Your Building's Reserve Fund Time to reexamine your current investment approach?

As the future of the economy remains questionable, the matter of your building’s finances begs the question: Should your co-op or condo board reexamine how you invest your reserve fund? No doubt, this has already crossed your mind, but even if it hasn’t, perhaps now is a good time to reassess your reserve fund investment strategies.

A co-op or condo’s reserve fund should include adequate provisions for maintenance, major capital improvements, unexpected repairs, or replacement of building systems, should your regular operating budget fail to cover these expenses. This specific amount kept in reserve may differ from building to building. If the fund is large enough, there may be no need for the complication and bother of increased maintenance fees, loans, and suchlike to meet unexpected expenses. Investigating different types of strategies and investing the money properly will ensure that your reserve fund will grow and meet the needs of your building.

The Basics

"The board has a fiduciary responsibility," says Carl Cesarano, a CPA and partner with Cesarano & Kahn PC in Queens, "and it’s up to them to investigate different avenues of investing." How and where your board invests the reserve fund is a decision that board members and your treasurer should make. Seeking the guidance of a financial advisor is a good idea if you’re unfamiliar with investing strategies, or if you seek to go beyond the traditional investment vehicles such as certificates of deposit (CDs) or government securities. Checking out all possible options before making a decision should give you a good grasp of your options.

To begin with, keep your reserve funds separate from your other accounts. This is not money you want intermingled with other assets. In addition, the board–and not the managing agent–should control the funds. Marc Taub, an accountant with Ellenbogen Rubenstein Eisdorfer & Co. LLP in Manahttan, advises requiring a dual signature in the event you need to access the money. This provides the board greater control over the reserve fund and also works as an anti-fraud policy. Taub also advises your board review your reserve fund at least annually, when your budget is determined. The treasurer should report the state of the reserve fund at the annual shareholders meeting.


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  • Can Co-Op Reserve funds be used to pay Court costs and Attorneys or Court appointed Receivers?
  • Our Board has decided not to "borrow" from reserve funds for major repairs but rather to build the reserves up so as to be able to replace the major items such as the roof, building concrete, seawall, parking lot paving, painting, etc. at the end of their projected useful life. The Board is now considering a special assessment to pay for needed repairs to some of the above items. Is this an appropriate way to manage reserve funds?
  • I've just been elected Treasurer and have no financial background. I found this article extremely beneficial and easy to understand "primer". Thank you.
  • can anyone tell me if you have a large capital reserve fund and are a stock holder and sell your property if you are entitled to any of the capital reserve you've been paying into for years??
  • As a owner I was sent a letter stating the Association was borrowing $300k from the reserve/replacement fund for needed work and the owners were assessed for 6 months to pay it back plus 5% interest, the Association never put the money back into the reserve/replacement that legal???