Reserve Funds

I have a question to ask and beleive I know the answer, however, "can the BOD use reserve funds for unfunded projects?" I beleive an assesment should have been implemented if the majority of the community wanted to approve a major project - your comments would be appreciated.

Our capital reserve fund also covers unexpected "major" building repairs, not just exterior maintenance. Example, one unit had a lightning strike, where top of flue and stone chimney was damaged. $1,100.00 in damages w/ a $1,000 deductible. The BOD elected not to file an insurance claim, because if we file a second claim in next 5 years, we'd lose all discounts and possibly risk a premium increase. So, not to impact our operating budget, the damages was paid from our reserve.

You would not tap Reserve Funds to install a new amenity. Once the cash is deposited into the reserve account, considered it locked away for your existing amenities.

Your board could choose to underfund reserves in its annual budget with the "extra" operating money used to install your amenity. In this way, you're transparent to your dues payers and it's listed publicly in the budget for all to see and discuss. If your Reserves are very healthy, you can exercise this option, then modify for reserve study to account for saving money to care for your new amenity.

Removing reserve funds from the account to install new amenities keeps it off budget and turns your reserves into a de facto slush fund due to the disregard of reserve fund rules and operational expectation.