RESERVE FUNDING PLAN

Adopt Plan. The board must adopt a reserve funding plan to meet the association's obligation for the repair and replacement of all major components. The plan must include a schedule of the date and amount of any change in regular or special assessments that would be needed to sufficiently fund the reserves. Civil Code §1365.5(e)(5);

Disclosure Format. The disclosure summary must by in the format described in Civil Code §1365.2.5

Open Meeting. The reserve plan must be adopted in an open meeting. Civil Code §1365.5(e)(5)

Assessment Restrictions. Any assessment increase to fund the reserves must conform to the limitations found in Civil Code §1366(b). This means the board can, without membership approval, impose 20% annual increases in regular dues and 5% special assessments.

Distribute to Membership. Beginning January 1, 2009, boards must distribute their reserve funding plan to all members along with the association's annual operating budget, not less than 30 nor more than 90 days before the start of the association's fiscal year. Civil Code §1365(b)

Disclosures. Each year, the must also make a number of disclosures about the reserves.

For a list of companies that specialize in providing reserve studies for community associations, see our Service Directory.

Updated 6/14/2008