The key to a healthy financial HOA is having a solid reserve fund. Having a fully funded reserve allows our association to be able to cover extraordinary events without having to go to the association for special assessments. It allows the Board of Directors of our HOA to quickly make decisions for repair and replacement of an asset without having to send out letters and meetings for special assessments. It allows the members of the association to be able to budget their own finances without the worry of a looming special assessment which, depending on the size of the assessment, could cause financial harm to an individual member. In the case of the tragic event of the Surfside condominium collapse, members were looking at special assessments of up to $85,000 dollars.
Florida Statute 703.303 (6) addresses HOA and Condominium reserves. It discusses the uses of reserve funds, and the formula that should be used to arrive at how much should be maintained in the fund. Garden Patio Villa’s governing documents closely follows Florida Statues.It should be noted that if the original developer established a reserve fund for the HOA, then reserve funds must be maintained once turned over to the association. If a reserve fund was not established, then the members of the association can vote each year on whether to establish or contribute to it. Reserve funds are to be used for capital asset replacement or deferred maintenance to the capital asset. It is an important distinction because sometimes members think that because they see money in reserves, they think those monies could be used instead of levying a special assessment.
In the event of an unforeseen capital expense, for example, a hurricane does major damage to the clubhouse roof, or knowing that the life of the clubhouse roof is coming to an end, the cost to replace could be supported by reserve funding. Our HOA board could quickly act in the case of hurricane damage to make the needed repairs. Having a solid reserve fund is key to a healthy financial HOA. In the case of planned replacement, knowing that solid reserve funds are available goes to keeping our Garden Patio Villas community a place that we can all be proud of to call home!