Some board members misinterpret the Ohio Condominium Act and the Planned Communty Act to mean that condominium associations only have to put away 10% of the budget toward reserves. Not only does this misinterpretation expose associations to potential litigation, the 10% figure likely does nothing to achieve the primary goal of the law: to cause owners to be informed as to future repair and replacement costs that can lead to special assessments. Both condominium and homeowners associations must project future expenditures to determine an appropriate funding level for the reserves. Blindly putting 10% of the budget into reserves is arbitrary and will likely lead to special assessments.
To address this issue, HOAPulse.com recently published an article entitled Funding Condominium Reserves by Percentage of Assessments. To view the article, please visit the following link:
As always should an association board member or professional property manager have specific questions regarding reserve funding, please contact one of the Kaman & Cusimano attorneys for specific counsel and guidance.