Cohousing-L Mailing List: Re: Replacement reserves

[Elizabeth Stevenson (tamgoddess]

Right you are. David Mandel corrected me, but for some reason, didn't send
it to the list.

It was, however, extremely difficult to get financing for co-ops years ago,
for some reason. (Maybe because the limited equity version is what was
sought?) Is it easier now? I think the fact that you can control who comes
in is a huge plus. 

-- 
Liz Stevenson
Southside Park Cohousing
Sacramento, California

> From: Sharon Villines <sharon [at] sharonvillines.com>
> Reply-To: Developing cohousing - collaborative housing communities
> <cohousing-l [at] cohousing.org>
> Date: Sun, 11 Apr 2004 15:59:12 -0500
> To: "cohousing-l [at] cohousing.org" <cohousing-l [at] cohousing.org>
> Subject: Re: [C-L]_ Replacement reserves
> 
> On 4/9/04 10:14 AM, "Elizabeth Stevenson" <tamgoddess [at] comcast.net> wrote:
> 
>> Co-ops ARE groovier. The reason it's hard to get a bank to finance a co-op
>> is that they don't make a profit for the homeowner.
> 
> This is actually not true of all coops. They are more like condos today than
> most people think. You are still buying shares but, like the stock market,
> those shares can go up or down.
> 
> On 4/8/04 5:37 PM, "Harriet Lewis" <hlewis [at] sonic.net> wrote:
> 
>> Our cooperative, Santa Rosa
>> Creek Commons, has money in replacement reserves earmarked for
>> replacement of individual apartment appliances, carpet & vinyl
>> replacement, interior painting, etc.  In addition, of course, we have
>> money there for major expenditures related to aging buildings such as
>> asphalt repair and new roofs (20-30 years) . Does anyone else include
>> items for interior units in replacement reserves?  At this cooperative,
>> when a member leaves, the apartment ownership (share) reverts back to
>> the co-op so maybe that is why we feel the need to have money available
>> to replace aging appliances and floor coverings.
> 
> This is a unique situation. In this instance, it makes sense to save some to
> refurbish units so you can sell them for more but then again, you can always
> refurbish and add that cost to the sale of the shares.
> 
> I've been doing some research on reserves and there are two kinds of
> reserves -- one for emergencies and one for replacement of items that one
> can predict will need replacement. Reserves are kept for those items that
> are held in "common interest" meaning they are owned commonly. If one owns
> one's unit, as in a condo or most coops, one should be keeping ones own
> reserves or savings to replace one's own stove or bathtub or floors.
> 
> Emergency reserves are to cover unexpected expenses that you might not be
> insured for -- an owner doesn't pay condo fees, you budgeted badly for
> plumbing costs, etc. 10-25% of your operating budget.
> 
> Replacement Reserves are to replace any elements held in common -- the
> commonhouse and everything in it, the sidewalks, outdoor lighting, fences,
> fountains, roofs, etc. Anything that is a common element and in many
> instances, a limited common element.
> 
> The theory behind these reserves is that the costs of common-interest
> elements should be paid over the life of the item, not just by those who
> happen to be living there when it needs to be replaced. When people buy into
> a condo, their lawyer should look at the reserves and be sure they are not
> buying into a huge liability because the roof is about to go and there are
> no funds to pay for it. Good reserve funds make selling condos much easier
> because they are a testament to the sound financial judgment of the
> enterprise.
> 
> Sharon
> -- 
> Sharon Villines
> Takoma Village Cohousing, Washington DC
> http://www.takomavillage.org
> 
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