Why Reserves are necessary in your association
For homeowners it can be hard to understand why the board is gathering money for projects that are not needed yet. Contributing to a reserve fund is highly important for the safety of both the homeowners and the board of directors.
- Avoid Rises in Annual Dues
Having money assigned in your association reserves fund also helps minimize the chance of significant rises in yearly dues because the projects have already been budgeted and funded for. - Avoid Special Assessments in your association
Special assessments occur when there is a shortage of funds, and big projects are necessary for the community. Many homeowners don’t understand or appreciate when special assessments take place. By assigning money to a reserves fund, these special assessments are less likely to occur. - Minimize getting lawsuits in your association
When special assessments or increased fees arise, homeowners are not usually excited to hear about the additional expenses. Some homeowners may decide to proceed with legal action and file a lawsuit against the association stating the board did not handle their financial responsibilities appropriately. For board members, assigning money to Assocation reserves will protect you from lawsuits due to you fulfilling your fiduciary duty and correctly managing the associations financials. - Maintain Property/Neighborhood Values
One of the reasons homeowners live in an association is due to the rules and guidelines that maintain the community. Assocation reserves help assure that necessary community maintenance projects like repairing the roads or replacing the roofs are always budgeted for. The care and Maintenace allow for homeowners to have more selling power if they ever choose to move due to the property and neighborhood maintaining their values.
We at PMI Birmingham Region service the Central Alabama area with all your association management needs. You can contact us at (205) 583-2500 or brady@pmibirminghamregion.com.
