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What Successful Associations Do: Master the Reserve Study

Believe it or not, budget season is upon us again. Each association requires different levels of involvement from their board during the budgeting process. While a professional community association manager will assist you when you’re getting started, it’s important for

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Is Your HOA Board Saving Enough for the Reserves?

How does the reserve fund in your homeowners association look? If your fellow HOA board members tend to look the other way, not want to deal with the reserves, or simply refuse to fund them, you’re not alone. Many Associations

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The Reserve Budget

Many of you are in the process of completing your 2017 operating budgets for your boards/committees/commissions (constituencies). Most operating budgets consist of anywhere between 80-100 individual line items that will guide the association with its operations for the next year.

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How to Execute a Major Project in a Condo Association

Thus far, the focus of Managing a Major Project has been on finding the right people and building the right plan. Preparing for the execution itself is half the battle. But now that you’ve got all of your ducks in

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7 Things you should know about HOA Reserve Funds

Reserve Study Laws and Reserve Funding Legislation vary by state.  In the absence of specific legislation regarding Reserve Funding, associations should refer to their governing documents (Covenants Conditions and Restrictions) with the help of a qualified attorney specializing in HOAs.

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Is Your Association Facing Capital Or Large Deferred Maintenance Projects?

Most condominium and community association developments along the coast of North Carolina and South Carolina were created and developed beginning in the mid-1980s. Many of these associations are now approximately 30 years old and require large capital or deferred maintenance

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Is Your Condo Following the Proper Reserve Protocol?

The start of a new year represents a slew of new beginnings for most community associations. From holding annual elections to the preparation of annual budgets, the first quarter of the year marks a pivotal time for many associations. With

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Four HOA Reserve Fund Investment Hurdles

HOA boards are faced with a challenge. They have limited time and resources, yet must meet the financial obligations of the reserve study by following a funding plan that provides adequate member contributions and additional revenue from prudent investment of

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Condo associations steadily building reserve accounts

Condominium assessments are escalating, but that’s not necessarily bad news. A good chunk of that money is headed for reserve funding.  These and other trends are shown in the recently released “2015 Expense Analysis: Condominiums, Cooperatives and Planned Unit Developments”

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An overview on Condominium and HOA Reserve Funds

For community associations, preserving the property and its common areas is one of the foremost duties of the association directors. Beyond the day-to-day maintenance responsibilities, association directors and managers are responsible to develop funding plans for the upkeep and replacement

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Can Reserve Funds be used for Drought-Friendly Landscape Renovations?

In the middle of a major drought, many of our California clients are asking this question as they try to be both “good citizens” and financially responsible. The answer is yes, but…   Landscape renovations can be classified as a Reserve

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Why Your HOA Should Contribute to Reserves

HOA boards and committees have to think about not only its community’s residents, but also its finances, taking care of day-to-day management and having to think ahead in case of unforeseen circumstances. With that being said, each year the committee

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The reasons why associations need reserves in their budgets.

Reserves are extremely important for any homeowners’ association, as there is always the possibility of a large and unexpected expense cropping up. Consider your property and all of the things that could potentially go wrong. What would you do if

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3 Things an HOA Board Can Do Now to Combat Costly Maintenance

There is always work to be done, especially in a homeowners association. It’s crucial that an HOA Board plan for general, ongoing maintenance and upkeep. This is important in order to keep the Association a safe place to live and

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Back to Basics: Reserve Fund Accounting

Reserves are monies set aside for the future replacement or renovation of the major community components. Every major improvement to the community that the community is responsible to maintain, such as driveways, parking lots, street lighting, playground, pool, roofs, painting,

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Operating, reserve funds must be kept in separate accounts

Community associations need two pots of money, an operating account and a reserve account. The first is for paying day-to-day bills, and the second is for occasional big-ticket items like roofs and boilers.     Read more……….

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Is 10% of Budget to Reserves a Law?

Due to the financial meltdown that began approx 2008, more lenders are particular with respect to making loans. Fannie Mae, Freddie Mac, and FHA have enacted a requirement that Reserve contributions comprise at least 10% of an association’s total budget.

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Why are Reserve Contributions Needed?

When it comes to adopting an operating budget, reserve contributions are far down on the list of items to include. A typical operating budget will include things like; utility bills, insurance premiums, landscaping maintenance, and management fees.      

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“Red Flags” that Signal Potential Reserve Account Problems

Homeowners associations must conduct periodic reserve studies in order to have a realistic estimate of the costs of repairing and replacing major common area components such as roofs. Ideally, an association will have funds set aside in a reserve account

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Boards need to keep reserve budgets fully funded

Q. Our condominium association last raised our assessments in 2010, which left us with a small surplus above our annual expenses to fund our reserve account. With no assessment increases since then, but increasing expenses, we are no longer able

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Associations beefing up reserve accounts, report shows

Condominium assessments continue to go up, and so do the bills for taking care of the buildings.  But associations in general could be in better shape financially than they were a decade ago. They are socking more and more money

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Reserve Funding: Condo and HOA Unknowns

The benefits of a reserve study have been well documented and universally accepted. Reserve studies highlight the scope of predictable repair and replacement an association will face over a predefined period, providing not only a roadmap of anticipated costs but

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Dry Wells and Reserves (AZ)

Dry Wells are designed to collect and dispose of storm water by allowing water to percolate into subsurface soils above the aquifer. All dry wells in Arizona must be registered with the Department of Environmental Quality. They are considered common

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Understanding reserve and operating accounts

Well-run community associations keep two pots of money. One is the operating account, used for the day-to-day costs of running the association and maintaining the property. The other is the reserve account, which is earmarked for the repair and replacement

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Failing to Reserve and Deferred Maintenance is a Recipe for Disaster

If you have ever served on the board of directors of an HOA, you know that some members are never happy to see their annual assessments increased. In fact, some folks can be downright hostile when faced with an increase.

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Loan Structures & Long Term Budget Short Falls in Community Associations

Financing for community association capital maintenance needs has gone from being rarely available to easily accessible. Financial institutions that are truly skilled in serving this unique industry are particularly flexible to the differing needs of each community. Not only does

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Underfunded Reserves – the $10 Solution!

In a recent webinar, an attendee remarked how simple it seemed to get on the path to appropriate Reserve funding. They were right! The problem of underfunded Reserves in community associations across the country can eliminated in five years with

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Responsible Reserve Funding: Keep Calm & Be Smart!

Society is replete with examples of intelligent people doing foolish things, especially regarding their homes and their money. Homeowners know that maintenance and repair expenses are unavoidable, that the cycle of deterioration begins the moment the last shingle is nailed

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Assess for Capital Improvements? Borrow? Do Both with “Split Funding”

A reader writers: Since becoming a condominium, our building has needed a seemingly endless series of repairs, most of which have been funded with special assessments. Now we desperately need a new roof and major work on our elevator. The

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The Four Reserve Rules

In preparing to speak to two different audiences in two days, both made up of new board members and new managers, I wanted to make sure I was communicating the simple truths about Reserve planning. It forced me to get

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Who needs reserves?

If there is one thing people hate almost as much as an assessment increase, it is properly funding reserves. Some owners look at those lonely accounts, chock full of unused cash just sitting there, and think, “Hey, let’s use that

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HOA Reserve Study Process

Most Homeowners Associations in Arizona operate in much the same way businesses operate (or at least should). Every year board members and management companies sit down and work on next year’s budget. The annual operating budget is full of monthly

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Who needs reserves?

If there is one thing people hate almost as much as an assessment increase, it is properly funding reserves. Some owners look at those lonely accounts, chock full of unused cash just sitting there, and think, “Hey, let’s use that

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Worst-Case Scenarios: When the Reserves Won’t Cover It

New Jersey has had its share of hurricanes and weather disasters over the years, and while sometimes there’s ample warning before something calamitous happens, that’s not always the case. A bad situation can be made immeasurably worse when a building

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Preserve Your Reserves

Seventy percent of homeowner associations are underfunded, and homeowners will feel the pinch. Anyone who lives in a townhouse or a condominium relies upon a homeowner association (HOA) to manage and maintain the building and common areas. Unfortunately for homeowners,

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Live Long and Prosper – Life Spans of Building Systems

Nothing lasts forever, and though you can’t predict the moment a piece of building equipment will break down, you can prepare for it. Even the toughest boiler, HVAC unit, or elevator will eventually tucker out and need major repairs, or

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Where’s the Money? Alternative Funding for Capital Improvements

As readers of this publication surely know, well-run condo buildings and HOAs need to have adequate amounts of money in both their operating funds and their reserve funds.    Read more…….

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What can Reserve Funds be Used For?

Good question! There are two ways to answer a question regarding the appropriate use of Reserve Funds, depending on how it is asked. Boardmembers and managers of condos, HOAs and other forms of community associations are often confronted with a

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Funding for Homeowner Association HOA Capital Improvement Projects. What are the choices?

For the vast majority of Homeowner Associations HOA in America, capital improvement needs nearly always outpace the financial resources available to fund such projects. For many, Capital Improvements, Reserve Studies, Reserve Allocations, Annual Assessment Increases, and Special Assessments all send

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Reserve Studies – Where the Client is Not Always Right!

Conventional wisdom says the client is always right. Customer service principles support that concept: please the client, nurture relationships for repeat business, etc. But what if it is your job to provide professional counsel, and the nature of the news

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Should Co-op / Condo Boards Create a Five-Year Capital-Improvement Plan?

If you prepare for the worst, you’re better off in the long run. Except when you’re not. A few years ago, the American Institute of Certified Public Accountants (AICPA) suggested that every co-op and condo’s financial statement contain information about

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Should a Reserve Fund Policy Ever be Unfair?

So much of the field of Reserve Studies and reserve fund budgeting is about being fair. The core goal is attempting to have the owners enjoying the use of the association’s assets pay for the deterioration that occurred to those

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Can Beach Sand Replenishment be a Reserve Component?

This question came from an oceanfront homeowners association, where the beach in front of their clubhouse is significantly smaller than its historical size. The lifeguard stand had to be moved back, and the association barely has room for its volleyball

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Underfunding Reserves: Keep Calm & Be Smart!

Society is replete with examples of intelligent people doing foolish things, especially regarding their homes and their money. Homeowners know that maintenance and repair expenses are unavoidable, that the cycle of deterioration begins the moment the last shingle is nailed

Read More

Establishing Your Reserve Funding Plan: Considerations & Strategies

Sarah Anderson, PCAM, Director of Marketing & Operations of EMB Management, Inc., AAMC, discusses some of the challenges of reserve planning with industry veteran Jim Talaga, RS, President of the Association Reserves – Washington regional office. Their goal is to

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How an HOA Board Should Use the Reserve Fund vs. Operating Fund

Funding community operations by an HOA Board is one of the most important, if not the most important, functions of the group. Properly overseeing day-to-day actions and long-term projects insures the neighborhood will have a continuous supply of funds to

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Is there Ever a Reason to Replace a Component Early?

Interesting question, with an answer that is not obvious. Most associations deal with the problem of replacing components too late, resulting in deferred maintenance and related costs that make the project much more expensive than if it was done on

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How Do Inflation and Interest Affect Reserve Contributions?

Interest on your reserve accounts are fees in terms of a percentage the bank pays you to hold your money. Interest earned on Reserve accounts can provide extra income to an association.   Read more…….

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Deferring Repairs? Choose Wisely!

A Boardmember recently asked what defines “too far” with respect to choosing to do a Reserve project on time or to defer the project. When does deferred repairs get to the point of the Board dangerously incurring liability and financial

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