Reserves - Fully Funding
In 2004 the law was updated on reserve funding. This put a lot more responsibility and liability on the Board. In the current world we live in individuals are “sue happy” so we must ensure we are following the law and clearing ourselves of any possible liability. So, the law at its clearest point states: The Board must fully fund reserves to ensure no special assessments are needed for capital improvements/reserve expenses. This puts the full responsibility on the Board to ensure all common elements and anticipated reserve expenses are fully funded for and that there is never a special assessment for an anticipated common element reserve expense. Examples – We know the siding, roof, trees, asphalt have a useful life and they must be replaced at some point. We don’t know when a water main break will happen or when a main sewer line will bust and wash out half a hillside. Therefor if an unexpected repair happens, we do have the right to special assess for that. Everything else must be fully funded for. So how does the Board know they have themselves covered? They have a comprehensive reserve study completed by an independent firm specializing in community reserve studies.