What happens when an essential common element is unforeseeably damaged—resulting in significant repair or replacement costs—and there’s no money in the budget or insurance to cover the loss? Rather than get caught scrambling for cash when an unexpected contingency or major maintenance need arises, many communities maintain “reserve funds,” a sort of back-up savings slated for emergencies, long-term upkeep costs, and irregular expenditures. Although reserve accounts are often not mandatory, an ample reserve can play a big role in protecting a community’s long-term financial health.
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