By Dale Gifford, PRA, RS, PCAM, AMS, CMCA
Regional Project Manager, Complex Solutions, LTD – Silver Sponsor 2020
You have your association’s reserve analysis in hand, you have created a reserve fund line item
in your financials, you have opened a reserve fund bank account, and you have made your first
deposit of reserve funds into your reserve fund bank account. You have reserve expenses and
you want to use those reserve funds, so what are the guidelines you need to follow when
spending the money in your reserve fund?
(9) (a) Unless a majority of the members of the association of unit owners vote to approve the
use of reserve fund money for that purpose, a board/management committee may not
use money in a reserve fund:
- for daily maintenance expenses, or
- for any purpose other than the purpose for which the reserve fund was established.
(b) A board/management committee shall maintain a reserve fund separate from other
association funds/funds of the association of unit owners.
(c) This Subsection (9) may not be construed to limit a board/management committee from
prudently investing money in a reserve fund, subject to any investment constraints
imposed by the governing documents/declaration.
What do these sections of code tell us?
First, if you want to use reserve funds for anything other than reserve expenses you need to
have a vote of the members. A majority of the members must agree on the use of those funds.
Second, you need to have a reserve fund that is separate from other association funds. My
interpretation of this sentence is to have an actual reserve bank account(s) and not just a line
item in your financials.
Third, an association can invest reserve funds but it must be done prudently and it must follow
any constraints listed in the governing documents.