The mandatory funding of all the required reserve funds will make living in these hi-rises very interesting in the next two years

MANDATORY RESERVES

By Jan Bergemann

Finally the Florida Legislature got the message they should have gotten 20 years ago: FULLY FUNDED RESERVES ARE MANDATORY!

And even if the legislature gave condo owners a reprieve until December 2025, condo owners should start now to consider their options:

Will they be able to afford the much higher maintenance fees they will have to pay monthly in the future or will these much higher fees break their household budget?

Let’s just face it: For most of the years past condo owners waived reserves in order to keep maintenance fees artificially low – meaning that many of the associations at this point don’t have any reserves worth talking about. Remember: According to media reports the Champlain Tower South had only $700,000 in reserves, but needed about $16M to pay for the necessary repairs.

That will have to change real fast and the fact that many of the required inspections will have to be followed up by costly repairs and maintenance high special assessments are on the horizon for many hi-rise buildings (buildings higher than three floors).

As much as this change to the Florida statutes was long overdue it will definitely price quite a few families out of their homes. But in all reality there is really no other way around it and the fact that many condo owners used the loophole in the statutes that allowed waiving the funding of reserves is now coming back to haunt the owners who in former times dismissed the idea of funding reserves.

We already see condo owners protesting against boards about the problems that are visible in these buildings. The big question in these cases: Does the association have the necessary funds to take care of the needed maintenance and repairs or are the owners willing and able to pay the special assessment the board might have to levy in order to pay for the contractor?

The mandatory funding of all the required reserve funds will make living in these hi-rises very interesting in the next two years – and we will have to see how strong the government agencies tasked with overseeing these new provisions in FS 718 are enforcing these provisions.

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Look for our article upcoming on Condo Funds and Investments, on SFPMA