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August 21, 2009
Reasonable Reserve Fund
Is there a back of the envelope formula for figuring out what an appropriate reserve fund is for a co-op building? I know all buildings are different but maybe as a function of # of units or multiple of annual maintenance or expenses?
Comments
In my old coop, the board kept an emergency reserve fund of three months' maintenance.
Posted by: zeebee_in_bklyn at August 22, 2009 9:10 AM
Yes there is, and your lawyer should know what it is.
Posted by: mopar at August 23, 2009 12:50 AM
Reserve funds are not typically to cover maintenance so the association is loose at best. What are the expected capital requirements (differs by building) and timing? Boilers, windows, plumbing, roof, facade -- that is what the reserve should be for. You can pay an engineer to provide that if you have no idea based on prior experience -- or do some research yourself. Lawyers are useless for it.
Posted by: BH76 at August 24, 2009 8:37 AM
I lived in a coop with 300 + units. We had a reserve fund of over $1 million. There is some kind of standard multiple for the reserve fund but I don't know what it is. Also there is a standard multiple (ballpark) for maintenance (not including taxes, of course). Your attorney should be able to advise on both these. That is why s/he looks over the coop's finances.
In addition, you should ask about roof, boiler, etc., and when they were last replaced, if the coop has plans to do any other serious upgrades, and whether they are planning on any assessments or there is any deferred maintenance.
Posted by: mopar at August 24, 2009 10:50 PM
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