refund of reserve money

Started by FrankD2 • 4 replies • 2049 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

FrankD2 (New Jersey)
Posts: 58

Posted:

it was suggested at our hoa of the possibilty of returning all reserve
contributions(including original capital contribution)to the resident when a resident
sells his house. The buyer of the house must pay this back.
your comments would be appreciated.

BradP (Kansas)
Posts: 2,640

Posted:

Frank,

No offense but that is one of the sillest ideas I have heard. Lets say I live there for 5 years and move, all my reserve contributions get refunded? Why? Did I not contribute to the depreciation of equipment and buildings that the reserve fund is there for? Why is it fair for the new owner to pay for previous owners? What happens if one owner moves out 6 weeks prior to improvements and another owner moves out 6 weeks after? The first one gets a full refund and the second doesn't?

LarryM3 (California)
Posts: 37

Posted:

Frank,
The ongoing repairs and maintenance will continue to go on. So must the reserve funding by the owners. It is important to keep the reserve amount current and up to date so no one can sue for mismanagement of funds. Keep the capitol improvement obligations updated with the reserves following suit and you should have no problems. You CAN'T refund money that is all ready set aside for future repairs. THEN expect a new owner to go back in time and for see issues and dollar amounts that he doesn't or can't for see.
Larry

RogerB (Colorado)
Posts: 5,067

Posted:

Frank whom ever made that suggestion really didn't think through the process involved. It would actually cost the Seller more money and it would limit potential buyers. Besides that the Seller may not be able document the amount they have paid into the reserve fund. If they could it would take research which would also incur an expense to them.

Just for the sake of thinking through what would happen, let's assume the Seller can document they paid $5000 into a reserve fund. So they have a contract which states the Buyer will pay them an extra $5000 at closing. So if I were the Buyer I would ask for a reduction of more than $5,000 below what I would otherwise offer because I might have to come up with an extra $5000 in cash at closing.

RonaldW (South Carolina)
Posts: 901

Posted:

Quote:

Posted By BradP on 04/25/2007 5:57 PM
Frank,

No offense but that is one of the sillest ideas I have heard. Lets say I live there for 5 years and move, all my reserve contributions get refunded? Why? Did I not contribute to the depreciation of equipment and buildings that the reserve fund is there for? Why is it fair for the new owner to pay for previous owners? What happens if one owner moves out 6 weeks prior to improvements and another owner moves out 6 weeks after? The first one gets a full refund and the second doesn't?

I agree.

Ron
SC

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here