Address the cash forecast
Reconcile accounts, review upcoming obligations, and improve billing or collection follow-up.
What does “borrowing from reserves” mean?
Boards often use this phrase for taking money set aside for future repairs and using it temporarily for operating bills or another expense, with an intention to restore it later.
The association is using its own restricted funds; calling the transaction a loan does not remove the restrictions. A bookkeeping entry also does not supply missing legal authority.
The Florida framework
Section 718.112(2)(f)3 generally limits reserve funds and their interest to authorized reserve expenditures unless alternative use is approved in advance by a majority of total association voting interests. Eligible voters and required proxy disclosures also matter. [1]
For covered SIRS reserves in budgets adopted on or after December 31, 2024, owners may not vote to redirect funds or interest beyond the replacement or deferred maintenance costs of the listed components. Specific statutory exceptions must be evaluated separately. [1]
Check the particular fund.
Counsel should identify which provision applies, any document restrictions, and the required process. Ordinary reserve flexibility should not be assumed for SIRS funds.
Different actions need different analysis
| Proposal | What to establish |
|---|---|
| Pay for the designated reserve project | Authorized purpose, scope, funding, and procurement approvals. |
| Use reserves for an operating bill | Whether alternative use is legally permitted and which advance approvals apply. |
| Move funds between bank accounts | Whether purpose and restrictions remain intact; a banking move is different from changing use. |
| Spend within a reserve pool | Permitted components, pooling rules, and future cash sufficiency. |
| Reduce future contributions | Separate funding-change rules; this is different from spending an existing balance. |
| Obtain an outside loan | Borrowing authority, approval, terms, and repayment funding. |
Florida permits pooling with restrictions, including limits on combining SIRS and other components. It also provides conditional financing and reserve-pause provisions. Those options do not create a general right to borrow reserves for routine expenses. [1]
Example: an insurance bill is due
Suppose operating cash is $8,000, an insurance bill of $20,000 is due, and the association holds $70,000 in roof reserves. The board proposes moving $12,000 and restoring it later.
The reserve balance does not establish that the proposal is permissible. Identify the applicable restrictions, required advance approval, and repayment feasibility before taking action.
This is a planning example, not a determination about a particular association. A genuine cash shortage deserves prompt attention, but urgency alone does not establish authority.
If an alternative use is lawful, make the proposal specific
- The fund, amount, and expense being paid.
- The legal basis and required approvals.
- The effect on scheduled repairs and available reserve cash.
- A realistic repayment source, schedule, and assumptions.
- Any proposed interest or other terms, reviewed by advisers.
- How the transaction and repayments will be recorded.
- Who monitors the plan and reports to the board.
Have counsel prepare appropriate notices and voting language. Describe the actual use rather than a vague request to “borrow as needed.”
Repayment needs a credible funding source
Identify where the money will come from without creating a second shortfall. Possibilities to evaluate include an authorized assessment, operating surplus, or another specifically identified lawful source.
Do not rely solely on hoped-for collections or an uncertain insurance recovery. Test the plan against slower receipts and earlier-than-expected repairs.
Lost earnings and future project needs also matter. Ask the accountant how to record the transaction and any interfund balance accurately.
Look at alternatives before using reserve cash
Consider authorized funding
Evaluate budget changes or a special assessment through the required process.
Evaluate outside financing
Compare legal authority, approval, interest, fees, and future repayment demands.
Coordinate with vendors where appropriate about timing. Avoid delaying required safety work simply to preserve a preferred assessment level.
Before moving money, ask
- Which fund and reserve category are involved?
- Is the proposed use authorized or an alternative use?
- Is alternative use permitted for these funds?
- What advance approvals, notices, and voting requirements apply?
- Will scheduled reserve obligations remain funded?
- What specific source will restore the money?
- How will the accountant record and reconcile the transaction?
- Who will track repayments and address a missed deadline?
What if a transfer already happened?
Preserve the transaction and approval records. Ask counsel and the accountant to determine the fund’s restrictions, authority, accounting treatment, and corrective steps.
Repayment can address a funding gap, but does not automatically cure a missing approval or otherwise unlawful use. Avoid concealing the transfer or relabeling it to bypass review.
Common questions
Can the president or treasurer authorize it alone?
Do not assume so. Determine the applicable authority and approvals; a person’s bank access is not the same as spending authority.
Does unanimous board approval replace an owner vote?
It does not replace a required owner approval or override a restriction on alternative use.
Is a short-term transfer automatically allowed?
No. The proposed purpose and governing restrictions still need review.
Does a low-rise building have unrestricted reserves?
No. Ordinary reserve requirements can apply even when a building is outside SIRS requirements.
Official source & scope
- Florida Statutes § 718.112 — particularly subsection (2)(f), reserve funding, alternative use, pooling, and related approvals.
Reviewed October 17, 2026. General education for Florida condominium boards. This page does not list every statutory exception. Consult association counsel and an accountant before a transfer, alternative use, funding change, or financing arrangement.
Create a transfer review record before moving cash
Document the source fund, proposed amount, intended expense, restrictions, required approvals, project impact, repayment source, and accounting instructions. Attach the professional review and approval evidence rather than relying on the bank transfer description.
- Distinguish a transfer between accounts from a change in the money’s permitted use.
- Test whether earlier repairs or delayed collections would defeat the repayment plan.
- Assign someone to reconcile the transaction and report any missed repayment.
- Preserve the original evidence if a questionable transfer has already occurred.
The ability to initiate a bank transaction does not establish authority to use the fund. Review financial controls and unbudgeted expenses before selecting a funding route.
Connected financial and community resources
Authority matters: Florida law establishes statutory duties; governing documents define association authority subject to law; contractual duties come from applicable agreements. UCO procedures address separate UCO functions. The added registers and workflows are Board Synergy recommended practices, not prescribed statutory forms. Historical articles provide background rather than current legal instructions.