Nothing but the Facts

Nothing but the Facts

Pooled Reserves and Insurance

By Keith F. Backer / Published August 2018

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     I attended one of your board certification courses, and I was interested in learning more about pooled reserves for our condominium. Currently, we have line item reserves which are earmarked for specific items. May our board vote to move those reserves into a pooled reserve so we have more flexibility to use the funds for other reserve categories? How may we establish pooled reserves in the future?


     Unless a pooling method of reserves was established when the reserves were first created, once funds that were based upon a budget that earmarked specific amounts for specific purposes have been deposited into a reserve, it is not permissible to move the funds from one category to another without a vote of the unit owners.

     A pooled reserve is one where the amount needed for each category of reserves is still determined by evaluating the remaining useful life and the replacement cost for each item; but, when the time comes to spend the money, if it turns out that the association needs more money than had been reserved for that category, the board alone may move money from another category to cover the funds needed without seeking a unit owner vote. The reserves would then be replenished, if necessary, when the following year’s budget is calculated, so that your reserves remain fully funded. The board alone may vote to create a pooled reserve, but it may only do so prospectively unless the owners have voted to move the existing reserves into a pooled reserve.

     To fund a particular reserve item for less than required or, in non-pooled reserve accounts, to use funds in one reserve category for another category, unless your documents require a greater level of approval, it would be necessary to obtain approval of a majority of the unit owners at a duly called meeting of the association. With a sufficient vote of the owners, all of the reserves which had been originally allocated using a line item reserve may be moved into a pooled reserve, and all future reserves may be collected as a pooled reserve.


     One of our know-it-all unit owners has insisted that our association must pay for the replacement of our building’s windows and doors because the Condominium Act requires that our association provide insurance for the windows and doors even though our declaration says the owners are responsible for those items. Is that true?


     Apparently, the unit owner to whom you are referring does not know it all, but he may be forgiven since the portions of the Condominium Act concerning insurance are among the most confusing and may sometimes conflict with the maintenance obligations provided in the declaration or bylaws.

     If your declaration imposes an obligation upon the owners to maintain, repair, and replace the units’ windows and doors, then it is the owners’ personal obligation to perform consistently with those requirements when the reason for the need for maintenance, repair, or replacement is something other than an insured casualty (age, deterioration, or abuse are examples).

     The law requires a condominium association to carry adequate property insurance covering all portions of the condominium property as originally installed or replacement of like kind and quality. Reconstruction after a property loss is to be undertaken by the association. Another section of the statute provides that any portion of insured property which is damaged by an “insurable event” shall be reconstructed, repaired, or replaced as an association common expense. In the absence of an “insurable event,” the obligation to repair the damaged property is on either the unit owner or the association, depending on which has the maintenance, repair, and replacement obligation as described in the declaration of condominium or bylaws.

     An exception to an association’s maintenance, repair, and replacement obligation (when insurance doesn’t cover the claim) is when the damage is caused by the intentional conduct, negligence, or failure of the owner (or his family, occupants, tenants, or guests) to comply with the terms of the declaration or rules of the association. For example, let’s say there is a rule which requires owners to turn off the supply line of their toilets when they are planning to be absent from the unit for more than 30 days. While the owners are absent, their toilet overflows, causing damage to the unit and common elements. If the association’s insurance doesn’t cover the claim because the deductible is not met, for example, the association could decline to make the repairs it might have been obligated to make because the damage was caused by the owner’s failure to comply with the rules.

     If a dishwasher, for example, has been leaking for a long time and slowly damaged the walls, it may be reasonable to conclude that the owner was negligent in not determining the machine was leaking for a long time, and the association could decline to pay for the damage. If the water line for a dishwasher burst suddenly and for no apparent reason and not for lack of maintenance, if it is determined that the flood was an insurable event, but will not trigger payment by the insurance company because the claim does not exceed the deductible, the association would be responsible for repairing the damage and paying for it because, even though there is no insurance available to pay, it is within the association’s deductible and those costs are the association’s responsibility. I know this has been a long answer to what was a short question, but there is no short answer to “who is responsible…” Questions like these are nearly always dependent on the specific facts. 

Keith F. Backer, Esq.

Managing Partner of Backer Aboud Poliakoff & Foelster

Keith F. Backer, Esq. is the managing partner of Backer Aboud Poliakoff & Foelster LLP. Mr. Backer is among the few Florida attorneys Board Certified as a specialist in condominium and planned development law by The Florida Bar. He has provided legal services to hundreds of community association clients in Palm Beach, Broward, Miami-Dade and St. Lucie Counties over the last three decades. For more information, visit