A well-constructed annual budget is the financial foundation of every successful HOA. Florida law requires associations to adopt a budget each year — but doing it right requires more than just copying last year's numbers. Here is a step-by-step guide for boards.
Under Florida Statute 718 (condominiums) and 720 (HOAs), associations are required to prepare an annual budget that includes all anticipated revenues and expenses. For condominiums, the budget must also include a reserve schedule for major components such as roofing, painting, and pavement. Failure to include adequate reserves can expose board members to personal liability.
Before building your operating budget, ensure your reserve study is current. A reserve study analyzes the remaining useful life and replacement cost of all major common area components. This study drives your reserve funding requirement — the single largest line item in most association budgets.
A complete operating budget should include: management fees, insurance premiums, landscaping and maintenance contracts, utilities (common area lighting, irrigation, pool), administrative costs, legal and accounting fees, and a contingency line of 5–10% for unexpected expenses.
Once total expenses are projected, divide by the number of units (weighted by ownership percentage if applicable) to determine the per-unit assessment. Florida law requires that assessments be sufficient to fund both operating expenses and reserve contributions. Under-funding reserves to keep assessments low is a common — and costly — mistake.
Florida law requires that the proposed budget be provided to all unit owners at least 14 days before the budget adoption meeting. Owners have the right to reject the budget (under certain conditions) and call for a special assessment vote. Working with a professional CAM ensures your budget process is fully compliant.
Professional HOA Services Inc.
Licensed CAM · Locally Owned & Operated · Downtown Punta Gorda, FL
Have questions about this topic or your community's specific situation? Our licensed CAM team is here to help.
Continue your board's research with practical PHS guides and references related to this topic.
Board Resources
A practical reference guide for Florida HOA and Condominium Association board members covering fiduciary duties, financial responsibilities, meeting requirements, records obligations, covenant enforcement, and election procedures under FL 718 and 720.
Open PDFLegal Reference
A side-by-side quick reference guide for Florida's Condominium Act (Chapter 718) and Homeowners' Association Act (Chapter 720), covering key compliance requirements, deadlines, and statutory citations. Essential for board members and property managers.
Open PDFServices
A comprehensive overview of all Professional HOA Services Inc. CAM management programs, including full-service, financial, administrative, and maintenance coordination services. Perfect for boards evaluating management options.
Open PDF