HOA Finances Explained

Two Buckets: Operating vs. Reserve

Most associations keep two kinds of money, and understanding the difference is critical for evaluating a community's financial health.

Operating Fund Funded by monthly dues. Covers day-to-day expenses: landscaping, pool maintenance, common area utilities, insurance on shared structures, and management fees. An operating deficit in the current year is a warning sign.

Reserve Fund Set aside for major future replacements — roofing, paving, elevators, pool resurfacing, exterior painting. Think of it as the association's savings account. A healthy reserve helps prevent sudden, large special assessments when big repairs come due. Not every Florida HOA has one, as explained below.

What Dues Cover

HOA dues vary widely — from under $100/month to over $1,000/month — depending on community size, amenities, and location. In Florida, expect to see:

• Landscaping & common area maintenance
• Pool, gym, and amenity upkeep
• Insurance on common structures
• Reserve fund contributions
• Management company fees
• Sometimes included: cable, internet, water, or trash

Know exactly what's included before comparing fees across communities. A community with $800/month dues that includes cable, internet, and water may be cheaper all-in than a $400/month community where you pay those separately.

Reserve Fund Health

A reserve study is an association's financial roadmap. It estimates the remaining useful life and replacement cost of every major component — and recommends how much to set aside each year.

How to read it:

• Fully funded amount: What the reserve should hold based on age and condition of components
• Current balance: What it actually holds
• Funding percentage: Current ÷ fully funded — the key number

These bands are a common rule of thumb, not a legal standard.

Florida HOAs don't have to keep statutory reserves unless owners vote them in, and even then owners can vote to waive or reduce funding one budget year at a time — which shifts the risk to future homeowners. Condo reserves work differently. See Florida reserve requirements for HOA and condo boards.

Special Assessments

When the reserve fund isn't enough to cover a major repair or unexpected expense, the board levies a special assessment — a one-time charge to all homeowners, on top of regular dues.

How they happen:

1. A major repair is needed (roof failure, elevator replacement, hurricane damage)
2. The reserve fund is insufficient to cover it
3. The board votes at a meeting. In an HOA, the notice must be mailed, delivered or emailed to members and posted at least 14 days ahead (§720.303(2)). Condos have a similar 14-day rule for nonemergency special assessments (§718.112(2)(c)). Your governing documents may also require an owner vote
4. Homeowners are told the amount and payment terms

Amounts can be significant. Depending on the repair and the number of units sharing the cost, special assessments can range from a few hundred to tens of thousands of dollars per unit, especially in older condo buildings with deferred maintenance.

Always ask about pending and recently voted assessments before closing. The HOA disclosure summary under §720.401 shows only the current amount of any special assessment, so ask the seller and check the estoppel certificate too.

Dues Increases

Chapter 720 sets no percentage cap on HOA dues. Any limit comes from your governing documents, which may cap increases or require a member vote, so read them.

The 115 percent figure you may see applies to condominiums. If a condo board proposes a budget with assessments over 115 percent of the prior year's, it must also propose a substitute budget without discretionary spending, and owners can adopt that substitute by a majority of all voting interests. Required reserves, some irregular repair costs and insurance premiums are left out of the calculation (§718.112(2)(e)).

Understand the historical rate of dues increases in any community you're considering. A community that raises dues 8% annually will double your monthly payment in about 9 years.

Questions to ask:

• What was the dues amount 3 years ago? 5 years ago?
• Have there been any board-imposed increases in the past 24 months?
• Is the current budget balanced, or is there a deficit?

Signs of a Financially Healthy HOA

Look for these indicators when evaluating a community's financial standing:

Positive signs:

• Reserve fund funded at 70%+ of fully funded level
• No special assessments in the last 3–5 years
• Stable or modest dues increases (under 5% annually)
• Clean, audited financials
• Upcoming maintenance is already budgeted

Red flags:

• Reserve fund below 50% with major repairs on the horizon
• Special assessments in consecutive years
• Large dues increase in recent years without improvement to amenities
• No reserve study, or a reserve study that's more than 3 years old
• Operating deficit in the current budget

Statutory content on this page was last verified against the 2026 Florida Statutes on 2026-11-04. Confirm current statute text at flsenate.gov before relying on it.