$390,000 in the operational fund at the end of the year, but Maintenance Fee increased by 2 %
Our Condominium had $390,000 at the end of the financial year, but the board did not want to use this money for next year's maintenance, keeping them as a small reserve for unpredictable circumstances and preferring to collect maintenance fees from owners that would cover all condominium annual expenses.
Is that reasonable amount to keep for unpredictable cases? Can owners do something about it?
Thank you!
As an experienced businessman, I must say, It is absolutely unreasonable to keep such a huge amount for unpredictable circumstances. It is not justified because:
1. It is understandable to keep ~ 1 % (or about $20,000) of a condo budget for unpredictable expenses but $390,000 - is not needed because such huge amount might be needed just for replacements and repairs which are already covering by a reserve fund
2. If something unpredictable happened there is an insurance for such cases
3. There is a reserve fund that might be used for such cases at least until the insurance company repay the amount needed
And finally, if the Board decided to keep this amount as a "small reserve" for unpredictable situation they must decrease the amount of contribution to a reserve fund for this period (keeping this amount of money in the operational fund) but which supposed to be moved in the in a reserve fund in the future if it did not use. There is no legal-based for such a case, everything depends on the Board judgment. The Board and property managers prefer to have as much money as possible in the case if something happens. But it is not savvy-wise financial management because THE MORE MONEY is IN THE "BAG" THE LESS NEEDS TO JUSTIFY ANY FUTURE EXPENSES AND SUCH MONEY MIGHT BE SPENT EASILY FOR ANY NEEDS/AND NO NEEDS.
It would be better to discuss such cases with other owners (the easiest way to discuss it here, using the Owners' dashboard) and request the board to use this ending balance for the next year (not increasing maintenance fees).
