New York's Cooperative and Condominium Community
Folks,
As always it depends on the corporation’s by-laws. Yes, most allow the collection of assessments for capital improvements and for capital reserves. Some by-laws mandate that a capital reserve fund be maintained. It is also good fiduciary practice to have a capital reserve fund as well as a regular reserve fund. Does the co-op have any “reserve” funds or does the corporation live hand to mouth?
Our 500 unit co-op typically has a capital reserve fund hovering near $1,000,000 (which fluctuates dramatically during the year as we have an AICPA mandated twenty-year capital asset evaluation program and plan of funding capital improvements each and every year, e.g.; elevators, generator, windows, roof, driveways, boilers, parking garage decks, recreation deck, swimming pool, tennis courts, fire detection system, computers, roof fans, etc.) and a working capital reserve fund near $500,000.
Yes, we assess each and every year, and even the assessment does not fluctuate. It increases slightly each year. It is collected during ten of twelve months each year to meet IRS regulations regarding separation of ordinary income and capital assessment income.
So my vote is that corporation gets to hold the funds if the by-laws mandate the collection and maintenance of the reserve fund.
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