Re: HOA Dues Increase & Reserves
From: Diana Carroll (
Date: Sat, 6 Jul 2019 05:53:57 -0700 (PDT)
Buyers may not be savvy about reserves but lenders are.  Every time someone
buys or refinances, I have to provide a copy of our budget and balances of
our reserve funds, and say whether we’ve had any special assessments or
have any planned.

Some home inspectors (not most but some) are also aware of the issue and
will warn potential buyers if something is off.

On Sat, Jul 6, 2019 at 5:29 AM R Philip Dowds via Cohousing-L <
cohousing-l [at]> wrote:

> Sorry. but I’m not sure I’m persuaded that the typical homebuyer is
> especially interested in, or capable of analyzing, reserve funding.  Nor do
> I have reason to suspect that the average buyer of a cohousing unit is more
> sophisticated than the average buyer of an ordinary condo, or a single
> family home.  I do believe that if a property looks “shabby” (e.g., an
> obviously superannuated roof, or peeling paint job), it will command less
> resale value than if it looks spiffy and “well maintained”.  Purchasers of
> “shabby" properties will probably exercise greater financial scrutiny or
> caution than they would for a property that “looks good”.
> None of this, however, is directly related to saving ahead for major
> capital replacement projects.  Consider the ever-popular single family home
> and its owner.  A minority of American households has the financial
> flexibility AND the financial management skills to save ahead for the new
> roof and the next paint job.  But to pay for these big hits, many others
> must rely on either (a) re-financing the first mortgage, or (b)
> supplemental borrowing (e.g., the home equity loan, which is the modern
> euphemism for the previously much-stigmatized “second mortgage”).  Absent
> these versions of the “special assessment”, households often learn to live
> with the disappointments of deferred maintenance.  Foreclosures and forced
> sales sometimes fall upon households that simply never factored in the
> correct costs of operations and maintenance over time.  (Good lenders will
> set limits that help keep novice borrowers from getting in over their heads
> …)
> So what’s different for cohousing?  Organized as condos or HOAs, the
> avenues of special assessment and bank borrowing are often blockaded by
> internal politics and/or reluctant  lenders,  But saving ahead can be
> unpopular because it implies, to some, that the occupants of today are
> subsidizing the occupants of tomorrow.  In general, despite its incredible
> technical aptitudes, the human species is not so hot at making, and
> adhering to, plans for fifty years ahead.  (Which is why our civil
> infrastructure crumbles away.)
> None of which is to say, Don’t bother with a “reserve plan”.  Just
> recognize that the classical “fully funded” reserve plan — one that
> anticipates total replacement of a physically and functionally obsolete
> structure after five decades plus or minus — is stunningly costly.  Partial
> plans focussing on the next ten or twenty years, and offering a funding
> strategy that covers just the “major” or critical systems, can look and
> feel more realistic. even to the solvent and future-oriented.
> Thanks,
> Philip Dowds
> Cornerstone Village Cohousing
> Cambridge, MA
> mobile: 617.460.4549
> email:   rpdowds [at]
> > On Jul 5, 2019, at 4:05 PM, Sharon Villines via Cohousing-L <
> cohousing-l [at]> wrote:
> >
> > This is a link to the California Reserve Study Guide which is very well
> written and explains the what and why of reserve studies.
> >
> >
> >
> > I have not a clue why they don’t recommend a minimum funding. I suspect
> because they think then everyone would do the minimum and no more. But if
> you have a study, at least you know how far behind you are.
> >
> > The Association Reserves website that does studies in many states has a
> variety of publications plus a DYI reserve study program. They also have a
> sample study online.
> >
> >
> >
> > They assess the risk of having a special assessment at 51% there is no
> reserve fund. If 40% funded, 10% risk, and 80% funded, -1% risk. 70-100%
> funded is strong.
> >
> > The study establishes a base for the projected costs of replacing
> everything you own for the next 30-50 years, so this means 70-100% of the
> total projected cost. If you are not adequately funded, that will affect
> property values as well. People moving in will have to make up the deficit
> so the condo is worth less.
> >
> > Association Reserves also notes that when funds go below 40%, regular
> maintenance tends to be seriously deferred, costing more later.
> >
> > Sharon
> > ----
> > Sharon Villines
> > Takoma Village Cohousing, Washington DC
> >
> >
> >
> >
> >
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> >
> >
> >
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