Must the association have a separate reserve account for the money for each item, such as the roof, elevators, or paving?
The reserves law does not require that the association establish separate accounts for each item. The association must have at least one reserve account at a financial institution. Nevertheless, the association’s records for that account must show separate funds (or entries) for specific items which will cost more than $10,000 to repair, replace, or maintain. This will allow the association to keep track of which money in the account is for which item. Reserves for items which will cost less than $10,000 can be lumped together in one fund or entry on the association records. The administrative rules establish a minimum expenditure limit for reserves items – either a dollar amount or a percentage of the association’s overall budget – so that an association will not have to establish a reserve for things like mops and buckets. The reserves law also allows a board to use reserves established for one purpose for another purpose. The administrative rules require the board to notify the owners that the change in use is being made.