Reserves are a big topic in any condominium association. How much should we have in reserves? How much should we contribute to reserves? Should we have a reserves study?

For many small associations, reserves may be scarce or non-existent to begin with. Boards may opt to special assess funds as needed rather than pad assessments to accumulate the excess needed to fund a reserves account. While HausFS never recommends this approach, the reality is that many associations live by a "we'll collect it when we need it" philiosophy.

When hard times hit, however, the importance of reserves becomes apparent. Typically, reserves are intended to cover large, expensive repair and maintenance projects that occur infrequently. A good reserves plan ensures that when a roof needs replacing, the association has the funds to cover most, if not all, of the expense, without the need for financing or a special assessment. In times of crisis, as we're experiencing now with the novel coronavirus pandemic, boards may also consider drawing on reserves for emergency needs.

Should your association draw on its reserves during tough financial times? Read more here.

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