D.M. from Hartford County, Connecticut writes:
Dear Mister Condo,
Our small common interest property ended the fiscal year with a surplus of funds. How should these funds be accounted for? Can we simply vote to deposit to our long-term capital account?
Mister Condo replies:
D.M., I am happy to hear that your association had surplus funds this year. So many are finding that inflation has depleted their Operating Funds and they are chasing shortfalls. State law and most governing documents dictate the return of unused funds to the owners. However, if the appropriate method for voting is held, these funds can be transferred to your Reserve Fund or even rolled over into next year’s operating budget. Typically, a majority or supermajority of unit owners need to vote in favor of such a funds transfer. If enough votes are not garnered, the funds should be returned to unit owners using the same formula that was used to collect the dues. All the best!