Policy 01 - Reserve Funding PDF Print E-mail
Written by Board of Directors   
Thursday, 15 November 2007 15:20

The Board of Directors has adopted and adheres to a policy of fully funding the Common Area Reserve Liability of the Association, in order to minimize the possibility of future special assessments and to eliminate speculation with Reserve Funds.

In fully funding the Reserve Fund the following rules will be followed:

  • All Reserve Funds will be maintained in fully insured accounts. Accounts must be maintained in adherence with all regulations, restrictions, and balance requirements to guarantee that the full balance of the account is insured.
  • All Reserve Funds will be maintained in fully liquid assets, CD’s, or instruments of the U.S. Treasury. If deposited in non-liquid assets, the maturity dates must be laddered at intervals of no more than (6) six months and the term of any asset or instrument will be no more than three (3) years.
  • All Reserve Funds will be maintained in accounts that do not have significant penalties for early withdrawal, or if placed in accounts with penalties, the funds may not be withdrawn at a loss of principal.
  • Reserve Funds will not be invested in any form of equity.
  • A Reserve Study will be completed in compliance with Civil Code Law.

It is assumed that the Reserve Fund will generate proceeds in the form of interest or dividends. The income generated from these proceeds will be retained in the Reserve Fund. All proceeds earned in reserve accounts become part of the Reserve Account, offset by any account management expenses or tax liability. Any transfer of Reserve Account funds and the purpose for which they were transferred will be noted in the minutes of the association.

Effective: 01-August-1990

Amended: 17-January-2002

Amended for clarification: 16-April-2002

Amended: October 2006

 

 

Last Updated on Sunday, 18 November 2007 09:25