Cohousing-L Mailing List: Re: Association Reserves questions

[Sharon Villines (sharon]

On May 18, 2006, at 11:05 AM, Mac Thomson wrote:

> We separately account for lots of different kinds of reserves and
> funds, but we invest all our money in a commingled fashion.  I think
> you'll be missing out on a lot of income earning potential if you
> invest your reserve funds in a savings account.

Please check your local laws. This is illegal in many (if not most) 
places.

The purpose of reserves is to provide funds to replacing those parts of 
the common elements that present residents are using but future 
residents will have to replace. No one wants to be the person who has 
to pay for the entire roof to be replaced. Those funds should be saved 
so when the roof does need to be replaced it is paid for by those who 
"used up" the old one.

The savings are not punishments by the state to stop people from living 
in condos. They are there to provide for the security of present and 
future residents. If you plan to live there forever, you want to be 
sure the guy next door who is a short term resident is paying his share 
now because he won't be there when you have to pay for the roof.

Without a solid replacement reserve fund, as a community ages, it 
becomes a financial liability for its members. And if you do not have 
your reserve funds in order, a smart lawyer will tell clients not to 
buy your homes when you have to sell.

Sharon
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Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org