A Florida condominium budget must be detailed by account and classification, must include the reserves the statute requires, and must be adopted at a board meeting for which every owner received written notice and a copy of the proposed budget at least 14 days in advance. If the adopted budget increases assessments by more than 115 percent of the prior year's (excluding reserves and non-recurring expenses), owners holding 10 percent of the voting interests may petition for a special meeting to adopt an alternative. Homeowners association budgets follow the notice in the bylaws and must contain specific reserve disclosures. The process works when it starts early.
The budget calendar
Budgets fail when the board sees the numbers for the first time at the adoption meeting. A workable calendar for a fiscal year beginning January 1:
| When | Step |
|---|---|
| August – September | Manager and treasurer prepare a draft from year-to-date actuals. Obtain the insurance renewal estimate and current appraisal. Update the reserve schedule from the SIRS or reserve study. Roll forward every contract with its escalation clause. Set the delinquency (bad-debt) assumption from the ledger. |
| September – October | Budget committee or full board workshop (a noticed board meeting if a quorum attends). Counsel reviews reserve treatment, any owner-vote items, and the notice package. |
| Mid-October | Finalize the proposed budget and the notice. |
| At least 14 days before the adoption meeting | Mail, deliver or electronically transmit the notice and a copy of the proposed budget to every owner; post the notice on the property. |
| November | Adoption meeting. Owner vote, if any, on reserve waivers for non-structural components. |
| Within days after adoption | Deliver the adopted budget and assessment schedule (coupons or statements) to owners; post on the website where required; update the collection system. |
| December | Confirm January assessments are correct; document the 115 percent calculation; file the notice affidavit. |
What a condominium budget must contain
Section 718.112(2)(e) and the Division's rules require the proposed annual budget to be detailed and to show the amounts budgeted by account and expense classification, including, where applicable, administration, management fees, maintenance, rent for recreational and other commonly used facilities, taxes on association property, taxes on leased areas, insurance, security, other expenses, operating capital, reserves, and fees payable to the Division. The budget must show each owner's share of the assessment. Reserves must be presented as the rules require (see our reserve funding article), including the bold-type disclosure that appears when non-structural reserves are proposed to be waived or reduced. Multicondominium associations must prepare separate budgets for each condominium and for the association.
The 14-day notice
The board adopts the budget at a board meeting. Written notice of that meeting, together with a copy of the proposed budget, must be mailed, hand delivered or electronically transmitted (to owners who have consented) at least 14 days before the meeting, and notice must be posted conspicuously on the property at least 14 continuous days in advance. An affidavit of compliance should be executed and filed in the official records. Sending the notice without the budget, or posting the budget in the clubhouse instead of sending it, does not comply, and a budget adopted on defective notice is voidable and invites a Division complaint.
If the bylaws require the owners, rather than the board, to adopt the budget, the meeting is an owner meeting with the notice the bylaws and statute require, and limited proxies may be used.
The 115 percent rule
If an adopted condominium budget requires assessments against owners that exceed 115 percent of the assessments for the preceding fiscal year, owners holding at least 10 percent of the voting interests may, within 21 days after adoption, petition the board for a special meeting of the owners to consider an alternative budget. The board must call the meeting on 14 days' notice within 60 days after the petition. The alternative budget is adopted only if approved by a majority of all voting interests; if it is not, the board's budget stands. In computing whether the 115 percent threshold is exceeded, reserve contributions, expenses required by law not anticipated in the prior budget, and non-recurring expenses are excluded, which means most SIRS-driven increases and insurance spikes do not trigger the rule. Boards should document the calculation with the budget so the answer is ready when an owner asks.
Homeowners associations
Chapter 720 requires the association to prepare an annual budget that sets out the estimated revenues and expenses for the budget year and the estimated surplus or deficit as of the end of the current year, and that includes the reserve disclosures described in section 720.303(6): a reserve schedule if reserves are mandatory, or the bold-type statement that the budget does not provide for reserves if they are not. HOA budgets are adopted as the bylaws provide, usually by the board at a meeting noticed as the bylaws require (and with 14 days' mailed and posted notice if a special assessment or a rule change regarding parcel use is also on the agenda). Many HOA declarations cap annual increases or require member approval above a percentage; read the declaration before assuming the board may adopt any budget it likes.
After adoption
- Deliver the adopted budget and the assessment schedule to owners (statements or coupon books) so that January payments are correct.
- Post the budget on the association's website where the statute requires one, and keep the prior years' budgets available as official records.
- Adopt the assessment resolution if the documents call for one, and record any change in installment dates.
- Prepare for the financial report. The year-end financial report is due within 90 days after fiscal year end at the level the association's revenues require, and it must reconcile to the budget and reserve schedule.
Mid-year changes
A budget may be amended during the year by the same procedure used to adopt it (14 days' notice with a copy of the proposed amendment for condominiums). Shortfalls may also be addressed by special assessment with its own notice, or by using operating surplus as the documents permit. Reserve funds for structural components may not be redirected to operating shortfalls.
Frequently Asked Questions About Budget Adoption
Do owners have to approve the condominium budget?
Not unless the bylaws say so. The board adopts the budget at a properly noticed meeting; owners must receive notice and a copy of the proposed budget at least 14 days in advance, and they vote only on items the statute or documents reserve to them, such as waiving non-structural reserves.
What if we forgot to send the proposed budget with the notice?
The budget was not lawfully adopted. Re-notice the meeting with the budget attached and adopt it again. If the fiscal year has begun, the prior year's budget continues in effect until a budget is properly adopted, and counsel should advise on assessments collected in the interim.
Our assessments are going up 30 percent because of the SIRS. Does the 115 percent rule apply?
Probably not. Reserve contributions, legally required expenses not anticipated in the prior budget, and non-recurring expenses are excluded from the 115 percent calculation. Document the computation so the board can show owners why the rule does not apply.
Can the board adopt the budget by email?
No. The budget must be adopted at a duly noticed board meeting open to owners, with the 14-day notice and budget copy.
What must an HOA budget say about reserves?
If reserves are mandatory, the budget must include the reserve schedule; if not, it must contain the statutory bold-type statement that the budget does not provide for reserves for capital expenditures and deferred maintenance that may result in special assessments, and that owners may elect to provide for reserves.
How often can we amend the budget?
As often as needed, using the same notice and procedure as adoption. Frequent amendments usually signal that the original assumptions (insurance, delinquencies, contracts) were unrealistic; a mid-year review in June catches most problems before they require an amendment.
Contact Hamilton Mikes
Hamilton Mikes reviews proposed budgets, notices and reserve schedules, and advises boards on the votes and disclosures Florida law requires. Call 239-594-7227 or visit our Budgeting and Financial Reporting page.
Statutes and authorities referenced
- § 718.112(2)(e), Fla. Stat. (condominium annual budget; 14-day notice with copy; 115 percent rule)
- § 718.112(2)(f), Fla. Stat. (reserves; disclosures)
- § 718.111(13), Fla. Stat. (annual financial report)
- § 719.106(1)(e) and (j), Fla. Stat. (cooperative budgets)
- § 720.303(6)–(7), Fla. Stat. (HOA budgets, reserves and financial reporting)
- § 720.303(2)(c), Fla. Stat. (HOA board meeting notice)
- Fla. Admin. Code ch. 61B-22 (Division budget and reserve rules)