Florida Requirements
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FLORIDA ADMINISTRATIVE CODE RESERVE REQUIREMENTS
Chapter 61B-22, Florida Administrative Code
61B-22.001 Definitions. For the purposes of this chapter, the following definitions shall apply:
(1) “Accounting records” include all of the books and records identified in Section 718.111(12)(a)11., Florida Statutes, and any other
records that identify, measure, record, or communicate financial information whether the records are maintained electronically or
otherwise, including, all payroll and personnel records of the association, all invoices for purchases made by the association, and all
invoices for services provided to the association.
(2) “Capital expenditure" means an expenditure of funds for:
(a) The purchase of an asset whose useful life is greater than one year in length;
(b) The replacement of an asset whose useful life is greater than one year in length;
(c) The addition to an asset which extends the useful life of the previously existing asset for a period greater than one year in
length.
(3) "Deferred maintenance" means any maintenance or repair that:
(a) Will be performed less frequently than yearly; and
(b) Will result in maintaining the useful life of an asset.
(4) “Funds” means money and negotiable instruments including, for example, cash, checks, notes, and securities.
(5) "Reserves" means any funds, other than operating funds, that are restricted for deferred maintenance and capital expenditures,
including the items required by section 718.112(2)(f)2., Florida Statutes, and any other funds restricted as to use by the
condominium documents or the condominium association. Funds that are not restricted as to use by Section 718.112(2)(f), Florida
Statutes, the condominium documents or by the association shall not be considered reserves within the meaning of this rule.
(6) “Turnover” means transfer of association control from developers to non-developer unit owners pursuant to Section 718.301, Florida
Statues.
61B-22.003 Budgets.
(1) Required elements for estimated operating budgets. The budget for each association shall:
(d) Include all estimated common expenses or expenditures of the association including the categories set forth in section
718.504(20)(c), Florida Statutes. Reserves for capital expenditures and deferred maintenance required by section
718.112(2(f), Florida Statutes, must be included in the proposed annual budget and shall not be waived or reduced prior to the
mailing to unit owners of a proposed annual budget. If the estimated common expense for any category set forth in the statute
is not applicable, the category shall be listed followed by an indication that the expense is not applicable;
(e) Unless the association maintains a pooled account for reserves required by Section 718.112(2)(f)2., Florida Statutes, the
association shall include a schedule stating each reserve account for capital expenditures and deferred maintenance as a
separate line item with the following minimum disclosures:
1. The total estimated useful life of the asset;
2. The estimated remaining useful life of the asset;
3. The estimated replacement cost or deferred maintenance expense of the asset;
4. The estimated fund balance as of the beginning of the period for which the budget will be in effect; and;
5. The developer's total funding obligation, when all units are sold, for each converter reserve account established pursuant
to section 718.618, Florida Statutes, if applicable.
(f) If the association maintains a pooled account for reserves required by Section 718.112(2)(f)2., Florida Statutes, the association
shall include a separate schedule of any pooled reserves with the following minimum disclosures:
1. The total estimated useful life of each asset within the pooled analysis;
2. The estimated remaining useful life of each asset within the pooled analysis;
3. The estimated replacement cost or deferred maintenance expense of each asset within the pooled analysis; and
4. The estimated fund balance of the pooled reserve account as of the beginning of the period for which the budget will be in
effect.
(g) Include a separate schedule of any other reserve funds to be restricted by the association as a separate line item with the
following minimum disclosures:
1. The intended use of the restricted funds; and,
2. The estimated fund balance of the item as of the beginning of the period for which the budget will be in effect.
(5) Limited common elements. If an association maintains limited common elements at the expense of only those unit owners entitled
to use the limited common elements pursuant to Section 718.113(1), Florida Statutes, the budget shall include a separate
schedule, or schedules, conforming to the requirements for budgets as stated in this rule, of all estimated expenses specific to
each of the limited common elements, including any applicable reserves for deferred maintenance and capital expenditures. The
schedule or schedules may group the maintenance expense of any limited common elements for which the declaration provides
that the maintenance expense is to be shared by a group of unit owners.
61B-22.005 Reserves. Reserves required by statute.
(1) Reserves required by statute. Reserves required by section 718.112(2(f), Florida Statutes, for capital expenditures and deferred
maintenance including roofing, painting, paving, and any other item for which the deferred maintenance expense or replacement
cost exceeds $10,000 shall be included in the budget. For the purpose of determining whether the deferred maintenance expense
or replacement cost of an item exceeds $10,000, the association may consider each asset of the association separately.
Alternatively, the association may group similar or related assets together. For example, an association responsible for the
maintenance of two swimming pools, each of which will separately require $6,000 of total deferred maintenance, may establish a
pool reserve, but is not required to do so.
(2) Commingling operating and reserve funds. Associations that collect operating and reserve assessments as a single payment shall
not be considered to have commingled the funds provided the reserve portion of the payment is transferred to a separate reserve
account, or accounts, within 30 calendar days from the date such funds were deposited.
(3) Calculating reserves required by statute. Reserves for deferred maintenance and capital expenditures required by section
718.112(2)(f), Florida Statutes, shall be calculated using a formula that will provide funds equal to the total estimated deferred
maintenance expense or total estimated replacement cost for an asset or group of assets over the remaining useful life of the asset
or group of assets. Funding formulas for reserves required by Section 718.112(2)(f), Florida Statutes, shall be based on either a
separate analysis of each of the required assets or a pooled analysis of two or more of the required assets.
(a) If the association maintains separate reserve accounts for each of the required assets, the amount of the current year
contribution to each reserve account shall be the sum of the following two calculations:
1. The total amount necessary, if any, to bring a negative account balance to zero; and,
2. The total estimated deferred maintenance expense or estimated replacement cost of the reserve asset less the
estimated balance of the reserve account as of the beginning of the period for which the budget will be in effect. The
remainder, if greater than zero, shall be divided by the estimated remaining useful life of the asset. The formula may be
adjusted each year for changes in estimates and deterred maintenance performed during the year and may consider
factors such as inflation and earnings on invested funds.
(b) If the association maintains a pooled account of two or more of the required reserve assets, the amount of the contribution to
the pooled reserve account as disclosed on the proposed budget shall be not less than that required to ensure that the balance
on hand at the beginning of the period for which the budget will go into effect plus the projected annual cash inflows over the
remaining estimated useful lives of all of the assets that make up the reserve pool are equal to or greater than the projected
annual cash outflows over the remaining estimated useful lives of all of the assets that make up the reserve pool, based on the
current reserve analysis. The projected annual cash inflows may include estimated earnings from investment of principal. The
reserve funding formula shall not include any type of balloon payments.
(4) Estimating reserves which are not required by statute. Reserves which are not required by section 718.112(2)(f), Florida Statutes,
are not required to be based on any specific formula.
(5) Estimating non-converter reserves when the developer is funding converter reserves. For the purpose of estimating non-converter
reserves, the estimated fund balance of the non-converter reserve account established pursuant to section 718.618, Florida
Statutes, shall be the sum of:
(a) The developer's total funding obligation, when all units are sold, for the converter reserve account pursuant to section 718.618,
Florida Statutes; and,
(b) The estimated fund balance of the non-converter reserve account, excluding the developer's converter obligation, as of the
beginning of the period for which the budget will be in effect.
(6) Timely funding. Reserves included in the adopted budget are common expenses and must be fully funded unless properly waived or
reduced. Reserves shall be funded in at least the same frequency that assessments are due from the unit owners (e.g., monthly or
quarterly).
(7) Restrictions on use. In a multicondominium association, no vote to allow an association to use reserve funds for purposes other
than that for which the funds were originally reserved shall be effective as to a particular condominium unless conducted at a
meeting at which the same percentage of voting interest in that condominium that would otherwise be required for a quorum of the
association is present in person or by proxy, and a majority those present in person or by limited proxy, vote to use reserve funds for
another purpose.. Expenditure of unallocated interest income earned on reserve funds is restricted to any of the capital
expenditures, deferred maintenance or other items for which reserve accounts have been established.
(8) Annual vote required to waive reserves. Any vote to waive or reduce reserves for capital expenditures and deferred maintenance
required by section 718.112(2)(f)2, Florida Statutes, shall be effective for only one annual budget. Additionally, in a
multicondominium association, no waiver or reduction is effective as to a particular condominium unless conducted at a meeting at
which the same percentage of voting interests in that condominium that would otherwise be required for a quorum of the association
is present, in person or by proxy, and a majority of those present in person or by limited proxy vote to waive or reduce reserves. For
multicondominium associations in which the developer is precluded from casting its votes to waive or reduce the funding of reserves,
no waiver or reduction is effective as to a particular condominium unless conducted at a meeting at which the same percentage of
non-developer voting interest in that condominium that would otherwise be required for a quorum of the association is present, in
person or by proxy, and a majority of those present in person or by limited proxy vote to waive or reduce reserves.
61B-22.006 Financial Reporting Requirements.
…(3) Disclosure requirements. The financial statements required by sections 718.111(13) and 718.301(4), Florida Statutes, shall contain
the following disclosures within the financial statements, notes, or supplementary information:
(a) The following reserve disclosures shall be made regardless of whether reserves have been waived for the fiscal period covered
by the financial statements:
1. The beginning balance in each reserve account as of the beginning of the fiscal period covered by the financial statements;
2. The amount of assessments and other additions to each reserve account including authorized transfers from other reserve
accounts;
3. The amount expended or removed from each reserve account, including authorized transfers to other reserve accounts;
4. The ending balance in each reserve account as of the end of the fiscal period covered by the financial statements;
5. The amount of annual funding required to fully fund each reserve account, or pool of accounts, over the remain useful life of
the applicable asset or group of assets;
6. The manner by which reserve items were estimated, the date the estimates were last made, the association's policies for
allocating reserve fund interest, and whether reserves have been waived during the period covered by the financial
statements; and,
7. If the developer has established converter reserves pursuant to section 718.618(1), Florida Statutes, each converter reserve
account shall be identified and include the disclosures required by this rule.
