Points of Practice
The Ohio Condominium
Reserve Contribution Conundrum BY Robin Strohm Every condominium association in Ohio has a legal requirement to contribute a portion of the association’s annual budget to reserves in order to fund the maintenance, repair or replacement of the condominium’s capital items consisting of the common elements. These capital items normally include the roadways, structural and exterior elements of the buildings, recreational amenities and other physical assets of the condominium. The Ohio Condominium Act (Ohio Revised Code 5311) was updated in 2004 and includes language requiring condominium associations to make an annual reserve contribution. Board members for condominium associations have since had to navigate vague and confusing language concerning the annual reserve requirement. O.R.C. 5311.081(A) states, “Unless otherwise provided in the declaration or bylaws, the unit owners association, through the board of directors, shall do both of the following: (1) Adopt and amend budgets for revenues, expenditures, and reserves in an amount adequate to repair and replace major capital items in the normal course of operations without the necessity of special assessments, provided that the amount set aside annually for reserves shall not be less than ten percent of the
budget for that year unless the reserve requirement is waived annually by the unit owners exercising not less than a majority of the voting power of the unit owners’ association; (2) Collect assessments for common expenses from unit owners.” This statutory provision applies where the declaration and bylaws do not provide otherwise for reserves. It attempts to fill a void when there is no guidance from the governing documents and provides for an arbitrary minimum contribution when funding reserves. Most declarations and bylaws provide little guidance as to what the amount of the reserve contribution should be each year. Normally general provisions in the governing documents refer to a portion of the association’s annual budget funding a working capital reserve for normal operations or for maintaining reserves for over a one year period to fund major capital expenditures.
30 | Columbus Bar L aw yers Quarterly Spring 2020
