Funding Condominium Reserves by Percentage of Assessments

If you live in a Condominium community, you may need to find out if your association is setting aside sufficient reserve funds for future replacements and maintenance. In a short case study article, Gary Porter, a CPA and reserve specialist, recounts the experience of a small California condo community and tells why they had to change their method of setting aside reserves and plan for a special assessment.

“The fact is, using a flat percentage of assessments just doesn't work as a reserve funding model. FHA funding requirements notwithstanding, an association must project future expenditures to determine an appropriate funding level. No two associations are the same; therefore, no two funding plans are necessarily the same, and no flat percentage number will work for all associations.”

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