The Communicator - Volume 1, Issue 1 - (Page 11)

and current Percent Funded be disclosed to the homeowners in the annual budget package (1365.a.2.A, B, C). In addition, Civil Code requires this annual information be based on a “diligent visual inspection” at least every third year (a With-Site-Visit Reserve Study). See 1365.5.e. This means that many associations comfortably perform a With-Site-Visit Reserve Study every third year, with No-Site-Visit Reserve Studies in between. There are no requirements regarding who prepares the Reserve Study (volunteer or professional), and I’m not here to sell Reserve Studies. While there are plenty of qualified professionals willing to help, well-intentioned volunteers will find an assortment of software products, workbook kits and Web applications that are very helpful. National Reserve Study Standards, the “rules” all should follow, are posted free online. But keep in mind, like most things, it is best to begin with the end in mind. If the Board wouldn’t seriously take the advice or rely on the results of a Reserve Study prepared by a homeowner volunteer, manager or uncredentialed professional, why waste your time? The Reserve Study needs to be right. It provides a basis for decisions made by the Board (Do we have enough money for this project or do we wait until next year? How much do our contributions need to be?), homeowners (How much at risk are we for a special assessment in this place? Are our Reserves adequate?), and prospective homeowners (Is this place sound financially, or should I negotiate a discount because I’m buying a berth on a sinking ship?). What difference does the annual 1365.2.5 disclosure make? Not much, really. This form is the legislature’s attempt to minimize confusion and surprise about the financial status of an association. This form means that on one page, each year a homeowner or prospective homeowner can see current information about the total assessment rate, Reserve contribution rate, Reserve Fund strength, Reserve Fund trends for at least the next five years, and get a straight answer to the yes/no question if the current Reserve contribution rate is projected to avoid a special assessment. This is valuable information. A responsibly operating non-profit, depended on to care for millions of dollars of real estate owned by other people, should regularly compile and report this information! All the form does is assemble information that is supposed to already exist, all in one place on one page. To be compliant, every year the association needs to update and publish its Reserve Component List, recalculate its Percent Funded, and test its budgeted Reserve contribution rate against projected expenses to see if it provides “sufficient” funds to avoid a special assessment. While in some areas of our lives we have learned to tolerate inaccuracy (weight on a driver’s license, a politician’s promise, etc.), Reserves are an important real estate disclosure. Expect current information, each year. ■ R o b e r t M . No rd l un d i s P re s i d e nt of Association R eser ves, Inc., www. Reser veStudy.com. He can be reached at (800) 733-1365, x-111 or rnordlund@ reservestudy.com. SPECIALIZED BANKING SERVICES FOR COMMUNITY ASSOCIATIONS AND MANAGEMENT PROFESSIONALS Association Bank Services offers: • Operating and Reserve Checking • Premium Interest Rates • No Monthly Service Charges • CD Placement Services (CDARS) (FDIC Insured Investment to more than 50 million) • Automated Lockbox Services • Automatic Assessment Payments • Association Loans • Business On-Line Banking • Cash Management Services • Remote Deposit • Simpliﬁed Association Signature Cards • Exceptional Service • Experienced Association Bankers Greater Bay Area Michael Kennedy or Katherine Young: 800-200-0013 San Francisco/Marin Monterey/Santa Cruz Karl Lofthouse: 415-273-2011 South Bay/Peninsula Geri Kennedy: 866-493-8022 Contra Costa/Central Valley/Napa/Solano Brian Mavity: 866-846-5476 Sacramento/Northern California Betina Schessow: 800-200-0013 CUSTOMER SERVICE All Locations: 800-200-0013 AssociationBankServices@fbol.com FirstBankHOA.com 350788_Firstbank.indd 1 The Communicator • 11 PM 11/21/07 1:31:51 http://www.ReserveStudy.com http://www.ReserveStudy.com

Table of Contents Feed for the Digital Edition of The Communicator - Volume 1, Issue 1

The Communicator - Volume 1, Issue 1 Contents President’s Message Capitol Recap Complying with California’s Reserve Study and Disclosure Laws The Devil Is in the Details Ask the Experts – Deferred Maintenance HOA Banking, Then and Now 2008 Events & Education Calendar Welcome to CAI BayCen Index to Advertisers

The Communicator - Volume 1, Issue 1

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