Published October 1, 2024
If your condominium association has a fiscal year that follows the calendar year, it is about that time of year to begin thinking about next year’s budget. The Budget and Reserves Manual from the Department of Business and Professional Regulation, Division of Florida Condominiums, Timeshares and Mobile Homes recommends that associations start gathering information to prepare their budgets about three months before the budget is to become effective. The board is required to adopt the annual budget at least 14 days before the start of the association’s fiscal year. If you are unsure if your association’s fiscal year follows the calendar year, your By-Laws will usually identify your association’s fiscal year. This budget season has some new deadlines on the horizon for certain condominiums association that boards should take into consideration.
The legal and technical requirements of condominium association budgets are found in Chapter 718 of the Florida Statutes and Section 61B-22 of the Florida Administrative Code. The association’s governing documents may also contain a fiscal management section to which the Board should pay attention. To begin, any meeting at which a proposed annual budget will be considered must be open to all the owners and notice must be mailed, hand-delivered, or electronically transmitted to those owners who have consented to receiving electronic notice, at least 14 days prior to such meeting. If you have a budget committee that makes recommendations to the board, the meetings of this committee are subject to the same notice requirements and must also be open to all owners. The person providing notice, whether an officer or the manager, must execute an affidavit as proof of notice, and this affidavit must be maintained as part of the official Association official records. The annual budget and any proposed budget to be considered at the annual meeting must be posted on the association’s website. Currently, associations managing a condominium with 150 or more units, which does not contain timeshare units, are required to have a website and thus post the required budget(s) on said website. Effective January 1, 2026, associations managing condominium with 25 or more units will be required to have a website and thus follow the website posting requirements of the statute.
The proposed annual budget will need to have two sections – the operating budget and the reserves. The operating budget will contain the estimated revenues and expenses. This must be detailed and must show the amounts budgeted. The amounts are not restricted to their estimates and can be used for different purposes.
Reserves are funds set aside for specific future expenses. The statute requires that the budget includes reserve accounts for capital expenditures and deferred maintenance, and must include accounts for roof replacement, building painting and pavement resurfacing, regardless of the amount, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. For condominium associations with buildings that are three stories or higher in height, which are now required to obtain a structural integrity reserve study, the budget must also include reserves for certain “SIRS components” listed in the statute for which the association is responsible for in the declaration. The first deadline for said associations is upcoming, with the structural integrity reserve study to be completed by December 31, 2024. The requirements of the SIRS and funding these reserve components is a complex one that should be discussed with association counsel. This is so particularly because the statute also provides that members may not waive or reduce the funding of the SIRS components “for a budget adopted on or after December 31, 2024.” This leaves the question of whether an association that is required to have a SIRS completed by December 31, 2024 but adopts its 2025 budget prior to December 31, 2024, may still waive the funding of those SIRS components for the 2025 fiscal year. Boards should speak with association counsel as it is crucial that the association’s budget is in compliance with the statutory requirements. For non-SIRS components, the members may determine to waive or reduce the funding of reserves as was done in the past. The only recent change is that in 2023 the required vote to waive or reduce the funding of reserves was changed to a majority vote of the total membership.
Lastly, if the board adopts an annual budget which requires assessments against owners which exceed 115% of the assessments of the preceding fiscal year, the members may by written request ask that the Board hold a special meeting to consider a substitute budget. This calculation excludes any authorized provision for reasonable reserves for repair or replacement of the condominium property, anticipated expenses of the association which the board does not expect to be incurred on a regular or annual basis, insurance premiums, or assessments for betterments to the condominium property.
Condominium association boards with any questions and concerns should consult with association legal counsel to navigate the legal requirements this budgeting season.
Top photo by iStockphoto.com/Jacob Wackerhausen
Karyan San Martano
Attorney at Law, Becker
Ft. Lauderdale | bio
