The following is an excerpt from the book, “Financial Management of Condominium and Homeowners Associations, by the C.A.U. (Community Associations Institute), entitled, “Capital Reserves Policies”.
“The development of a sound capital reserve policy requires the Association's Board of Directors to be familiar in detail with the overwhelming importance of Reserves and the implications of not placing sufficient monies into the Reserves Fund for long term periodic major repair and replacement. To do nothing must inevitable the lead to a decline in everyone's home values.
“Arguments for maintaining adequate reserves are many. One reason not often discussed or mentioned would include the fact that if an Association waits until the year that a certain cost must be addressed before raising the necessary additional funds, then those who lived in the community in the preceding years, but moved out prior to the raising of the Special Assessment funds will have contributed to the wear and tear of the communities assets, without contributing to the regeneration and replacement of those assets.
