A Reserve Study that has been prepared in accordance with National Reserve Study Standards will contain the information necessary to meet the first two of the three main requirements. The third “disclosure” requirement is met through the distribution of the Reserve Study (or more typically, just the Executive Summary) to the members.
Hawaii state law (Section 514A-83.6) requires associations to update their Reserve computations each year as part of their annual budget, and include a specific statement about whether the budgeted Reserve contributions were developed using a “Percent Funded” or “Cash Flow” funding plan.
Various individuals in California have asked if our company, or other California-based Reserve Study providers, are in the business of creating “Funding Plans” to help associations comply with the January 1, 2009 Reserve Study Funding Plan requirement
FHA loans (actually Federal Housing Administration-insured loans) have taken a great leap in popularity since conventional lenders began limited their lending. At the time of this writing, FHA-insured loans account for 30-50% of all new condominium mortgages.
Below are some big picture thoughts to consider with respect to how community associations function in our society and how owners and industry professionals can have a hand in achieving the key objectives as I have stated them in this infographic.
In the prior Practical Application article, we showed the annually required reserves disclosures to be a powerful and easy to use planning and communication tool on their own.
