Reserve Safeguards

We recently had a reserve study done in our 106 unit townhome community, an increase passed the homeownership so we begin in January. During an executive meeting came concerns about safeguarding and handling the funds. The concerns primarily revolved around keep these funds safe for their intended usages and not allowing them to get spent on the project of the day define as an emergency. The other concerns were regarding how keep the money. Does anyone in the HOA family have some good policy wording that we could apply.

Thanks You
William

Start here:

http://www.communityassociations.net/reserves_main.html

and here is a direct link to a PDF file which has sample policies in them:

http://www.wscai.org/hoa/assn294/documents/reservestudies.pdf#search=%22condominium%20association%20sample%20reserve%20policy%22

Some basics about reserves:

Alwasys have a formally adopted resloution defining the reserve fund and purposes for which it can be used.

Always require a board resolution to move or withdraw funds from the reserves.

Always require two (2) signatures to move or withdraw funds, at least one should be a board member.

Always invest or place reserves in government backed instruments. You should take exactly the same risk with these funds that you are paid to take - ZERO. If someone tells you they can get a better return, ask them if they will guarantee that return in writing, and then turn them down anyhow.

Watch the amounts you deposit against the insured limits. Make sure if the institution bites the dust, you don't lose a dime.

Try to arrange the rollover dates of the instruments so that something is coming up every few month or so. This way you might not have to take an "early withdrawal" bite.

Just keep telling everyone that security is the primary concern, over return or convenience.

Joe