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Can condo associations invest reserves however they want?

Posted on Sun, May 29, 2011 @ 09:15 AM
  
  
  
  
Does any Florida law restrict how a condominium association can invest their reserve funds? It has been the understanding of the board of directors that an association can not use any investment that risk the principle of their reserve funds. Is it against the law to invest in stocks, bonds or other investment vehicles?

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COMMENTS

I'm on the board of a 108 unit high-rise condo building in Delaware. I wouldn't want to take any risk in investing in stocks etc. Plus, depending on our projected expenditures based upon our Reserve Study, I personally would only suggest a short-term CD that would not interfere with any upcoming projects.

posted @ Sunday, May 29, 2011 10:00 AM by Murray


Check your governing documents. Most restrict HOA's to "safe" invetments.

posted @ Sunday, May 29, 2011 10:43 AM by wayne whitehead


You need to first look at your association Declarations and By-Laws. Research to see if your state has specific requirements/guidelines for association reserve funds.  
 
Then finally, consult your association's attorney.

posted @ Sunday, May 29, 2011 10:59 AM by Kathy


I don't know that it's against the law to invest reserve funds in stocks, bonds, mutual funds, etc; however I don't think it's good business practice. The BOD should strive to make sound, safe investments. Most assn's only invest in money market accounts and CD's. The CD's can be laddered to correspond to the needs stated in the reserve study.

posted @ Sunday, May 29, 2011 2:22 PM by mary


I agree 100% with Mary. Depending on the amount of money to invest, a excellent strategy would be the MMA and laddered CD's.  
 
The important component is fully understanding your reserve study and determining when items are scheduled for replacement or repair.

posted @ Sunday, May 29, 2011 2:40 PM by Richard


Can anyone tell me where in the Florida state statutes it is mandated that condominiums reserve funds for major condominium repaires?

posted @ Friday, August 19, 2011 3:09 PM by Mitzie Rose


Reserves for capital expenditures and deferred maintenance are required by Section 718.112(2)(f), 
Florida Statutes, and must be included in the proposed annual budget. The only way to reduce from "full" reserves is by vote by owners.

posted @ Monday, October 03, 2011 12:14 PM by Luther


Ther are few options for investing reserves. Most Board members feel the fudiciary need to ensure a protection of the principle often at the expense of return on investment. I can tell you that there are annuities available the quarantee the principle while returning 3.5% year one and 1.5% years 6-7 in the state of Florida. The interest rates stated above are guaranteed and the rates in years 2-7 can increase if bonds rates increase. The reserves can be withdrawn at any time, any year withour fear of forfiture of the principle.

posted @ Thursday, May 23, 2013 10:11 PM by Steve Hebel


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