How does pooling method of reserve funding work?

Under the pooling method, the Board would be able to pay the $300,000 out of the $750,000 total reserve funds to complete the project in a timely fashion. The Board would then need to determine how to earn back the extra $50,000 that was used for the roofing project over future years.

How are pooled reserves used in condominiums?

A: Cash flow funding of condominium reserves, often referred to as the “pooling” method of reserve funding, is a concept that was introduced many years ago through an amendment to the state’s administrative rules regulating condominium finances. Under the traditional,…

What happens when you switch to pooled reserves?

Once the vote to switch to pooled reserves is successful, no further votes would be required in future years and the association could continue to operate under the pooling method.

Are there reserve requirements for a pooling Association?

The pooling method may expose the association to some variability in the annual assessment amounts due to the unpredictable nature of the replacement/deferred maintenance cycle of the components. However, with careful budgeting and spending, the association should most likely be able to maintain relatively level reserve requirements.

What do you need to know about pooled reserves?

Under pooled reserves, it is still necessary for the reserve schedule which accompanies the annual budget to set forth required reserve items (roofs, painting, paving, and other items with the replacement cost/deferred maintenance expense of more than $10,000.00).

Which is better component reserve account or pooling?

Thus, the pooling method provides significantly more flexibility than component reserve accounts and allows for projects to be completed in order of need at the time the need arises. Member approval is required to use the pooled funds to pay for any item not included within the reserve pool.

Can a homeowners association switch to pooled reserves?

Once the vote to switch to pooled reserves is successful, no further votes would be required in future years and the association could continue to operate under the pooling method. Q: My homeowners association is in a dispute with the landscaping company that was recently terminated for doing a bad job and for damaging common property.