The SKY is green!! Special Assessement ??

For our COA in Ohio the answer would be no. Ohio law mandates that an Association must fund the reserves with at least 10% of the annual operating budget or a majority of H/O must vote each year to allow for the possibility of special assessments. In our case the money could be borrowed from reserves but then general assessments for the next year would probably have to be raised to repay the funds plus interest.

Nicole, We had an issue of a similar nature--using reserve funds for a maintenance issue not identified in the reserve study. (Remember the meandering stream. . .)

In Hoosierland there are no laws (and nothing in our documentation) regulating reserve funds. Instead of looking at the reserve fund as a set of individual funds dedicated to specific projects, the board wisely looked at it as an unindifferentiated whole.

Since the reserve fund was done well and conservatively, a number of anticipated maintenance projects have not needed to be undertaken at the time they were estimated to take place. We will simply continue to build the reserve fund, restoring the money used for the unanticipated expense, through our annual fees as we have for the past 12 years.

And as homeowners, we live happily ever after . . .

By the way, if 10 percent of fees are mandated by law to be set aside for reserves, it seems to me that in a well built, well maintained association, the reserve fund could become excessively large.

Is there some sort of cap? Or is this a case of another poorly written law?

Robert - Good Morning! but are you in the right thread . . .?

Nicole - "unplanned maintenance" - can you be more specific. Why wasn't this already in the reserve fund plan?

Not knowing what the expense is, are you sure it doesn't rightfully belong in the reserve? It seems some people define their reserve fund in very narrow terms. In my opinion it should cover all major expenses related to real property. By major expense I would say anything more then 10% of the budget though there is some wiggle room there.

Now beyond that, it seems that you should also have 10 to 25% of your budget sitting in an account similar to the reserve fund. Many have called this an operating reserve.

Unexpected expenses are a part of life. I am just amazed at how many HOAs pretend they are immune from this.

That had happened is out last earthquake that hit this month cause a huge crack in the first floor decking, the pool and outside cement fascia on the building. However, the facscia that cracked away on the building is not covered by our earthquake insurance as this was a pre exhisting item. Our insurance will only cover the rest. The facsia is missing a 100+ pound chunk of cement that was already cracking and well known to the current board. It was pre-exhisting, our HOA knows it and STATE FARM will not pay for it. That is the unplanned maintenance.

George if this was to happen then the H/O would simply have to vote to cease funding the reserves and allow for the possibility of a special assessment. The law was put in place to protect H/O who were often first time buyers who moved into Associations especially with little to no down payments. Developers and some BOD's have been known to keep assessments artificially low in order to make the property seem more desirable and then hit the H/O with massive SA's to pay for stuff that should have been budgeted for.