What is the minimum recommended funding level for reserves in a community association?

The minimum recommended funding level for reserves in a community association is set at 100%. This standard reflects a best practice in financial management, ensuring that the association has sufficient funds to cover future repair and replacement obligations for common elements.

Funding reserves at 100% means that the association is fully prepared to meet anticipated capital expenditures, such as roof replacements, road repairs, or major maintenance projects. This level of funding helps to avoid special assessments or financial shortfalls when large projects arise and ensures that the community can maintain property values and the quality of life for residents.

While lower percentages like 75% or 50% may suggest some level of reserve funding, they leave the association vulnerable to unplanned expenses and can lead to financial strain on the community. By adhering to the recommendation of fully funding reserves, community associations can foster stability and trust among homeowners, knowing that the community’s needs will be met without unexpected financial burdens.