Does law now require condo owners pay catch-up fees for years when reserves were waived?

Live in a home governed by a condominium, co-op or homeowner's association? Have questions about what they can and cannot do? Ryan Poliakoff, an attorney and author based in Boca Raton, has answers.

Question: For the last two years, my fellow condominium board members have been running around with their hair on fire because we have been told the new Florida statutes require us to not only fully fund reserves on an annual basis beginning next year, but also to replace the approximately $4 million that would have been in our reserve accounts had we not waived funding reserves over the last 50 years.

A recent webinar I attended disputed that and said we only need to fully fund reserves on an annual basis going forward. Can you clarify this issue for us? — Signed, N.K.

Dear N.K., I agree with the webinar. “Fully funded” means that you collect the full amounts that your reserve study says you are obligated to collect — not that you have 100% of the funds you need in your reserves at any given time.

There are two primary legal requirements that will become active at the end of this year. First, a residential condominium must perform a structural integrity reserve study (“SIRS”) every 10 years for each building that is three stories or higher; and, for any budget passed on or after Dec. 31, 2024 (effectively, the 2026 budget), members of an association that must obtain an SIRS may not vote to either waive such reserves or use them for any non-reserve purpose. This means that, beginning with most condominiums’ 2026 budget, the vast majority of reserves will no longer be waivable.

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However, there is nothing in the law saying that the reserve study must somehow collect a one-time makeup for a lack of funds at the time the study is implemented.

Of course, this lack of funds will affect how much needs to be collected on an annual basis, and every reserve specialist writes their studies differently — but I have not yet seen a reserve study mandating that millions of dollars be collected on a one-time basis to effectively catch-up the reserves. I have seen studies that strongly recommend such a catch-up on a voluntary basis, but there is nothing in the statute that would mandate such an assessment.

But, in truth, this is only one of many gray areas in the statute.

For example, if an association is not obligated to obtain a reserve study until Dec. 30, but they in fact already have their study, does that mean the 2025 budget must collect structural integrity reserves? Or may they delay collection until 2026, or even vote to waive the reserves, because although SIRS reserves are generally not waivable, that prohibition does not apply to budget promulgated before Dec. 31, 2024? My interpretation is the latter, but the statute does not expressly say.

Or, what about pooling SIRS reserves? Currently associations are allowed to pool their standard reserves (collect one bucket of money that can be used for any reserve purpose), but can they also pool the new SIRS reserves? And if they have current reserve money in a pool, how much of that money can be transferred into the new SIRS reserve fund, given that much, but not all, of the money collected in the traditional reserves was for items that are now accounted for in the SIRS reserves?

Unfortunately, this is just how statutory drafting works, and some of these questions may be answered in future amendments or Division of Condominiums rulings; and others may remain open questions until (or unless) an owner eventually sues an association to “correct” how they are collecting (or failing to collect) the new reserves.

Why can I be charged both condo and HOA fees?

Question: I would like to know why I must pay homeowners association fees as well as condominium fees. I own a condominium unit — not a house! — Signed, S.D.

Dear S.D.,

Many communities are governed by multiple associations. In your case, you live in a condominium, and so your condominium property is jointly and severally owned by all the unit owners, and there is a condominium association that is responsible for managing and maintaining the property. That association charges assessments to pay for expenses related to those specific responsibilities.

Your condominium, along with the villas and homes, are within a broader community that almost certainly shares other facilities among themselves.

For example, you may have a gatehouse with a guard and motorized gates. Or, you could have other recreational facilities, such as a clubhouse or playgrounds. There also may be lakes and wetlands that must be maintained, and almost certainly there are roads leading between all of the individual communities.

All of this commonly shared property is owned by a master association, which is usually governed by Chapter 720 (the HOA Act). That master association charges owners assessments for its own expenses — maintaining those roads, and gatehouse, and clubhouse, and any other association property, in addition to the costs of security, architectural controls, landscape maintenance, etc. Those expenses are on top of the costs of maintaining your individual condominium property, and so you are responsible to pay both.

Ryan Poliakoff, a partner at Poliakoff Backer, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. Ryan Poliakoff and Gary Poliakoff are co-authors of "New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living." Email your questions to condocolumn@gmail.com. Please be sure to include your location.