Can homeowners association in FL which maintains capital improvement reserve funds use them to replace property which is still in good usable condition?

Answer 1

This is a common question that arises over the maintenance and repair of major real estate assets covered by the association's reserve study.

The answer is based in economics.

A reserve study estimates the useful life of a real estate asset. Annual budgets contribute to the reserve account according to the recommendations -- or other guidance -- of the reserve study specialist.

When the year arrives during which a major project is planned and for which funds have been earmarked in the reserve account, the question can be: Do we repair an asset that is in 'good usable condition'? (which is your question).

The answer is up to the community to determine.

Best practices dictate that the board present the proposed project with its associated expenses to the community and asks the community for feedback on whether to push the project back until the asset fails -- which can cause additional expense if damage occurs -- or proceed with the project as planned.

This is not a community vote, but a community conversation.

There is no standard answer.

Answer 2

Homeowners associations (HOAs) in Florida can use capital improvement reserve funds for a variety of purposes, including replacing property that is still in good usable condition. However, it is generally recommended that such funds be used for necessary repairs or replacements rather than for items that are still functioning adequately. HOAs should exercise caution and follow state laws and their governing documents when making decisions regarding the use of reserve funds. Consulting with legal counsel or a professional association management company can provide further guidance.