What sort of financial problems can homeowner associations encounter with inadequate reserve funds?
Without adequate reserves, associations rely on special assessments.
Since special assessments are unpopular (as they require often considerable unexpected expenses for homeowners), the tendency is to postpone major repairs.
This deferral can accelerate the deterioration process, detract from street appeal and erode property resale values. A reserve funding plan with regular monthly contributions from each owner is both fair and insures that major maintenance is done when it's needed.
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