Florida's 115% Condominium Budget Rule Is Not an Assessment Cap
Updated: 3 days ago
Every budget season, someone tells the board it cannot raise assessments more than 15 percent. That is not what Florida law says. Section 718.112(2)(e) establishes a procedure that applies when a proposed budget requires assessments exceeding 115 percent of the prior year's assessments. For an association controlled by its unit owners, it does not create a cap.
What happens when the threshold is exceeded
When the comparison shows that the proposed budget requires assessments exceeding 115 percent of the preceding year's assessments, the board must simultaneously propose a substitute budget. The substitute budget may not include discretionary expenditures that are not required to be in the budget, and it must be proposed at the budget meeting before the board's annual budget is adopted.
The owners must consider the substitute budget at the meeting. It is adopted if approved by a majority of all voting interests, unless the bylaws require a greater percentage. If it is not adopted, the board's initially proposed budget may be adopted.
Not every increase counts toward the 115% calculation
The statute excludes three categories from the comparison: authorized provisions for required reserves for repair or replacement of the condominium property; anticipated expenses the board does not expect to incur on a regular or annual basis for the repair, maintenance, or replacement of the items listed in Section 718.112(2)(g); and insurance premiums. These exclusions can make a considerable difference, particularly for communities facing higher insurance or building-repair costs.
A simple comparison of total assessments in the current and prior budgets may therefore give the wrong answer. The board and management should prepare a worksheet that separately identifies the statutory exclusions in both years and documents how the threshold was calculated.
The notice for a substitute budget is different
Section 718.112(2)(e) requires at least 14 days' notice of the budget meeting. Although electronic notice is expressly permitted for ordinary budget meetings, the provision addressing substitute budgets refers only to mail or hand delivery.
DBPR's published FAQs permit electronic notice, and a proposed administrative rule would expressly authorize it. Until the inconsistency is resolved, associations can avoid the issue by mailing or hand-delivering the notice and providing copies of both proposed budgets.
Developer-controlled associations are different
While the developer controls the board, assessments may not exceed 115 percent of the prior year's assessments unless approved by a majority of all voting interests. That restriction is a true limit, and it should not be confused with the substitute-budget procedure that applies once the owners control the association.
What this means for the 2027 budget
If an increase is necessary to pay for insurance, repair obligations, or required reserves, the board should explain the reasons and follow the applicable procedure. Trying to avoid the rule by changing labels or moving expenses is not a solution. Neither is treating 115 percent as a reason to underfund expenses the association is legally obligated to pay.
For help applying the 115 percent rule to your association's budget, please contact Pope Mazzara & Menendez.
Disclaimer: This article is provided for general informational purposes and does not constitute legal advice. The application of Florida law depends on the facts and governing documents of each association. Reading this article does not establish an attorney-client relationship with Pope Mazzara & Menendez, PLLC.
