Florida law requires HOAs to provide financial documents to prospective buyers. Most buyers request them, receive a PDF, and don't know what they're looking at. This guide covers the five numbers and ratios that actually matter — and the red flags that should make you pause before closing.
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Talk to a Specialist →The Reserve Fund — Most Important Number
The reserve fund is the HOA's savings account for major capital expenditures: roof replacements, pool resurfacing, road repaving, elevator maintenance. A healthy reserve fund means that when the pool deck needs $400K of work in year 7, the money is already there. An underfunded reserve means that work will be paid for with a special assessment — a one-time charge to every homeowner.
Look for the "percent funded" figure in the reserve study. Industry guidance suggests 70%+ funded is healthy. Below 50% is a yellow flag. Below 25% is a serious concern. Ask for the most recent reserve study (updated every 3–5 years) and look at the projected funding plan.
The Five Red Flags
Reserve Fund Below 30% Funded
This means the HOA has collected less than 30% of what it will need for upcoming capital expenses. When those expenses arrive, they become special assessments. A special assessment on a $400K home can run $5,000–$25,000 or more. Ask what the upcoming 5-year capital expenditure plan looks like and how it's being funded.
Operating Deficits in Recent Years
If the operating budget shows expenses exceeding income in recent years, the HOA is spending more than it collects. Either fees will increase significantly, or reserves are being drawn down to cover operating shortfalls — which accelerates the underfunding problem. Look at the last 2–3 years of operating statements side by side.
High Delinquency Rate
If 10%+ of homeowners are delinquent on HOA fees, the association is collecting less than budgeted income. This shortfall either goes to reserves or triggers an operating deficit. Ask the management company for the current delinquency rate. In well-run communities it's typically under 3–5%.
Pending or Recently Levied Special Assessments
The seller is required to disclose known special assessments. But ask specifically: "Are there any pending capital projects under discussion that may result in a special assessment in the next 3 years?" Minutes from recent board meetings often reveal discussions about upcoming projects before they're formally assessed.
Active Litigation Involving the HOA
HOA litigation — whether against a contractor, between the HOA and individual homeowners, or external suits — can be a significant financial liability. Ask directly: "Is the HOA currently a party to any litigation?" Review recent meeting minutes for references to legal matters. Litigation costs come out of the operating budget or reserves.
For Kings Point buyers specifically: You're dealing with 100+ individual sub-associations in addition to the master HOA. Request financials for both the master association AND the specific sub-association for the unit you're buying. An underfunded sub-association can levy its own special assessment independently of the master HOA's health. This is the most important due diligence step unique to the Kings Point purchase process.
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What to Request and When
Florida Statute 720 gives you the right to receive HOA governing documents, the most recent year-end financial statements, and the current operating budget before closing. Request these at or before going under contract — not after. If the seller or HOA is slow to provide them, that itself is information. Most Florida HOA management companies can provide a full document package within 5–7 business days.