HOA budget, reserves and collections management for Palm Beach County boards

Association finances are three linked systems. The operating budget pays for what the community uses this year. The reserve budget sets money aside for roofs, paving, waterproofing and other big components that will need replacing later. Collections turns the assessments the budget depends on into cash. When one is weak, the other two take the strain: low reserves lead to special assessments, and slow collections squeeze the operating account.

Florida sets the rules in Chapter 720 for homeowners' associations and Chapter 718 for condominiums. Your declaration and bylaws add the voting and notice requirements for your community. Our HOA and condo association management page covers the day-to-day scope; this page is the finance calendar a board should expect to run.

A budget that owners can follow starts from the prior year's actual spending, not from last year's budget. A useful board package shows each line with last year's budget, last year's actual, this year's proposal and a short note on every line that moved.

• Contracts first. Landscaping, insurance, utilities, management, pool, security and elevator contracts are known costs; rebid the ones coming up for renewal before the budget is set.
• Insurance. Premiums are often the largest moving line for Florida associations. Get the renewal quote early and build the budget around it.
• Repairs and maintenance. Use the maintenance history, not a flat percentage, and keep routine maintenance separate from reserve items.
• Reserve contribution. Take it from the reserve study (below), not from whatever is left over.
• Bad-debt allowance. If some owners are behind, the budget should say how much of the assessment income it expects to collect.

Boards must follow the notice and approval steps in the statute and the governing documents when proposing and adopting a budget, so schedule the budget meeting backward from the date the new fiscal year starts and ask the association attorney to confirm the notice requirements. If a CAM prepares the draft, the board still owns the decision.

A reserve fund is money held for the replacement of a major component whose cost is too large for one year's operating budget. A reserve study lists each component, estimates its remaining useful life and replacement cost, and recommends how much to set aside each year. Without one, a board is guessing, and guessing is how a surprise special assessment starts.

For residential condominium buildings three habitable stories or higher, section 718.112(2)(g) requires a structural integrity reserve study (SIRS) at least every 10 years covering roof, structure, fireproofing and fire protection, plumbing, electrical, waterproofing and exterior painting, and windows and exterior doors. For those components, the reserve amounts have to follow the study, and the reserve money may be used only for those components. Our milestone inspection and SIRS guide walks through the deadlines and the rules on pausing contributions in detail.

Homeowners' associations are governed by Chapter 720, which has its own provisions on reserves, so check which rules apply to your community type and ask your association attorney how your documents treat reserve funding. Whichever statute applies, the habit is the same: update the study on schedule, put the recommended contribution into the budget, and keep the reserve accounts separate from the operating account.

Two practical points. First, if reserve funding stops matching the study because of a special assessment or a loan, the study usually needs to be revisited before the next budget is adopted. Second, get contractor pricing on the largest components before the budget is final. Randolph also holds a Certified General Contractor license (CGC1528750) and a Certified Roofing Contractor license (CCC1332751), so a board managed through BeacCorp can have a licensed contractor look at the roof and exterior lines directly.

Assessments are the association's income, and the lien rights in Chapter 718 (section 718.116) for condominiums and Chapter 720 (section 720.3085) for HOAs are what back them. Consistency matters as much as speed: a collection policy that is applied differently to different owners invites a dispute. The board should adopt a written policy and the manager should apply it.

• Monthly delinquency report. A ledger of every account that is behind, how long, and what has been sent. The board sees it at every meeting.
• Friendly reminder and statement. Most late payments are an address, a bank change or an oversight. A prompt reminder resolves many of them.
• Written demand and payment plans. Where the policy and the documents allow it, a payment plan is often a better outcome than a lien.
• Attorney referral. Statutory notices, liens and foreclosure steps come with strict content and timing rules and belong with the association's attorney. The manager keeps the file complete and the board informed.
• Records. Keep every letter, payment and conversation on the account. A clean file is what an attorney, a title company and an estoppel request all rely on.

We do not publish a collection fee or a percentage on this page, and we do not recommend any steps beyond the ones your documents and your attorney approve. If you are comparing firms on cost, our property management fees guide explains how management fees are generally structured.

1. Confirm the reserve study or SIRS date and order the update before it expires.
2. Collect renewal quotes for insurance and major contracts three to four months before the fiscal year ends.
3. Draft the budget from actuals, with the reserve contribution taken from the study.
4. Send the budget notice and hold the meeting as your documents and the statute require.
5. Review the delinquency report monthly and the reserve account statement quarterly.
6. Close the year with a reconciliation, and confirm the financial reporting your type of association must provide to owners.

If the board has a manager who produces this calendar and keeps it, finances stop being a once-a-year crisis. That is the part of the job a licensed CAM does best. BeacCorp's license numbers are CAM34850 for Randolph Scott Bell and CAB3255 for the firm.