Members of the Board of Directors of neighborhood associations have responsibility for managing the association’s finances and creating budgets that allow a community to preserve property values. A major part of this fiduciary responsibility is the board’s responsibility to budget for future repairs or unanticipated expenses. To accomplish this goal, an up-to-date reserve fund is critical to the financial management of a community.
Here are four great reasons to make sure your reserves are properly funded:
1. Fiscal responsibility.
Creating and maintaining an adequate reserve fund is part of a board’s fiduciary duty, but a well-funded reserve demonstrates good stewardship of the association’s money. A well funded reserve account gives homeowners peace of mind that the board is acting in their best interest and that their biggest and most valuable asset will be protected. In addition, it is an asset that will attract future buyers to your community and current homeowners will not live in fear of an unanticipated special assessment.
2. It keeps you prepared.
When an association has a well-funded reserve, it can pay for unexpected expenses, like damage from hurricanes, and other natural disasters. If an association experiences an unexpected event and doesn’t have sufficient funds set aside, they may have to issue a special assessment – which homeowners could see as a sign of financial mismanagement. Special assessments are something that can deter potential buyers and should be used sparingly.
3. It attracts buyers.
The appearance of a community translates directly into its property value. A well-funded reserve allows an association to pay for unexpected expenses and community asset replacements – thus improving resale values, keeping current homeowners happy and attracting new buyers.
4. Instills confidence
Neighbors appreciate full transparency and comfort knowing that their largest investment is protected. At Gulf South Property Management we practice full transparency in all that we do and we suggest that Board members do the same. When neighbors see and understand where their money is being spent they are much more amenable at annual meetings and, most importantly, supportive of board decisions.
If your association needs help getting your finances in order, give us a call today.