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The Honest Broker: The New Condo Law, SD-4, has changed HOA Reserve Funding


The Honest Broker: The New Condo Law, SD-4, has changed HOA Reserve Funding

BY:  Diane Lott, Broker           Paradise Found Realty

What are Reserve Funds? 

Most condo associations essentially have two separate budgets that they work from; “Operating” which includes repeated monthly bills, such as electric, lawn, maintenance, salaries, etc., and “Reserve” which are categorized to maintain structural or ongoing maintenance of their buildings, walkways, parking areas, elevators, etc. 

Each “line item” is added when a Reserve Study is completed, which is recommended to be done every 5-6 years for accuracy.  The number of items placed into the Reserves could be under 10 or over 50 and depend upon the membership.  In keeping the number of reserve line items low,  the monthly monetary obligation in dues is lower. In the past, associations would allow their members to vote to partially fund or waive funding of them altogether.  This led to poorly maintained buildings.  Associations could not do needed repairs properly if they didn’t have the money to do them and couldn’t use their operating budgets because those were needed to keep the bills paid. 

Poorly funded reserves led to poorly maintained buildings.  Evidence of this occurred with the collapse of the Champlain Tower in Miami.  After failing to pass legislation during the 2022 regular legislative session, Florida’s legislature used an emergency legislative session intended to address Florida’s insurance crisis to pass building safety legislation for condominiums and cooperatives 3 stories or higher that are 30 years old or older. Condo Associations’ finances have significantly changed with the passing of this new law.  

Effective December 31, 2024, associations may NOT vote to waive or reduce fully funding reserves for SIRS building components. They are also prohibited from voting to use such reserves for any other purpose. As the statute is currently drafted, this arguably applies to ALL condominiums and cooperatives, regardless of size or location.

The SIRS (Structural Integrity Reserves Study) Building Components are: 


*Load-bearing walls or other primary structural members



*Fireproofing and fire protection systems


*Electrical systems

*Waterproofing and exterior painting


*Any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such item negatively affects the above components

These are the bare minimum components but can reserves can include a multitude of other line items.

How will this new law affect associations that are either inadequate or have non-existent reserves?

Associations are mandated to repair and rectify any issues found on the SIRS study and if there are inadequate funds to do so, the association will most likely have to apply a “Special Assessment” to the membership to pay for the study and needed repairs. They will most likely need to perform a proper Reserve Study and adequately fund them based on the study.  For associations that are “behind” in their funding, this will lead to steep increases in HOA dues to catch up and fund for future repairs.  The SIRS study must be done every 10 years. The report must be filed with the State of Florida and all repairs must be performed within 365 days from the date of the study.

Be Well!


Diane Lott, Broker

Owner: Paradise Found Realty

Paradise Found Realty, Inc. of Palm City  

Your concierge real estate company.  Call for your home visit today:  954-294-5060

Call to schedule a visit today:    954-294-5060

Email:  Diane@ParadiseFoundRealtyFl.com

Website:  www.ParadiseFoundRealtyFl.com

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