Few questions weigh on a board more than how much money the community should be setting aside, which is why we invited reserve study specialist Will Simons of Association Reserves to answer the top ones association leaders ask in this online Q&A session. Will joined PJ Biondolillo of Campbell Property Management to work through real-world questions that board members and managers had on reserves.
This expert-led webinar covered the topics that surface every budget season, including how much an association should hold in reserves, what reserve funds can pay for, the rules that set condos apart from HOAs, and the lending changes now reshaping how boards plan.
Disclaimer: This video is for educational purposes only. You will not receive credits for watching the recording. Credits were issued only to those that attended the course.
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There is no single correct number, but the clearest way to measure it is a metric called percent funded, which rates a reserve account on a zero to one hundred percent scale. An account below thirty percent sits in a weak position with a higher chance of special assessments or loans, thirty to seventy percent is moderate, and seventy percent or above carries the lowest statistical risk. That percentage comes from comparing the cash a community has on hand against its fully funded balance, the amount it should hold today based on the age and replacement cost of every component. A roof with a twenty-year life that is ten years old, for example, should have roughly half of its replacement cost already in the bank.
Percent funded gives board members and managers a snapshot of financial strength at any moment in time. A low number does not always mean an emergency, but it does point to a higher likelihood of cash flow problems down the road. Tracking that figure year over year turns community association reserve planning from guesswork into a measurable goal, and it gives owners a clear picture of where their contributions stand.
Funding strategy falls along a spectrum. Baseline funding is Florida's legal minimum, the level at which a plan shows the account will never drop below zero, while full funding aims at or near one hundred percent funded for only about fifteen to twenty percent more per year. Threshold funding sits between the two, holding the account above a floor the board chooses, such as a set dollar amount or a minimum percent funded. How those contributions are collected is a separate decision, and the choice between the straight-line and pooled funding methods shapes how flexibly a board can respond when a project arrives early, so the figures should feed a reserve funding plan that is revisited every year.
Reserve funds can only pay for the specific components listed on the reserve schedule, and nothing else. A cost earns a place on that schedule by passing a simple three-part test, and anything that fails it belongs in the operating budget or a separate contingency plan instead.
The first question is whether the association is actually responsible for the item, which rules out things like unit windows and doors or roads the city maintains. The second is whether the component has a limited and predictable useful life, since foundations and structural walls are not things a community plans to replace. The third is whether the project clears a meaningful cost threshold, because reserves are meant for big-ticket work rather than light bulbs and routine upkeep. In Florida, a condo reserve study must always include reserves for roofing, painting, and pavement resurfacing, along with any other component that costs more than twenty-five thousand dollars.
Two common requests fall outside what reserves are allowed to fund. New additions that do not yet exist, such as building a playground on open green space, count as capital improvements and cannot be paid from money already dedicated to repairing existing assets. Insurance deductibles are another gray area, and reserving for them is generally discouraged because there is no way to predict when, or whether, a storm will force that payment. A dedicated emergency fund or a line of credit is a sounder way to prepare for those costs.
The numbers should be reviewed every year as part of the budget, with a formal update on a regular schedule rather than once a decade. A reserve study is not a document a community commissions once and files away, since the figures inside it change constantly. It is best understood as a financial roadmap that shows when a community should be ready to act, not a rulebook that forces the work on a fixed date.
Every budget season brings a new reserve schedule, so a Florida reserve study works best as a living document that someone reviews annually and sometimes more than once a year. A condominium that falls under the structural rules has even more at stake, because the funding number in the study cannot be ignored once it is set. A quick annual refresh keeps that number accurate in a market where replacement costs and inflation move quickly.
A full study, often called a Level 1, is built from scratch the first time a community has one done. A Level 2 update pairs a fresh on-site inspection with revised numbers and is a sound practice roughly every three years. In the years between, a Level 3 update revisits the financial picture without a site visit, typically costing about a quarter to a third of a full study while still producing a complete, updated plan.
“It's telling you the point at which you should be financially prepared to do this work. However, that does not create a mandate for you to go out and do it.” - Will Simons, Association Reserves
The structural integrity reserve study, or SIRS, created a separate class of reserves that condos and co-ops three stories and above must fund at baseline every year. Owners cannot vote to waive or reduce that structural funding, which is a sharp break from the rules that apply to HOAs and smaller condos.
Funding reserves is the default obligation for every community, and it works as an opt-out rather than an opt-in. An HOA or a non-structural condo account can be partially funded or waived, but only if the owners meet and vote to do so by a majority of the total voting interest plus one. The structural portion for qualifying condos has no such escape hatch, and every reserve component is meant to be funded each year regardless. Skipping a year does not erase the cost, it simply pushes a larger bill into the future.
Communities with structural reserves now manage two buckets, a structural pool and a non-structural pool, and the money moves in only one direction. Structural dollars set aside for roofing, waterproofing, load-bearing elements, and similar life-safety systems in a high-rise condominium can be spent only on those items. Non-structural money, saved for things like a lobby refresh, can be redirected toward a structural need, but structural funds can never be used the other way. Confirming any transfer with the association attorney is always wise, since governing documents and ownership votes can add their own requirements.
“So every year, your components age and deteriorate and get closer to their expiration of their lifespan. Thus, it makes sense you should be putting money in the bank each year to offset that deterioration.” - Will Simons, Association Reserves
The practical approach is to set aside a recurring allowance on a predictable cycle rather than wait for a full failure. Plumbing and concrete are the classic hard-to-predict assets, since no one can say exactly when or how much work they will need.
Concrete frame buildings near the coast will see some deterioration no matter what, so setting aside money on roughly the same seven to ten year cycle as exterior painting is a reasonable approach. The right allowance depends on the building's age, materials, and above all its own repair history, and a reserve study specialist can help translate those factors into a working number. A pooled approach helps here, letting a board draw on the full fund when a concrete restoration project runs heavier one year and lighter the next. Something set aside is always better than nothing, since even an imperfect estimate keeps money flowing toward the eventual work.
Routine landscaping and day-to-day upkeep stay in the operating budget, but an occasional large project, such as a major beautification effort or recovery from an unusual freeze, can qualify as a reserve component once its timing and cost can be estimated. Furniture and other common-area furnishings are more subjective, and communities usually inventory what they have and plan either a full replacement or a rolling percentage each year. A modest neighborhood clubhouse and a luxury lobby call for very different budgets, so the goal is simply to match the plan to the standard the community wants to maintain.
Yes. Beginning January 4, 2027, condos and co-ops will need to direct at least fifteen percent of their annual budget to reserves, up from ten percent, to qualify for the conforming loans backed by Fannie Mae and Freddie Mac. The change raises the stakes for reserve budgets well beyond the buildings that are actively selling units.
When a community cannot meet that threshold, buyers may lose access to the best interest rates and the widest pool of lenders, which can drag down values for every owner. An association can still qualify with a current, credible study that justifies a lower figure, though that is the exception rather than the rule. Most boards are best served by treating fifteen percent as a floor and planning accordingly.
In practice, a reserve contribution somewhere between fifteen and forty-five percent of the annual budget is typical for a financially healthy community. Where a specific association lands within that range depends on the age of its building, the condition of its components, and the quality of its planning. Reviewing the reserve line as a share of the total budget is a quick way for any board to gauge whether it is on solid footing.
“The healthy associations out there are the ones that are doing the right number for reserve planning.” - Will Simons, Association Reserves
The thread running through every one of these questions is that reserves reward steady attention rather than last-minute reaction. A community that measures its percent funded, contributes to every component each year, respects the line between structural and non-structural money, and keeps its study current is one that rarely faces a crisis it did not see coming. When reserve planning is treated as an ongoing discipline instead of an annual chore, it quietly protects property values, keeps financing within reach, and gives owners confidence that the community's future is in capable hands.
No. Florida's reserve study requirements apply only to condos and co-ops three stories and above through the SIRS mandate, so an HOA reserve study is a strong best practice rather than a legal obligation.
No. A milestone inspection only evaluates a building's current physical condition, so a clean result does not remove the obligation to keep funding structural reserves for the maintenance that keeps it sound.
The state agency that oversees condominiums can impose fines, including against individual board members, and misusing restricted structural reserves can also be viewed as a breach of the board's fiduciary duty. Checking with the association's attorney before moving any reserve money is the safest course.
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Ashley Dietz is the VP of Marketing at Campbell Property Management and has led the company’s educational and marketing initiatives since 2013. A Florida Atlantic University graduate with a bachelor’s degree in communications, Ashley specializes in community association education, digital outreach, and industry engagement for Florida HOAs and condominiums.