Reserves

61B-22.005 Reserves

PURPOSE AND EFFECT: The proposed rulemaking amends Rule 61B-22.005 to clarify language about adjustments to annual reserve funding amount and language about changes between pooled and straight-line reserve accounting.

SUMMARY: Rule 61B-22.005, F.A.C. sets forth the requirements for reserves for expenditures and deferred maintenance, including calculating the required amount of reserve funds, timely funding, and restrictions on use.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this rule will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: the economic review conducted by the Agency.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or to provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days after publication of this notice.

RULEMAKING AUTHORITY: 718.112(2)(g), 718.112(2)(f), 718.501(1)(g) FS

LAW IMPLEMENTED: 718.103(1), 718.112(2)(f), 718.112(2)(g), 718.501, 718.618 FS

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:

DATE AND TIME: Thursday, November 12, 2026, 10:00 a.m.

PLACE: CTMH Conference Room (B509), Department of Business and Professional Regulation, 2601 Blair Stone Rd., Tallahassee, FL 32399

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Madison Presley, Manager I, Division of Florida Condominiums, Timeshares, and Mobile Homes, 2601 Blair Stone Road, Tallahassee, Florida 32399, (850)717-1415. Madison.presley@myfloridalicense.com.. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Madison Presley, Manager I, Division of Florida Condominiums, Timeshares, and Mobile Homes, 2601 Blair Stone Road, Tallahassee, Florida 32399, (850)717-1415. Madison.presley@myfloridalicense.com.

THE TEXT OF THE PROPOSED RULE IS:

61B-22.005 Reserves

PURPOSE AND EFFECT: The proposed rulemaking amends Rule 61B-22.005 to clarify language about adjustments to annual reserve funding amount and language about changes between pooled and straight-line reserve accounting.

SUMMARY: Rule 61B-22.005, F.A.C. sets forth the requirements for reserves for expenditures and deferred maintenance, including calculating the required amount of reserve funds, timely funding, and restrictions on use.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this rule will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: the economic review conducted by the Agency.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or to provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days after publication of this notice.

RULEMAKING AUTHORITY: 718.112(2)(g), 718.112(2)(f), 718.501(1)(g) FS

LAW IMPLEMENTED: 718.103(1), 718.112(2)(f), 718.112(2)(g), 718.501, 718.618 FS

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:

DATE AND TIME: Thursday, November 12, 2026, 10:00 a.m.

PLACE: CTMH Conference Room (B509), Department of Business and Professional Regulation, 2601 Blair Stone Rd., Tallahassee, FL 32399

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Madison Presley, Manager I, Division of Florida Condominiums, Timeshares, and Mobile Homes, 2601 Blair Stone Road, Tallahassee, Florida 32399, (850)717-1415. Madison.presley@myfloridalicense.com.. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Madison Presley, Manager I, Division of Florida Condominiums, Timeshares, and Mobile Homes, 2601 Blair Stone Road, Tallahassee, Florida 32399, (850)717-1415. Madison.presley@myfloridalicense.com.

THE TEXT OF THE PROPOSED RULE IS:

61B-22.005 Reserves.

(1) through (2) No change.

(3) Calculating reserves required by statute. Funding formulas for reserves required by Section 718.112(2)(f), Florida Statutes, shall be based on either a straight-line accounting method or a pooled reserve accounting method, containing an analysis of each of the required line item assets.

(a) For a residential condominium that is not required to complete a SIRS, reserves for deferred maintenance and capital expenditures required under Section 718.112(2)(f), Florida Statutes, must be calculated using a formula that allocates the total estimated deferred maintenance expense or replacement cost of a line item asset or group of assets evenly over the asset or group of assets’ remaining useful life on an annual basis. The association shall annually evaluate whether the total deferred maintenance expense or replacement cost of each line item requires adjustment for maintenance or replacement purposes. The association must maintain funding that keeps the reserve balance above zero, unless properly waived or reduced in accordance with Section 718.112(2) F.S and this rule.

(b) through (c) No change.

(d) Pooled Method: If the association maintains a pooled account of two or more of the required reserve assets, the amount of the contribution to the pooled reserve account as disclosed on the proposed budget shall be not less than that required to ensure that the balance on hand at the beginning of the period for which the budget will go into effect plus the projected annual cash inflows over the remaining estimated useful lives of all of the assets that make up the reserve pool are equal to or greater than the projected annual cash outflows over the remaining estimated useful lives of all of the assets that make up the reserve pool, based on the current reserve analysis. The projected annual cash inflows may include estimated earnings from investment of principal. The reserve funding formula shall not include any type of balloon payments or other financing arrangements that results in a one-time payment that exceeds the standard payment amounts found on the reserve schedule, at any point of the assessment replacement term or period. In addition, pooled reserve funding schedules may not be structured in a manner that defers reserve contributions for the purpose of reducing current assessments or in a way to increase current contributions to offset or reduce future assessments. Rates of change in funding over the course of the reserve schedule may be increased or decreased to account for inflation or deflation but shall not exceed the annual inflation or deflation amount according to the Consumer Price Index for Urban Consumers or final demand for individual commodities according to the Producer Price Index The association may deviate from these limits when changes in the market price of materials substantially impact projected costs, provided such changes are supported by objective data from a State of Florida, federal government entity, or the Federal Reserve System.

(e) An association may change the method of accounting for statutory reserves between straight-line and pooled accounting without a vote of the unit owners, provided that such change does not alter the original authorized purpose, the required level of funding, or the restricted use of reserve funds.

1. The intent is solely to clarify when a change between pooled and straight-line reserve accounting constitutes a change in accounting method as opposed to a change to reserve funding levels, balances, purposes, or permitted uses . An association may change the reserve accounting method in a manner that requires the reclassification or redistribution of reserve balances between reserve components without a vote of the unit owners only if:

a. through d. No change.

2. A vote of the unit owners is required if a change in the reserve accounting method results in any of the following:

a. The reduction or elimination of reserve funding for any reserve component;

b. though c. No change.

3. No change.

(4) through (11) No change.

Rulemaking Authority 718.112(2)(g), 718.112(2)(f), 718.501(1)(g) FS. Law Implemented 718.112(2)(f), 718.112(2)(g), 718.501, 718.618 FS. History–New 7-11-93, Formerly 7D-22.005, Amended 12-20-95, 1-19-97, 12-18-01, 12-23-02 .

61B-22.005 Reserves.

(1) through (2) No change.

(3) Calculating reserves required by statute. Funding formulas for reserves required by Section 718.112(2)(f), Florida Statutes, shall be based on either a straight-line accounting method or a pooled reserve accounting method, containing an analysis of each of the required line item assets.

(a) For a residential condominium that is not required to complete a SIRS, reserves for deferred maintenance and capital expenditures required under Section 718.112(2)(f), Florida Statutes, must be calculated using a formula that allocates the total estimated deferred maintenance expense or replacement cost of a line item asset or group of assets evenly over the asset or group of assets’ remaining useful life on an annual basis. The annual reserve funding amount may be adjusted from year to year to reflect inflation, deflation, or other changes in the estimated deferred maintenance expense or replacement cost of the line item asset or group of assets. Any adjustment must continue to allocate the estimated cost over the remaining useful life of the line item asset or group of assets without disproportionately shifting reserve funding to earlier or later years. The association shall annually evaluate whether the total deferred maintenance expense or replacement cost of each line item requires adjustment for maintenance or replacement purposes. The association must maintain funding that keeps the reserve balance above zero, unless properly waived or reduced in accordance with Section 718.112(2) F.S and this rule.

(b) through (c) No change.

(d) Pooled Method: If the association maintains a pooled account of two or more of the required reserve assets, the amount of the contribution to the pooled reserve account as disclosed on the proposed budget shall be not less than that required to ensure that the balance on hand at the beginning of the period for which the budget will go into effect plus the projected annual cash inflows over the remaining estimated useful lives of all of the assets that make up the reserve pool are equal to or greater than the projected annual cash outflows over the remaining estimated useful lives of all of the assets that make up the reserve pool, based on the current reserve analysis. The projected annual cash inflows may include estimated earnings from investment of principal. The reserve funding formula shall not include any type of balloon payments or other financing arrangements that results in a one-time payment that exceeds the standard payment amounts found on the reserve schedule, at any point of the assessment replacement term or period. In addition, pooled reserve funding schedules may not be structured in a manner that defers reserve contributions for the purpose of reducing current assessments or in a way to increase current contributions to offset or reduce future assessments. Rates of change in funding over the course of the reserve schedule may be increased or decreased to account for inflation or deflation but shall not exceed the annual inflation or deflation amount according to the Consumer Price Index for Urban Consumers or final demand for individual commodities according to the Producer Price Index, whichever is greater and more appropriate for the situation.

(e) An association may change the method of accounting for statutory reserves between straight-line and pooled accounting without a vote of the unit owners, provided that such change does not alter the original authorized purpose, the total reserve funding balances , or the restricted use of reserve funds.

1. The intent of this paragraph is solely to clarify when a change between pooled and straight-line reserve accounting constitutes a change in accounting method not requiring a vote of the unit owners, as opposed to a change to reserve funding levels, balances, purposes, or permitted uses, which would require a vote of the unit owners. Without a vote of the unit owners, an association may transfer, reclassify, or reallocate reserve balances for required reserve items from one or more reserve accounts that are maintained under the straight-line method into a single reserve account to be maintained under the pooled method only if:

a. through d. No change.

2. A vote of the unit owners is required if a change in the reserve accounting method results in any of the following:

a. The reduction of total reserve funding balances for all reserve components ;

b. though c. No change.

3. No change.

(4) through (11) No change.

Rulemaking Authority 718.112(2)(g), 718.112(2)(f), 718.501(1)(g) FS. Law Implemented 718.112(2)(f), 718.112(2)(g), 718.501, 718.618 FS. History–New 7-11-93, Formerly 7D-22.005, Amended 12-20-95, 1-19-97, 12-18-01, 12-23-02, .