Condo Association Management Blog

I'd like to speak to your question in broader terms. In my state - Washington State- the condo laws say that an association must be fully funded in their reserve money at 60%. This is the lowest common denominator for future financial planning. Do you have at least that? 
 
Then on a day to day basis, the associations I managed kept 2 months worth of operating cash in their checking account. The rest was put into savings. 
 
Do you have more than 10% of your assessments in arrears? This is an ill indicator. 
 
These are the first two things I would look at. Then begin analyzing with more determination.

Sherry, when you say "Washington State- the condo laws say that an association must be fully funded in their reserve money at 60%." What do you mean by that? Can you give some examples?  
 
Or let's say you need the buildings painted in two years, and the roofs replaced in five years, and the parking lot is to be replaced in ten years, and you have gotten projected estimated costs for all of them. Do you have separate reserve accounts (or accounting records) for each one and put in so much money each month into each of them as in: this is what we are supposed to have in each one by such and such a month/year, and this is actually what we have in each of these reserve accounts? 
 
In Minnesota in our docs, it says we have to have two months worth of operating expenses in a SEGREGATED account, so we have that in a separate CD that is not to be touched unless our cash flow is diminished. It earns a little bit of interest, of course, over the years. For paying our monthly expenses, that is in a checking account.

You've got a great example going. Let's say all those future expenses you've mentioned add up to $100,000. In Washington State a condo assoc. would have to have at a minimum $60,000 in a separate reserve account. Then the condo association would be in compliance with the law.

Great site. I like the way you explain everything without using complicated terms. 

Our condo, of 24 units, in NE Florida is 30 years old and now in need of over $120,000 of concrete, paint, and roof repair. We have $60K in reserves and some of the owners would like to use these reserves and assess for the balance. One board member is adamant that we cannot use these funds because no one will be able to mortgage any units in our building via FHA loans, due to the 60% requirement. Keep in mind that we fund our reserves monthly and have no delinquencies. What do you think; can we use our current reserves for the repairs to be done on our condo building?