Adopting the annual budget: the meeting, the vote, and the reserves.

By Carlos Castellano · Current as of August 6, 2026

The annual budget is the one board decision every owner feels. It sets what each of them pays for the year, and in a condominium it decides how much of the building’s future gets funded now. It is also the decision where the two Florida chapters diverge most sharply. Chapter 718 scripts the condominium budget meeting in detail, down to a second budget the board sometimes has to hand out at the same meeting. Chapter 720 says far less, and the parts it does say run in almost the opposite direction. Here is what each statute actually requires of the board.

The board adopts the budget. The members usually do not.

Start here, because it is the most common misunderstanding at the podium. In both chapters the annual budget is adopted by the board of directors at a board meeting. It is not put to the membership for approval, and owners do not vote it up or down. What owners get is notice, the right to attend, the right to speak on the agenda item, and in specific situations described below, a separate vote on one narrow question.

Condominiums have a deadline. Section 718.112(2)(f)1., Florida Statutes, provides that “the board shall adopt the annual budget at least 14 days before the start of the association’s fiscal year.” The same paragraph now says what happens if the board misses it: “in the event that the board fails to timely adopt the annual budget a second time, it is deemed a minor violation and the prior year’s budget shall continue in effect until a new budget is adopted.” The association does not fall into a hole, but it also does not get to collect on numbers it never adopted.

Chapter 720 sets no adoption deadline. Section 720.303(6)(a) requires that the association “shall prepare an annual budget that sets out the annual operating expenses,” that the budget “must reflect the estimated revenues and expenses for that year and the estimated surplus or deficit as of the end of the current year,” and that it “must set out separately all fees or charges paid for by the association for recreational amenities.” The timing comes from your own bylaws and fiscal year, not from the statute.

The notice a budget meeting needs

Condo: 14 days, with the proposed budget attached. Section 718.112(2)(e)1. is specific. Any meeting at which a proposed annual budget will be considered is open to all unit owners, and at least 14 days before that meeting the board must hand deliver, mail, or electronically transmit to each unit owner “a notice of such meeting and a copy of the proposed annual budget.” Not a summary, and not available on request. The actual proposed budget goes out with the notice. An officer, manager, or other person providing the notice then executes an affidavit evidencing compliance, and that affidavit is filed among the official records. The same paragraph expressly allows the budget meeting to be conducted by video conference.

HOA: an ordinary board meeting, with one added sentence. Chapter 720 has no separate budget-meeting notice. The budget is adopted at a regular board meeting on the ordinary timeline: notice identifying the agenda items posted in a conspicuous place at least 48 hours ahead, or mailed or delivered to each member at least 7 days ahead if the association does not post. The trap is in Section 720.303(2)(c)2.: “an assessment may not be levied at a board meeting unless the notice of the meeting includes a statement that assessments will be considered and the nature of the assessments.” A budget sets assessments. If your notice says only “budget,” it has not said what the statute requires it to say. We cover the whole notice framework, including when 14 days is required instead of 48 hours, in board meetings and notices.

Condo: the 115 percent substitute budget

This is the rule most often described wrongly, and the error changes what a board does. Under Section 718.112(2)(e)2.a., if the board proposes an annual budget requiring assessments that exceed 115 percent of assessments for the preceding fiscal year, “the board shall simultaneously propose a substitute budget that does not include any discretionary expenditures that are not required to be in the budget.”

Read what that does and does not require. It does not require the membership to approve the annual budget. It requires the board to bring a second, stripped-down budget to the same meeting and put it before the owners before the annual budget is adopted. The notice for that meeting goes out at least 14 days ahead, hand delivered or mailed, with the same affidavit filed in the official records. Owners “must consider and may adopt” the substitute, and it is adopted only if approved by a majority of all voting interests, or a greater percentage if the bylaws require one. If the substitute is not adopted, the statute says the annual budget the board originally proposed “may be adopted.” The board’s budget is the default outcome, not the one that needs permission.

The 115 percent is not calculated on the bottom line. Section 718.112(2)(e)2.b. excludes three things from the comparison: any authorized provision for required reserves for repair or replacement of the condominium property, anticipated expenses the board does not expect to incur on a regular or annual basis for the structural-integrity items listed in paragraph (g), and insurance premiums. This is the part boards discover late. An association whose total assessments jump well past 115 percent because insurance and reserves went up may not trigger the substitute-budget duty at all once those three categories come out. Run the exclusion before you conclude either way.

One tighter rule applies while the developer still controls the board. Under Section 718.112(2)(e)2.c., assessments may not exceed 115 percent of the prior year unless approved by a majority of all voting interests. For a developer-controlled board that is a real ceiling, and the membership vote is what lifts it. After turnover the rule reverts to the substitute-budget mechanism above, where the board’s budget stands unless the owners affirmatively adopt the substitute.

There is no 15 percent rule for HOAs

Board members hear a version of the condominium rule and apply it to a homeowners’ association: that Chapter 720 requires a membership vote before the board can raise assessments more than some percentage over last year. It does not. There is no assessment-increase trigger anywhere in Section 720.303, and no membership vote standing between an HOA board and the budget it adopts.

What can exist is a cap in your own governing documents, and the statute acknowledges it. Section 720.303(6)(b) provides that where reserve accounts are not established under paragraph (d), “funding of such reserves is limited to the extent that the governing documents limit increases in assessments, including reserves.” So if someone tells your HOA board it cannot raise assessments above a set percentage, the answer is not in the statute book. It is in your declaration or bylaws, and it is worth reading the actual language before the budget meeting rather than during it.

Reserves in a condominium budget: required, and largely unwaivable

Section 718.112(2)(f)2.a. is mandatory: in addition to annual operating expenses, “the budget must include reserve accounts for capital expenditures and deferred maintenance.” Those accounts must include roof replacement, building painting, and pavement resurfacing regardless of the amount involved, plus any other item whose deferred maintenance expense or replacement cost exceeds $25,000 or the inflation-adjusted amount set by the division, whichever is greater.

That threshold moves. Under Section 718.112(2)(f)6., the division adjusts the $25,000 figure annually for inflation based on the Consumer Price Index released each January, and must post the current inflation-adjusted minimum conspicuously on its website by February 1 each year. Do not budget off the statutory floor. Check the division posting for the year whose budget you are adopting. Our HB 913 action list tracks the figure as it has moved.

Waiving reserves. Section 718.112(2)(f)2.b. allows the members of a unit-owner-controlled association to determine, by majority vote of the total voting interests, to provide no reserves or less reserves than the section requires. Then it takes most of that back: for a budget adopted on or after December 31, 2024, the members of an association that must obtain a structural integrity reserve study “may not determine to provide no reserves or less reserves” for the paragraph (g) items. Those are the structural and life-safety components the study covers, and for a great many condominiums they are the expensive part of the budget. What the study covers and when it is due is its own subject, and we cover it in milestone inspections and SIRS.

Spending reserves on something else. Section 718.112(2)(f)3. keeps reserve funds and the interest on them in the reserve accounts, usable only for authorized reserve expenditures unless a majority of all the total voting interests approves another use in advance. And again the carve-out bites: for a budget adopted on or after December 31, 2024, members of an association that must obtain a structural integrity reserve study may not vote to use those reserve funds for any purpose other than replacement or deferred maintenance of the paragraph (g) components. There is no members’ vote that unlocks that money for a clubhouse renovation.

Two narrow pauses exist. Under Section 718.112(2)(f)2.d., if the local building official determines the entire condominium building is uninhabitable due to a natural emergency, the board may pause or reduce reserve contributions until the building is determined habitable again, and reserve funds may be spent to make it habitable. Under sub-subparagraph e., for a budget adopted on or before December 31, 2028, an association that completed a milestone inspection within the previous 2 calendar years may, on the approval of a majority of the total voting interests, pause or reduce reserve funding for no more than two consecutive annual budgets in order to fund repairs the milestone inspection recommended. An association that uses that pause must have a structural integrity reserve study performed before contributions resume. Neither pause is available to a developer-controlled association.

Who may vote, and what the proxy has to say. Section 718.112(2)(f)5. limits voting on waiving or reducing reserve funding, or on using reserves for another purpose, to the voting interests of the units actually subject to the assessment funding those reserves. It also requires any proxy question on those subjects to carry this statement in capitalized, bold letters in a font larger than anything else on the face of the proxy ballot: “WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS.” A proxy that omits it is defective.

Reserves for the paragraph (g) items may be funded by regular assessments, special assessments, lines of credit, or loans under Section 718.112(2)(f)2.c., and choosing a special assessment, a line of credit, or a loan requires the approval of a majority of the total voting interests.

Reserves in an HOA budget: optional until the members opt in

Chapter 720 runs the other way, and this is the contrast worth understanding before you sit down with the numbers. Section 720.303(6)(b) says the budget “may include reserve accounts for capital expenditures and deferred maintenance for which the association is responsible.” May, not must. An HOA board can budget reserves as an ordinary line item without any of the statutory machinery attaching.

Statutory reserves attach only when the membership says so. Under Section 720.303(6)(d), “an association is deemed to have provided for reserve accounts upon the affirmative approval of a majority of the total voting interests,” obtained either at a duly called membership meeting or by written consent. That approval has to state that reserve accounts shall be provided for in the budget and must designate the components the accounts are for. Once approved, the board includes those reserve accounts in the budget the next fiscal year and every year after, computed under the useful-life and replacement-cost formula in paragraph (e).

The annual waiver vote, and what happens if it fails. Once reserve accounts are established, Section 720.303(6)(f) lets the membership, “upon a majority vote at a meeting at which a quorum is present,” provide for no reserves or less reserves. Two details decide most real cases. First: “if a meeting of the parcel owners has been called to determine whether to waive or reduce the funding of reserves and such result is not achieved or a quorum is not present, the reserves as included in the budget go into effect.” A failed meeting is not a waiver. It funds the reserves. Second: “any vote taken pursuant to this subsection to waive or reduce reserves is applicable only to one budget year.” There is no standing waiver. It is a fresh vote every single year, and a board that assumes last year’s waiver carries forward will underfund the budget it just adopted.

Two related powers sit nearby. Under Section 720.303(6)(h), reserve funds and the interest on them stay in the reserve accounts and are used only for authorized reserve expenditures unless another use is approved in advance by a majority vote at a meeting at which a quorum is present. And under Section 720.303(6)(b), a statutory reserve account may be terminated altogether on the approval of a majority of the total voting interests, at which point it comes out of the budget.

One consequence lands in a different document. If an HOA budget does not provide for statutory reserve accounts, Section 720.303(6)(c) requires the association’s annual financial report to carry a specific statement in conspicuous type telling owners that reserves are not fully funded and that they may elect to fund them. It is the financial report’s duty rather than the budget’s, but the choice the board makes in the budget is what determines which statement the report has to carry.

Getting the adopted budget to the members

For a condominium the delivery already happened: the proposed budget went out 14 days before the meeting with the notice.

For an HOA it happens after. Section 720.303(6)(a) requires the association to “provide each member with a copy of the annual budget or a written notice that a copy of the budget is available upon request at no charge to the member,” and the copy must be provided within the time limits in subsection (5), which is 10 business days after receipt of a written request. Either delivering the budget or sending the availability notice satisfies the duty, but one of them has to happen, and the request path then runs on the records deadline. We cover that deadline and the damages that follow missing it in what the law requires when a member asks to see the records.

The short version for this budget season

If you are a condominium director: work out your 115 percent figure with reserves, insurance, and non-recurring structural expenses excluded before you decide whether a substitute budget is required. Get the notice and the proposed budget out 14 days ahead and file the affidavit. Assume the structural reserve items cannot be waived and cannot be spent on anything else, and check the division’s posted threshold for the year. Adopt at least 14 days before the fiscal year starts.

If you are an HOA director: check the declaration for an assessment cap before you assume the statute imposes one, because it does not. Make sure the meeting notice states that assessments will be considered and their nature. Find out whether your members ever approved statutory reserve accounts, because that single fact decides whether the annual waiver vote applies to you at all. And if it does, hold that vote every year, and remember that a meeting that fails or lacks a quorum funds the reserves rather than waiving them.