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ReservesSep 30, 2012

While some people view this policy as heavy handed and the 10% threshold as arbitrary, it makes good fiscal sense. And it is usually cheaper to the shareholders in paying for capital repairs and improvements in the long run when compared to paying off loan interest.

Personally, I think the 10% amount is too low for full funding of capital repairs and replacements. I would suggest treating this requirement as a portion of what is needed with loans, assessments, selling more corporation stock (in the case of co-ops), tax credits, grants & special programs or other financing.

You may also wish to use a low risk investment fund or Certificate of Deposits to hold the funds until needed.

The last thing any condo or co-op needs in this economy is to have willing buyers who are unable to get mortgages as a result of the finances of the condo or co-op corporation.

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