Sample Reserve Investment Policy

Provided as a courtesy by Association Reserves.
Please customize as appropriate and review with appropriate legal and accounting professional counsel

Is 10% of Budget to Reserves a Law?

Click here to see a list of laws we compiled from across the country with respect to Reserves. While 30 states have some legal requirements, the “10% of budget to Reserves” is not a law. But it’s something you want to do. Due to the financial meltdown that began approx 2008, more lenders are particular with respect to making loans. Fannie Mae, Freddie Mac, and FHA have enacted a requirement that Reserve contributions comprise at least 10% of total budgeted assessment income (Note: this only applies to condominiums, it does not apply to planned development or home-owner associations).

Story of the Month The Budget Jam that became a Lawsuit

It all started out so innocently, with a phone call asking if we knew about reserves at condominium Associations. It was the attorney of a Developer. They were being sued by the Association for an outrageous sum, for failure to set aside appropriate Reserves.

The Legal Side of Reserve Studies: Part 1

The Primary duty of the Board is to protect and maintain the association’s common areas. Some common area repair/replacement projects are so expensive that they take years of preparation.