RIVER ROAD
ESTATES

Normal and unforeseen expenses must be accounted for regardless of whether our POA plans for the expense.  There are several important reasons we put association monies into reserves:

 

1. Reserve funds meet legal, fiduciary, and professional requirements.

2. Reserve funds provide for major repairs and replacements that we know will be necessary at some point in time.

3. Reserve funds minimize the need for extra assessments of dues to homeowners or borrowing the funds.  For most homeowners, this is the most important reason.

4. Reserve funds enhance resale values.  Lenders and real estate agents are aware of the ramifications for new buyers if reserves are inadequate.  Many states require associations to disclose the amounts in their reserve funds to prospective buyers.

5. The American Institute of Certified Public Accounts requires community associations to disclose its reserve funds in its financial statements.  It's a general accepted practice for reserve funds to cover at least two (2) years of budgeted expenses.

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