My 111 unit co-op is in upper Manhattan. We save up over 12 months and pay off the Real Estate Taxes all at one time in July. In August, we start savings up for the following July’s annual real estate taxes. We got our bank to drop the escrow requirement for the mortgage (NCB) and they allow us to do this internally. There are three benefits: the co-op receives interest each month as we save up; we get the discount on the 2nd, 3rd and 4th quarters of early paid tax (the 1st quarter is considered paid as on-time™ and not eligible for the discount); and we have created a working capital reserve in case of emergency. We estimate that we either save or earn about $4,100 per year.

There is an additional benefit. This assists in creating a Board culture of saving up ahead of time for expenses and projects (fiscal discipline). For example, we are completing a $500k roof replacement project without assessment or loan as we already had funds on hand.

Finally, we also self-escrow the annual insurance charges. This allows us to pay off the annual worker's compensation and building insurance policies fully when due to avoid paying the insurance premium finance fees. We used to self-escrow for the annual water/sewer bill (frontage) but since we switched to quarterly billing (meter), we save up for the quarterly bill.”

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