What the law actually states is that the board must adopt a budget that will fund the reserve account in an adequate manner to repair and replace the common elements in the normal course of business without the need for a special assessment AND the annual contribution to the reserve account must be at least 10% of that year’s budget. Often the amount needed to be fully funding the reserve account greatly exceeds the 10% requirement.
The 10% requirement was initially written in order to require condominium developers to properly fund reserve accounts prior to turning the condominium over to owners. Unfortunately, the outcome of the law seems to have only created confusion.
The 10% requirement does not apply to homeowner associations as it was not included in the Planned Community Act when it passed in 2010. However, the remainder of the reserves law does apply so make sure you are funding your reserve account properly.
Condominium and homeowner associations alike should be certain to be fully funding reserves so as to avoid dreaded special assessments.