Contributions to Reserve Fund

Contributions to the association reserve fund are funds derived from the current years income or dues only.  Money transfered into the reserves that came from closed accounts or mature CDs are not contributions and thus cannot be counted as such.  Money transfered from funds left over from previous years are not contributions either they are repayments of money not contributed or are just transfers into the fund.

Every person who holds title to a condo needs to be aware of this.  If your annual financials do not show contributions as an expense you will need to calculate it.  Take the reserve balance from the previous years balance sheet and subtract it from the most current balance sheet reserve balance.  The difference is the net contribution after reserve expenses.  Take that number and the most current balance sheet and subtract it from the amount of surplus shown under owners equity.  This will tell you how much the checking account has increased.  To verify this take the most current balance sheet and subtract the checking balance from the checking balance on the previous years balance sheet.  The two should match.  Here is an example.

                                            2009                      2008                      Difference
Checking balance of         47,761.14                22,308.08               30,111.77
Reserve Balance             144,834.16              107,107.19              33,068.28
2009 Surplus on Balance Sheet                                                     $63,180.03

The reason for the surplus to be so large is that the contributions on the income statement does not include contributions deriving from the 2009 dues collected.  Therefore, the surplus shown on the balance sheet includes both the contributions and the amount of dues that were not used to pay expenses. 

Because the $30,111.77 there is not any large sums of money owed the association from a suit or any accounts this far past due and only a compilation audit is completed which will not reveal any vendor over-payments or charges.  This money is unspent dues period. 

Arizona state law 33-1254 says that any surplus money left from the current year dues is to be refunded to the owners or credited to their accounts to offset dues.  This means anyone who owned a home in the community for any length of time in 2009 is owed a partial or full refund of the over paid dues. 
Condos are personal property and cannot legally be held for investment purposes.  Any surplus money not spent is a profit causing an investment to be created into the HOA.

This means that every person who held title to a home in Indian Bend Village Inc. a non-profit aka Suntree is owed $14.42 per month for part year owners or $173.05 for full year owners.  If this money is not refunded not only does it violate state law but it also violates the declaration. 

Surplus money cannot be used for whatever the board wants to spend it on.     Spending money on the common area other than the common area in front of the homes has no benefits.  The amount of money spent on major redesign projects will be so insignificant that it isn't worth mentioning.  If landscaping returns 15% then a 173.05 per owner project would could only get a return of 25.00.  Spending 173.05 to get 25.00 makes no financial sense at all!


Every owner of a condo in Ariozna should be aware how to determine the surplus dues and that it is legally required to be refunded.