How Does a Reserve Plan Benefit Condominium Owners in Portland?

Posted on: May 18, 2007

With the low maintenance lifestyle, and generally lower cost, the popularity of condominiums over the last several years has been great! Being an owner myself, I enjoy the peace of mind that comes with paying my part of the Home Owners Association dues. I know my complex will remain clean, well maintained, and up to date. But, what if there was something major could not be funded by our HOA reserve fund? Well, the condo owners could see a special assessment to cover this expense! Not what you want to find when you come home.

In the past, this has happened because of poor planning and not maintaining a proper reserve fund. In the last couple of years, Community Associations have not only realized the importance of reserve planning and funding, but there are some new guidelines or duties I think are very good news for all present and future owners.

Community Association Boards are now required to conduct a reserve study, which calculates the amount of money necessary to repair or replace common elements when they reach the end of their useful life; this is called the Reserve Plan. Next, the Community Association Board establishes a reserve account for replacing common elements; these will normally require replacement in more than three or less than thirty years. Each year the replacement cost will be updated and compared; adjustments can be made either for a deficiency or a surplus. I know my monthly HOA dues have risen over the last couple years, but I feel this reserve planning and funding will give every owner who is involved with a Community Association better control and peace of mind.

Article written by Brett Day, Broker portlandrealestate.com