A client recently asked a good question: if Reserves are all about becoming prepared for future expenses, why would you use current cost in computing the Percent Funded (Reserve Fund strength) value for the association?
Boards are free to choose how to fund Reserves. Typically Governing Documents require the Board to collect “adequate” or “sufficient” Reserves to care for the association’s common areas.
Special Assessments are the typical unwanted consequence when an Association is surprised by significant expenses that are larger, or earlier, than expected.
Reserve Fund Strength is a calculated ratio that compares the actual amount in Reserves to the current value of Reserve Component deterioration. In this eBook, you’ll learn: -How much is enough for your Association -Fully Funded Balance basics -What % Funded means and how to calculate it -Why % Funded matters
Reserve studies are required by Hawaii State Law, HRS 514A and HRS514B-148 for Condominiums and Time Share property under HRS 514E-10.3.
