Check with your Reserve Study provider, as there is some "gray area" for the reasons you mention. See more here: www.reservestudy.com/resources/blog/is-it-a-reserve-component-or-a-capital-improvement/ and here: www.reservestudy.com/resources/article/capital-improvements-vs-reserve-expenses/ There is more info available (some from CAI), but the above should give you a good start.

@@reservestudies It's actually not gray at all. WA law defines "capital improvements" to reasonably limit super-priority liens. Expenses for repair and maintenance are relatively easy to sort out when it comes to reserve funds, BUT when it comes to replacing a component, and an association has a *choice* about the materials they use, a like-for-like replacement is obviously not a capital improvement. Choosing to install a larger garage door or replacing carpet tile with a marble floor that costs 1,000% more than a "substantially similar item" is most definitely a capital improvement. All day long.

@@condoconnection Understood and agreed, but it's the nuanced decisions where judgment is involved, that's when you should discuss the issue with your local Reserve Study professional.

@@reservestudies **Isn't it easier to follow the IRS text about what qualifies as a capital improvement or betterment?** www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations Leaving these decisions up to individual persons seems risky and unnecessary, doesn't it? That's why we have national reserve study standards, right? Except those standards fail to reasonably address this question. Why is that? When a condominium has $125,000 of carpet and decides to replace it with $1,000,000 of marble flooring, that's a capital improvement. If an owner in Washington state was assessed for that cost and couldn't pay it, that amount could not be included as part of a super-priority lien. BUT neither the reserve study standards, nor your website says this. Why is the industry unwilling to address this elephant in the room? The IRS requirements for capital improvements are robust and tax professionals are the experts in this case.

We want everyone to be set up for success and sometimes that means brining the pros in!

Neither I nor ChatGPT have been able to find any supporting evidence to prove this. If I could find it, it would make my job A LOT easier...

It's more about what is not stated in FL law. You will note there is no requirement for "Full Funding" as is so commonly reported. All that has changed is the elimination of homeowner ability to vote to waive Reserve funding (for SIRS components), which means they can take an aggressive/conservative approach, or a more gradual approach.

Take good care of your property (maintenance), fund Reserves, perform Reserve projects in a timely manner, minimize known hazards, and tell your insurance agent about it!

Not propaganda. No doubt there are plenty of dysfunctional boards and associations. But there are plenty of associations doing well, and we're here to encourage and equip more boards to lead their associations well.

If it is a common area maintenance responsibility, yes.

Consider a new insurance product - special assessment insurance. See www.feesible.com/

see www.feesible.com

The calculation is done for the current items/projects on the component list. So to your question, "just the first seal project". No one is being asked to provide for, or be financially prepared for, future cycles. If you keep up with current cycles, the future cycles take care of themselves.

Reserve studies are not locked at 30 year projections (at least we don't). For us, it is comprised of items that are 3-50 years lifespan. We do our sealing every 8-9 years, so our reserve shows us collecting for 8 or 9 years and then replacing it. We do however stay in contact with our vendor and update the cost every year or every 2 years, to make sure we are staying current on costs for this item as well as other items, beyond just adding straight % increase. The inflation this last couple of years really crept up on us, especially big ticket item like roof replacement. Our complex (single story 10-plex and single story 6-plex) is right at 25 years old, we started having a couple of leaks around roof vents a couple of years ago, and got estimates for roof replacement. The last 20years + of board management was a bit complacent (their philosophy was there social security wasn't increasing so dues didn't need to either, and they figured we would never truly use all the money in our accounts, and was using a $100,000 figure to replace both roofs. While fixing the leaks we started getting quotes. We got quotes of $75k for the 6-plex and $115k for the 10-plex.

Remember - your Reserve Study professional should have a national designation (RS or PRA), and they are hired by the association to provide independent budget guidance to the board. Nothing association-owned is ever sold. Individual homeowners have nothing to do with Reserve Study provider selection, or Reserve Study creation.

My concern is when the management company is the problem. National designation is just a piece of paper. Not a reflection on you or your company.

Every board should be reviewing the standard four financial reports every month, minimizing chance for fraud or theft. Don't let the fox be the only one watching the chicken coop!

@@reservestudies I agree.

Do you know the legit reason why HOAs exist in the first place? It's similar to why Unions exist: to protect the rights and safety of the individual involved.

HOAs are a Real Estate reality. Buck and his board are doing a great job to care for the association, its owners, and our environment in the process!

@@reservestudies I've found that it helps to remind people why the HOA exists, the purpose being that it is there to bring the entire neighborhood up to building code, and ensure the safety of the residents; a lot of HOAs tend to additionally try to increase property value, which technically extends beyond the spirit of why they were created; as their primary objective is to prevent things such as damage from Strong Winds (Roofing) spreading damage to someone else's home, preventing residents from catching heatstroke (HVAC), protecting against landslides & wildfires (lawn care), protecting against Freezing/Bursting Pipes (Insulation), etc.

Remember that the board is legally responsible to protect the physical and financial assets of the association. In doing so, the nice side effect is that they end up caring for the physical and financial best interests of the homeowners. I am of the opinion a board's primary duties are not just to "prevent bad things from happening".

@@reservestudies The difference between the two is that one allows the individual to maintain self-governance over what they ultimately do with their property; this primarily affects farmers and landscaping, but can also affect how lively a place seems; whereas merely looking out for everyone's safety, which was the original purpose of the first HOA, will not infringe upon a Homeowner's property rights beyond ensuring everyone is using a standardized building code to mitigate damage during disasters. Everything from Earthquakes, to Fire Storms, to Tornadoes, to Landslides, to Snap-Freezes, to Floods; this is what the HOA was constructed to protect against; resulting in reduced insurance costs, fewer insurance claims, lower crime rates, tight-knit neighborhoods, higher property values, friendlier neighbors, increased inclusivity, and a deeper understanding of one's community.

Please seek legal counsel on this. Our understanding is that the Fair Debt Collection Act only applies to third party individuals/companies working on behalf of the association. We can also report that many boards offer payment plans.

Dear WinterGardens-dr7hb, Thank you for your important question. Firstly, I apologize for not responding sooner; I did not have the opportunity to view the video on KZbin. Here is the information you requested: From a community-level perspective, the association, as a first-party creditor, is not required to comply with the Fair Debt Collection Practices Act (FDCPA). However, it is advisable to adhere to its guidelines where possible. Payment plans offered directly by the association to its members fall outside the scope of the FDCPA. Once first-party notifications and payment plan offers have been exhausted, and it becomes necessary to engage a licensed entity for collection, FDCPA compliance is required. This requirement does not apply if a lien and trustee company is conducting a non-judicial foreclosure, as per the ruling in Obdusky v. McCarthy. Holding: A business engaged in no more than nonjudicial foreclosure proceedings is not a “debt collector” under the Fair Debt Collection Practices Act, except for the limited purpose of enforcing security interests under 15 U. S. C. §1692f(6). Judgment: Affirmed, 9-0, in an opinion by Justice Breyer on March 20, 2019. Justice Sotomayor filed a concurring opinion. Please let me know if you have any further questions, or if you wish to have a demo of our service please contact me at [email protected]

Again, transparency and communication are hallmarks of a well-functioning board. Keep the homeowners informed, with nothing to hide. We're going to "sing that song" on the podcast over and over again!

I Agree. And the management company threatens to sue you. Adding insult to injury, because they are using the HOA money.

Transparency and communication are hallmarks of a well-functioning board. Keep the owners informed, with nothing to hide. We're going to "sing that song" over and over again!

If the Management is accused of misappropriation of funds by the owners, the board had not been a well-functioning board. The video mocks the owners and threatens them, the victims of a possible crime, with counter-suit and libel. The Management clearly was not transparent, nor proactively communicating with the worried owners. Not being aware of the owners' concern and not nipping it in the bud allowed it to escalate. Owners did not wake up one day and decide to sue. It was out done of frustration with the insufficient response from the Management. The HOA Board works for the Owners, the Management Company works for the HOA board.

Kindness is everything