A reader recently asked a good question, asking for clarification about where the money should come from for a particular expense. The answer illustrates an important concept.
In some areas of the country, specifically California where it is required by State Law, at least every few years a Reserve Study needs to be prepared on the basis of a “diligent visual site inspection”. But what does that mean?
Some Governing Documents (or jurisdictions) require that a Reserve Funding Plan not be based on a special assessment. But some communities wiggle around that requirement by just “temporarily increasing the monthly assessments”, not levying a one-time special assessment. What is the difference?
After last week’s webinar on selecting Reserve components (click here for the recording), one attendee asked why they often see many “painting” components… one for stucco, one for wood trim, one for the ironwork around the pool, one for balcony railings, etc.
I wish the answer was as simple as the question. Since associations come in all different types and sizes, and in that variety there are significant differences in the common areas maintained by the association and the Operational Budget expenses, the answer is “no”.
An attendee at one of our webinars earlier this week (click here) asked if it was ok to defer a project with a Remaining Useful Life (RUL) of 0 until the following year, and how that should be communicated in the Reserve Study. Deferring a project can be done, but it is a decision made by the Board, and something the Board communicates in a document separate from the Reserve Study. The Reserve Study is where the association communicates to the members the status of the physical components, the preparedness of the Reserve Fund to deal with those projects, and the ongoing contributions to the Reserve Fund necessary to offset that ongoing deterioration.
