An Saving Account, to be used, should (or must in some country's) be approved by the Homeowners Association Council.

Creating an Saving Account is a good thing because:

  • All money not necessary to face the ordinary operations (day to day expenses) should be separated from Cash or Deposit Bank Account. This way its clear how much money the homeowners have applied on savings.
     
  • Protected the Savings from possible fraud. If there are special restrictions to withdraw money from this account, that makes it safer. Some country's laws force the existence of special Bank accounts for this purpose. Limitations can be that the account owner can only withdraw to pay maintenance of the building, having to present the bill to the Bank institution.

The amount that should be placed on this account should, or could, cover the following:

  • Maintenance of the infrastructures.
    Painting, elevators, solar panel replacement, ...
     
  • Safety margin to cover extraordinary expenses like door replacement.
    Take in attention that insurance covers most of unexpected expenses like those cause by disasters witch are the more problematic unexpected expenses.

 

Determine the value of the maintenance is not easy. You have to consider an large period, like 10 ot 20 years. The major expense is the repaint of the building, witch occur only every 10 or 15 years. So if you use the repaints period will be a good approach. To know the value of the repaint service ask for on or two proposals.

Next you have to see what more to consider. History of building maintenance can be a great help, if available.

Now that you calculated the amount, its necessary to divide the expense. First divide the amount by the total number of years. That gives the amount that should be transfered to the account each year. 

Second, include the amount on the Financial Plan for next Year.

Note:

Dividing the total amount of maintenance of 15 years and incorporate the result in each year Financial Plan is the best way to divide maintenance costs in a fair way. This way, if an owner sell is fraction, he had compensate the degradation of the infrastructures during the period he used. The new owner will pay for the degradation starting the year he bought the fraction.