Equipment and major components (like the roofs) must be replaced from time to time, regardless of whether we plan for the expense. We prefer to plan and set the funds aside now. Reserve funds aren’t an extra expense—they just spread out expenses more evenly. There are other important reasons we put association monies into reserves every month:
1. Reserve funds meet legal, fiduciary, and professional requirements. A replacement fund may be required by:
Any secondary mortgage market in which the association participates (e.g., Fannie Mae, Freddie Mac, FHA, VA).
State statutes, regulations, or court decisions.
The community’s governing documents.
2. Reserve funds provide for major repairs and replacements that we know will be necessary at some point in time. Although a roof may be replaced when it is 25 years old, every owner who lives under or around it should share its replacement costs.
3. Reserve funds minimize the need for special assessments or borrowing. For most association members, this is the most important reason.
4. Reserve funds enhance resale values. Lenders and real estate agents are aware of the ramifications for new buyers if the reserves are inadequate. Many states require associations to disclose the amounts in their reserve funds to prospective purchasers.
5. The American Institute of Certified Public Accountants (AICPA) requires the community association to disclose its reserve funds in its financial statements.
Being home with our loved ones is a way to celebrate family, friends, and the successes of the year. As we gather in family homes, decorated for the holidays, the role of our HOA might become more apparent, especially when it comes to enforcing the rules.
Some of the things we love most about the holidays are also some of the best parts of living in an Homeowner Association, namely, a sense of community and belonging, neighborly consideration, and common purpose. This holiday season, let’s enjoy our family and friends through traditions and celebrations, and enjoy our communities by being good neighbors. Keep a few things in mind as you host festivities in your homes:
Parking – Nothing puts a damper on holiday fun like having your car towed for improper parking. Make sure you and your guests are aware of parking restrictions. Every space is assigned. Numbered spaces belong to our owners, even if the space is empty. Visitors may park in the visitors lots, and of course street parking is available.
Sound – Any loud noise can be considered a nuisance. Whether it’s your drunk uncle after too much egg nog, the music your holiday lights are set to strobe to, or your dog incessantly barking the “Jingle Bells” tune, a nuisance that gets reported to police or the HOA Board could ruin your party or even incur fines.
Decorations – Decorating your home is a fun tradition, but forgetting to take things down soon after the holidays might be an eyesore for neighbors or result in fines. Christmas-season lights are great, New Year’s lights are okay. Leaving them up through Valentine’s Day, well…