Statutory and Non-Statutory Reserves in Homeowners’ Associations

Given the fiduciary responsibilities of directors and officers to the members of their homeowners’ association, it is important to understand when reserve funding is mandatory under the Florida Homeowners’ Association Act (Chapter 720, Florida Statutes). Reserve accounts in a Homeowners Association allow the association to set aside funds for deferred or long-term maintenance of common areas or for capital expenditures, so as to eliminate the need for special assessments. Deterioration of common I areas is unavoidable, Akin to a safety net savings account, reserves can cover the cost of these repairs. Without a reserve fund, the association may have no choice but to raise assessments or levy a special assessment on homeowners.