Top 10 Reserve


ssociations Make & How To Avoid Them


E 1


ach community association is unique in its membership, construction, and maintenance needs. Some communities are well funded


in their reserve account while others struggle to increase reserve contribution rates. Though each community is unique, there are a number of common reserve funding-related mistakes that communities make (in no particular order).


Ignoring Reserve Study Results


While many associations perform regular reserve study updates, many opt not to follow the recommendations


within the report. This is often due to a number of reasons including, but not limited to, lack of understanding the study, because the study recommends a large increase in reserve contributions and/or a special assessment, or pressure from owners to keep assessments low. Risks of ignoring the study include an increased risk of a special assessment, unfairly burdening future owners with today’s costs, deferred maintenance, higher project costs, and the potential for decreased property values. Therefore, it is important that  reserve funding plan that will work for the association.


22 Community Associations Journal | April 2022 2


A Mistakes — By Karen McDonald, CMCA, AMS, PCAM, RS of Accurate Reserve Professionals — Lack of Return on Investments


It isn’t uncommon for associations to put reserve funds into a savings account and then focus their


 the return on reserve funds through proactive money  Deposits (CD’s) which often will yield a higher interest rate. Because these investment vehicles limit access to the funds  banking partner will be able to assist in creating a laddering plan for CD’s to ensure that reserve funds are available at the proper times based on the projects listed in your reserve study. As always, be mindful of FDIC limits and do not invest reserve funds where the principal balance can be lost (such as in stocks).


It is common to put reserve funds into a savings account.


3 Failure to Call the Experts


 repairs are made to quickly eliminate the problem but consideration is not given to whether the repairs are


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