Why consider earning a return?
Interest can help association funds contribute toward future costs while they await use. The board must also consider loss risk, access, fees, and the association’s authority.
A practical priority is safety of principal, liquidity for obligations, then return within those constraints. This is a planning approach, not a claim that Florida law mandates one investment product.
It pays for shared operations and future work. Avoid choosing an investment solely because its advertised yield is higher.
Confirm authority and restrictions
Section 718.111 requires prudent, good-faith conduct in the association’s interests. Review governing documents, board authority, conflicts, and any investment restrictions with counsel. [1]
Section 718.112 restricts reserve use and reserve interest. Earning a return does not convert restricted reserve funds into unrestricted operating money. Preserve the appropriate fund identity and accounting. [2]
Understand the product before choosing it
| Option to evaluate | Useful characteristics | Questions and risks |
|---|---|---|
| Bank savings or money market deposit account | Interest-bearing deposit with access subject to account terms. | Verify insurance, aggregate balances, fees, and withdrawal terms. |
| Bank certificate of deposit | A deposit for an agreed term. | Check maturity, early-withdrawal penalties, renewal instructions, and insurance. |
| Treasury bill | Short-term U.S. Treasury security; face value paid at maturity. | Understand custody, access, fees, and price risk if sold early. |
| Money market mutual fund | A securities investment often used for cash management. | Not FDIC insured; review risks, expenses, and redemption terms. |
| Longer-term bonds, bond funds, stocks, or other investments | Different potential returns and risk profiles. | Principal and market-value risk may conflict with near-term obligations; seek qualified review. |
These are product categories for education, not recommendations to purchase. Money market deposit accounts and money market mutual funds are different products. SEC guidance explains that funds are not FDIC-insured and can lose value. [4]
Treasury bills can be held to maturity or sold earlier. An early sale may produce a different amount; understand market pricing and transaction arrangements. [5]
Deposit insurance: add the accounts together
FDIC guidance generally combines a corporation’s deposits at the same insured bank up to $250,000. Different account purposes or authorized signers do not create separate coverage. Count operating deposits, reserve deposits, CDs, and interest together when assessing exposure. [3]
Illustrative example
An association has $80,000 in operating deposits, $150,000 in reserve savings, and a $60,000 CD at the same bank. The combined $290,000 exceeds the standard $250,000 corporate coverage by $40,000, before additional interest.
Verify the legal institution, ownership category, and coverage with the bank or FDIC. Separate branches of one bank are not separate insured banks. For sweep or brokered arrangements, check underlying institutions, overlapping deposits, ownership records, and access.
Match maturities to expected expenditures
Maintain accessible funds for ongoing bills and a reasonable contingency allowance. Use the reserve plan to identify expected project dates and amounts.
A ladder staggers maturities instead of committing all funds to one date. It can help align availability with spending, but does not eliminate risk or ensure enough cash.
Before placing project money in a 12-month product, evaluate how the association would pay if work begins on schedule or earlier. A higher yield can be outweighed by penalties, market losses, or delayed access.
Adopt a written investment policy
- Objectives and authorized product categories.
- Limits on terms, uninsured exposure, concentration, and risk.
- Cash forecasting and reserve-schedule review.
- Who recommends, approves, executes, and independently reviews transactions.
- Account title, custody, access controls, and recovery procedures.
- Reporting, accounting, and maturity monitoring.
- Conflict disclosures, adviser compensation, and periodic review.
Have counsel and qualified financial or accounting advisers review the policy. A board policy cannot override legal or governing-document restrictions.
Keep accounts under association control
Use the association’s legal identity and appropriate tax identification. Avoid personal accounts or personal ownership of association investments.
Record balances, product terms, maturities, institution contacts, and authorized users. Secure credentials and arrange backup access without exposing passwords in public records.
Compare statements to accounting records and track earnings in the correct fund. Ask the accountant about taxes and reporting; nonprofit corporate status does not automatically make investment income tax-free.
Before approving an investment
- Is the product permitted and consistent with the funds’ purpose?
- When will the money be needed?
- Could principal be lost or access restricted?
- What insurance or other protection actually applies?
- What fees, penalties, and renewal terms apply?
- Are bank exposures and overlapping deposits understood?
- Are conflicts and adviser incentives disclosed?
- Who will monitor, reconcile, and arrange funds at maturity?
Questions to ask a provider
“Is this a deposit or a security? Who holds it? What can cause a loss? What happens if we need the money early? What are all fees? How are you compensated? Can our association export records and change authorized users?”
Verify the provider’s credentials and understand the engagement. The board should receive clear explanations rather than relying solely on a sales description.
Official sources & scope
- Florida Statutes § 718.111 — director duties.
- Florida Statutes § 718.112 — reserve funds and interest.
- FDIC: Corporation and Association Accounts — aggregate deposit coverage.
- SEC Investor Bulletin: Money Market Funds — product risks and insurance distinction.
- TreasuryDirect: Treasury Bills — terms, maturity, and sale options.
Reviewed October 17, 2026. General education for Florida condominium boards, not a recommendation for a specific investment. Obtain advice about your documents, cash needs, product risks, deposit coverage, and tax treatment.
Maintain an investment and maturity register
Record the legal institution, account title, product type, fund purpose, principal, current balance, yield terms, fees, access restrictions, maturity date, renewal instructions, coverage review, and assigned reviewer. Keep account numbers and recovery information secure.
- Match each maturity to expected spending and a contingency for earlier work.
- Review aggregate exposure across operating deposits, reserves, and CDs at the same institution.
- Set reminders early enough to change automatic renewal instructions.
- Reconcile statements and allocate interest to the correct fund.
Use financial controls for independent review and contact and access updates after a transition. A board-approved investment policy should identify the permitted products and approval process.
Florida law: §718.111(16) requires best efforts toward prudent investment decisions considering risk and return. It expressly permits reserve investments in specified depository accounts and certificates of deposit without an owner vote. That provision is not blanket approval of every investment product; review other proposals with counsel.
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.