Reserve Fund

Started by CharlesO • 5 replies • 1418 views

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CharlesO (Maryland)
Posts: 17

Posted:

Ours is a fledgling community of 48 townhomes. When our phase one is complete, there will be a total of 144 townhomes. Phase two will be single family homes. Phase three will be condos around an eight acre lake. There will eventually be a community center w/swimming pool. This year our budget was $48,000 of which landscaping consumed 60% because there are so few of us to cover the cost of maintaining all of the common areas. My question is: should we start contributing to a reserve fund now, even though it would be imposible to do a reserve study. Times are tough and to increase our assessments higher to fund a reserve now would be a further hardship for the residents. We are approaching the end of year two and are pretty much living on a shoestring but I wouldn't want to ignore what is hopefully coming in our future. Thanks for your comments.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Charles - who is the "we" and "our" - has there been a turnover from the developer? Do you have your board or are your resident representatives on the declarent's board?

CharlesO (Maryland)
Posts: 17

Posted:

We have an elected Board. We will have the turnover the first of 2010.

TracieS (Colorado)
Posts: 460

Posted:

Who's "in control"?

CharlesO (Maryland)
Posts: 17

Posted:

The Board has done everything except handle the money. Starting in 2010 the board will do that.

TracieS (Colorado)
Posts: 460

Posted:

My personal opinion is that a reserve fund is VERY IMPORTANT!!!!!! VERY, VERY, VERY!!!!

My teeny tiny townhome association (19 units) has never funded a "reserve", and we're approaching 25 years old. Roofs, garages, sidewalks, alleyway...all are starting to show age. Now, we have to play catchup.

By contributing even a TINY bit to a reserve will start to set the standard for future owners. People will be used to seeing it on the financials. They'll be used to the fact that there's a LOT of money just sitting there and SHOULDN'T be touched for anything other than what it's meant for. They won't be crying about assessments and how they're so high when "you guys have so much money just sitting there." It shows FUTURE buyers that your association is SERIOUS about making sure you're doing everything you can to keep assessments low over the long haul of home ownership.

If you don't start just yet, I think you'd be ok. Most capital improvements that would be in the reserve should last for a long time, and you're just 2 years old?

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