Reserve account
My HOA does not provide an annual budget for the reserve account (planned projects or replacememts), only the operating account. This makes no sense to me. Is the reserve account not to be budgeted and provided to members as part of the “budget” annually?
Thank you for your reply and would you please provide the legal reference for your answer?
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Barbara,
While your governing documents will be the primary source for the ability of the association to raise money. And how they develop an annual budget to do so. The association are required to maintain the common property both in the short term thru annual maintenance and the long term thru special activities that are required infrequently. If they refuse to plan for those long term maintenance activities, they are effectively breaching their fiduciary duty to the association to act reasonably and prudently.
They all typically identify that the association annual budget will include both the expected operating expenses for the association for the fiscal but also the annual contribution to the reserve account. They may also describe how the association may assess a special assessment. That is what is used to determine your annual assessment. There are several sections in statute primarily in the Condominium act that define what constitutes a common expense assessment all of which are consistent with what I described. Also because of the rules for statutory construction those provisions are also relevant and applicable to planned communities.
Dennis