2025 Florida Condominium Budget Reform: New Reserve Funding and Vote Rules

The 2025 legislative session brought many changes to Chapter 718, which governs Florida condominium associations. Two of those changes are impacting the drafting and approval of 2026 budgets for many Florida condominiums.

New Reserve Funding Options

Condominium associations with three or more habitable stories that are required to obtain a structural integrity reserve study (SIRS) may now use loans, lines of credit, and special assessments as a source of reserve funding. If a majority of all unit owners authorize the board to obtain or use one of these financial vehicles, the association can budget for reserve funding based on anticipated funds, even if they have not yet been deposited into the bank account. This could result in lower annual reserve contributions for structural items.

Florida Statutes section 718.112, however, still provides that “the reserve amount for [structural] items must be based on the findings and recommendations of the association’s most recent structural integrity reserve study.” Because most SIRS were completed in 2023 and 2024, before this legislation, the operational concern is that the budget will not comply with Chapter 718 unless it matches the reserve funding with the most recent SIRS. Associations wishing to take advantage of loans, lines of credit, or special assessments to contribute to reserve funding must also update their SIRS to reflect these new assumptions and anticipated revenue sources. 

Changes to Budget Approval Procedures

Historically, Chapter 718 has placed guardrails on a condominium association’s ability to increase its budget. Until this year, the unit owners had the right to petition and force a vote of the membership on an alternative (and usually lower) budget when the budget increased by more than 15% from the prior year’s budget. The general idea was that the board had jurisdiction over the budget, except that the membership could mobilize if the budget increased too much.

The new legislation requires the board of directors to proactively schedule and hold a vote of the membership before it can adopt a budget that increases by more than 15% compared to the prior year’s budget. This switch now requires the board to seek permission before adopting significant budgetary increases. In contrast, the statute previously authorized the membership to request an alternative budget after the fact if the membership objected.

Step 1: Determining if a Membership Vote is Required

Procedurally, two things must occur. First, the Board must determine whether the budget forces a membership vote. The statute now excludes certain expenses from the calculation, including required reserves, non-recurring maintenance, repair, and replacement expenses for structural reserve components, and insurance premiums. If these factors drive the increase, the budget may not require a special vote. Boards, however, cannot use decreases in insurance premiums to offset increases.

Step 2: Creating a Substitute Budget

If the budget triggers a vote, the board must create a “substitute budget that does not include any discretionary expenditures that are not required to be in the budget” and schedule a membership meeting before adopting the 2026 budget. The law does not define “discretionary expenditures,” which may make it difficult to determine which items must be included.    

The substitute budget is approved if a majority of all voting interests vote in favor. If the membership vote fails, the board may adopt the budget with the proposed increases.

By updating structural integrity reserve studies and carefully reviewing budgets with discretionary increases, boards can leverage new funding options while ensuring compliance and transparency. For guidance on implementing these updates or reviewing your association’s 2026 budget, contact your Varnum attorney.

Watch this video to hear more from Steve Adamczyk.