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August 25, 2008 2:35 PM

Meager reserve account savings worries condo owner

Posted by Elizabeth Rhodes

Q: What recourse do condo owners have to require their board to follow the requirements of the declaration?

Ours states that the board is responsible for calculating "contributions to the reserve fund so that there are sufficient funds in the reserve fund to replace each Common Area covered by the fund at the end of the estimated useful life..."

However our board has cut reserve fund contributions by more than 75 percent in the last five years, preferring instead that we pay for things with special assessments. We have one now in the works for $300,000.

A: Alas there's no magic bullet here.Your only realistic avenue is to get other owners to agree with you that building a healthy reserve account is preferable to huge special assessments.

If you can do this you can wield the power to get the board to change direction.

Or failing that you, and like-minded owners, can become board members and make the changes yourself.
As leverage to get your point across, remind other owners of the new state law requiring condominiums to undertake reserve studies and make them available to prospective buyers.

The law doesn't require associations to back up the studies with appropriate reserve amounts in savings.
However those associations that choose to underfund may find their property values suffer because buyers are leery of buying into special assessments situations.

That could mean owners will have to reduce their asking price to get a sale -- putting them no further ahead financially than if they'd raised dues to fund reserves instead.

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