March 1, 2026, 6:01 a.m. ET
Live in a home governed by a condominium, co-op or homeowner’s association? Have questions about what they can and cannot do? Ryan Poliakoff, an attorney and author based in Boca Raton, has answers.
Question: A few years ago, our condominium board needed money for a significant maintenance, repair and replacement expenditure. At the time, our restricted reserve fund was straight line; there was insufficient cash in the relevant line item for a needed expense. The board made a motion to change from the component form of reserve accounting to a pooled approach. They transferred all the money from over 25 years of straight-line reserves into a new pool to pay the expense
I’ve read that boards alone can change to a pooled approach going forward, but that, to move money from previously accumulated straight-line reserve into the pool, it requires a members’ vote. Was this an example of statutory non-compliance? If so, can the association fix this, or is this just “water under the bridge”? Signed, M.R.
Dear M.R.,
As you know, the Condominium Act, Section 718.112, Fla. Stat., requires condominiums to collect reserve funds for roof replacement, painting, pavement resurfacing, and any other deferred maintenance item that is estimated to cost more than $25,000. A few years ago, all the reserve items that relate to the structural integrity of a building were put into a separate category of structural integrity reserves that are more restricted; and then everything remaining is part of the regular reserves. It sounds as if the repairs in your building were done before the structural integrity reserves were mandated.
Regular reserve funds must be used for their stated purpose unless a different purpose is approved by the membership. Similarly, regular reserve funds must be collected in full unless that collection is waived by a membership vote (SIRS funds are mandatory no matter what, and cannot be waived, though there are now some special rules that allow the membership to use SIRS funds for milestone repairs, or instead to fund the SIRS with a line of credit or loan, among other things).
Until recently, the statute didn’t discuss the concept of pooling at all. Instead, the Division of Condominiums promulgated rules regarding how reserves are funded and presented, and the administrative rule stated that the funding formula used by the association could either be calculated as a separate reserve account for each “asset” (such as the roof, the HVAC system, the pool heaters, etc.); or instead the association could calculate the reserves based on collecting a pooled fund covering two or more individual assets.
Because the rule allowed either funding method, it stood to reason that the board could choose the desired method; and so it was universally accepted that the board alone could make that decision. This is true for both regular and SIRS reserves, although of course those pools must be kept separate.
The statute has now been updated to further codify the administrative rule and to recognize the board’s right to pool both regular and SIRS funds (in separate accounts). The statute expressly says that “a vote of the members is not required for the board to change the accounting method for reserves to a pooling accounting method or a straight-line accounting method.”
Today, very few boards would voluntarily collect reserves using straight line funding. It’s extremely limiting and creates situations where an association may have lots of money available for repairs generally but, because that money is dedicated to the wrong reserve item, the association would have to assess owners to collect additional funds — which is both inefficient and puts a burden on owners.
With that said, we still have the question of what to do with funds that were collected using a straight-line method prior to a board vote to pool reserve funds.
Neither the old nor new versions of the statute expressly say what to do in this situation; but, given that the statutory language strongly suggests that you can’t use reserve funds collected to fund repairs for a specific asset on another asset without a membership vote, the universal conventional wisdom has been that any funds collected using the straight line method could not be dedicated to the pool without a membership vote.
Is there a chance a court will eventually say that a board can do this on its own, and without membership approval? Absolutely — the statutory language is messy and internally inconsistent in many areas and, given that the statute now says that a member vote isn’t required to change to a pooling method of accounting, it’s possible that a judge could interpret that as applying to previously collected funds, as well. We just have no way to know until the dispute ends up in court.
As for your own association, the issue could be corrected by depositing funds back into their original line items and recalculating the reserves entirely; but given that this issue is unlikely to end up in court, as well as that you’re probably nearing the statute of limitations for an owner to challenge the board’s decision; not to mention that a lawsuit would not accomplish anything other than to force the board to collect additional funds from every owner (including whomever filed the suit), it’s probably best to just let things be.
Ryan Poliakoff, a partner at Poliakoff Backer, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. Ryan Poliakoff and Gary Poliakoff are co-authors of “New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living.” Email your questions to condocolumn@gmail.com. Please be sure to include your location.
