Maryland House Bill 107 Reserve Fund Study

Well, we have to have a reserve study done in Washington State, and tell homeowners the results, but there is no requirement that we fund it per the recommendations of the study.

I don't know about the Maryland bill, but I wouldn't panic about having to fund your reserve fund unless the law makes you do it. If you are underfunded, you likely can fix that over a number of years.

To my knowledge no study was required 25 years ago and the the new legislations give us three years to reach recommended study fund requirements. Looks like we are headed down the Assessment path plus substantial increases in monthly owner fees. It's been my experience that maintenance repair accounts are for routine repairs and Capital repairs/replacement are for end of life cycle items like roofs, parking lot repairs/resurfacing. Generally, expenditures for any common element repair/replacement over say $5,000 could be considered a capital expenditure. We are not talking about additions or enhancement to existing units but maintenance of effort for what is existing. If anyone has recently had a study, were you surprised by the results and how did the community address the required funds to support the study findings?

I've never heard the term level 1 - there are preliminary studies, studies that include site visits, some that don't and full studies, which include a site visit with an inspection of the components.

If this is your very first study, I'd consider what type of components I have and then talk to the reserve specialist as to what may be most appropriate. If it's been five years or longer since your last full study, start there.

Once you have the information, you can review the recommendations and decide how to proceed. I would suggest you hold a special homeowners meeting with the specialist where he or she could present the finding and people can ask questions. We did this at what was to be our annual meeting this year - didn't make quorum, so we did the presentation anyway for the folks who did show up.

Then take a long, hard look at your budget - if you have expensive replacements on the horizon sooner rather than later, you may need another meeting to tell the homeowners the truth about where you're at and what the board plans to do. Tell them about the new law and remind them of Surfside - part of the reason that happened is because homeowners didn't find reserves properly, and you want to avoid loans and special assessments. Just be honest and provide the data - some still won't like it, but they'll also know the consequences if they do nothing. Not everyone will be able to sell before the cost comes down.

Our board president announced assessments will increase every year for the foreseeable future because we're terribly underfunded. So far, I'm not aware of any pushback - when I was on the board, we warned homeowners this was a possibility and we may still have to have a special assessment.

In the state of Minnesota, we have that requirement already into law, but the short coming of the law is that there is not an agency at the state level, county level, or local level that will make sure that is followed by the condos or HOA's.

Wow, three Michaels on this thread.

Too bad Michael is not my real name.