and trying to decide what to do. The board did not create this situation in most cases. Years of annual waiver votes, often with the overwhelming approval of the owners who are now upset about the consequences, created it. The board's job now is to present the facts clearly, explore every financing option honestly, communicate the timeline transparently, and make decisions that protect the community's long-term financial health even when those decisions are difficult in the short term.

That is what running a board well looks like when the easy days are over.

For a complete guide to Florida HOA and condo reserve funding, special assessments, budgeting, and the decisions every board faces, pick up a copy of Run the Board.