Florida HOA Boards Face New Budget and Investment Rules Under 2025 Law Changes

Effective July 1, 2025, significant updates to Florida’s Condominium Act are reshaping how HOA and condominium boards manage budgets and invest funds. These changes directly impact board decision-making and community financial planning, especially for associations facing inflationary pressure or major capital needs.

Florida Governor Ron DeSantis signed HB 913 into law on June 23, 2025. “Today in Clearwater, I signed legislation to deliver much-needed relief to condo owners across Florida,” said DeSantis. “We’ve heard the concerns of condo owners throughout Florida, and we are delivering reforms that will provide financial relief and flexibility, strengthen oversight for condo associations, and empower unit owners.”

Here’s what your HOA board needs to know:

Budget Over 115% A New Two-Budget Requirement

One of the most impactful changes is aimed at increasing financial transparency and owner participation. Under the revised law, if a board proposes an annual budget that exceeds 115% of the previous year’s budget (excluding certain expenses like insurance, reserves, and non-recurring capital repairs), the board must also provide a “substitute budget” for unit owner consideration.

Specific enacting language of HB 913 are:

Annual Budget Requirements

Relating to the budget requirements for condominium associations, the bill:

• Requires associations to simultaneously propose a substitute budget that excludes any discretionary spending if the proposed budget exceeds 115 percent of the assessments of the preceding year;

• Requires that the substitute budget be presented to the unit owners for approval before a budget can be adopted; and

• Revises the expenses that associations can exclude when determining whether assessments exceed 115 percent of the assessments of the preceding year by:

• Removing “assessments for the betterment of the community;” and 

  Limiting the exclusion of anticipated expenses to expenses related to the SIRS inspection.

The substitute budget must eliminate any “discretionary expenditures that are not required to be in the budget”—but what qualifies as “discretionary” is not clearly defined. This ambiguity means boards must exercise careful judgment and consult legal counsel when classifying expenses. Examples might include landscaping enhancements, new amenities, or nonessential services not required by statute or governing documents.

Both the proposed and substitute budgets must be sent to unit owners at least 14 days in advance of a vote—longer if the governing documents require more notice (e.g., 30 days). A unit owner meeting must be held to vote on the substitute budget before the board can adopt its original proposed budget. If a majority of the total voting interests(not just a quorum of those present) approves the substitute budget, it becomes the official budget. If not, the board may adopt its original version.

What’s Excluded from the 115% Calculation?

It’s important for boards to understand what does not count toward the 115% threshold:

• Insurance premiums

• Mandatory reserve contributions

• One-time or non-annual capital repairs (e.g., concrete restoration, roof replacement)

Boards must be meticulous in how they calculate this threshold and document exclusions, especially in communities facing major repairs under Florida’s enhanced structural integrity laws.

New Guidelines for Reserve Fund Investments

The statute also codifies new language concerning how boards invest association funds. Boards are now expressly required to use “best efforts” to make prudent investment decisions for both operating and reserve accounts—a slightly stronger standard than previous common practice.

Importantly, the law affirms that boards may invest reserve funds without a vote of the owners in:

• Certificates of deposit (CDs)

• Depository accounts at recognized financial institutions (e.g., community banks, credit unions)

While these vehicles have long been considered safe options, the law stops short of answering whether more complex investment instruments—such as bond funds, money market accounts, or managed investment portfolios—are permissible with a membership vote. Nor does it define what qualifies as a “depository account” or whether brokerage firms outside of traditional banks may hold HOA funds.

This leaves many questions open, especially for associations seeking higher returns on reserves amid rising repair costs and insurance premiums. Boards should proceed cautiously, and legal and financial advice is highly recommended before placing funds in anything outside the clearly allowed options.

What Boards Should Do Now

1. Review Your Budget Process: Evaluate whether your proposed 2025–2026 budget may exceed the 115% threshold. If so, begin preparing a legally compliant substitute budget with discretionary spending clearly identified and removed.

2. Clarify Notice Requirements: Ensure your timeline aligns with your governing documents, especially if they require longer notice than the statutory minimum.

3. Define “Discretionary” in Context: Work with legal counsel to interpret what discretionary spending means for your specific community, based on your documents and operational norms.

4. Reassess Investment Policies: If your association is investing or plans to invest reserves, make sure your policy complies with the new law. Avoid unclear investment instruments unless approved by a member vote—if permitted at all.

5. Communicate Clearly: Educate your owners early and often. Financial transparency and engagement will be key to navigating the new requirements smoothly.

Florida's latest legislation signals a shift toward stronger owner involvement and more cautious financial oversight in HOA governance. While the rules add complexity, they also offer an opportunity to improve clarity and confidence in association budgeting and financial management.

Stay tuned as the legal and HOA management communities continue to analyze the full impact of these changes.