H.L. from New Haven County, Connecticut writes:
Dear Mister Condo,
Our PUD consists of 19 individual fee simple owners of 4 family rental apartments totaling 76 apartments. The Association is comprised of each owner owning 1/19 of the property the buildings stand on. The owners contribute each month to the maintenance of the buildings and have built up a reserve account that has not been assigned a reserve for any particular repairs or improvements in the past. What becomes of the unused money in the Association account when an owner sells his 1/19 share?
Mister Condo replies:
H.L., unless the governing documents state otherwise, all monies contributed to the Reserve Fund is the property of the Association. There is no “unused” money as Reserves are collected as common elements age and will be used for repair and replacement of these elements when the time comes. It is proper that unit owners contribute to the reserve Fund while they are in possession of the unit as the “wear and tear” of the common elements is happening when they are part of the association. It might be helpful for the association to use a proper Reserve Study to explain to owner where the Reserve Fund is eventually going to be used but, I can assure you, there is no “unused” money in the Reserve Fund. Also, a healthy Reserve Fund is as important as curb appeal when a unit owner sells as it shows the buyer that the association is fiscally well run. All the best!