"How much money should we have in Reserves?"

A common question I am asked frequently is “how much money should we have in our condo reserve"? Well, according to the Florida Statutes, the amount required is what is considered to be “adequate”. Obviously this is a very vague term.


It's important to understand that there is absolutely no way to come up with a one system fits all formula for establishing reserves. In my opinion the more money available in the condo reserve accounts the better. Condo Associations should include a line item for future replacement cost of common area items in their monthly budget each and every month. These funds should be maintained in a special reserve account. The specific amount set aside each month is determined by the size of the property and the amount of common areas/elements that will need attention in the future.

The best way to determine this is to have a Reserve Study Specialist or Professional Engineer provide you with a Reserve Study. This Reserve Study will determine the expected useful life of all your HOA or Condo Association common area items. The A/C system, roof, painting, structure, lighting, interior painting, pool, gates, etc. are all included in this Reserve Study. The Reserve Study preparer will then apply future expected costs to each element and determine what needs to be put aside each year to meet these goals for you Association.

"How much should you have in condo reserves?" Your Association may have enough money in a condo reserve account if it can address a condo association common area issue without having to implement a Special Assessment. This is a simple definition of what "adequate" reserves really mean.

We always highly recommend that Associations have a Reserve Study completed at least every 5 years. We can assist your Association in having this important study completed. An accurate Reserve Study can save your community from facing large Special Assessments or rushing around to obtain a high interest loan for major repairs. Contact us to find out how a Reserve Study can help your Association.