Virginia Code 55.1-1826: Annual budget; reserve study; reserves for capital components.
A. Prior to the commencement of the fiscal year, the board of directors shall make available to lot owners either (i) the annual budget of the association or (ii) a summary of such annual budget.
Terms Used In Virginia Code 55.1-1826
- Association: means the property owners' association. See Virginia Code 55.1-1800
- Board of directors: means the executive body of a property owners' association or a committee that is exercising the power of the executive body by resolution or bylaw. See Virginia Code 55.1-1800
- Capital components: means those items, whether or not a part of the common area, for which the association has the obligation for repair, replacement, or restoration and for which the board of directors determines funding is necessary. See Virginia Code 55.1-1800
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Lot: means (i) any plot or parcel of land designated for separate ownership or occupancy shown on a recorded subdivision plat for a development or the boundaries of which are described in the declaration or in a recorded instrument referred to or expressly contemplated by the declaration, other than a common area, and (ii) a unit in a condominium association or a unit in a real estate cooperative if the condominium or cooperative is a part of a development. See Virginia Code 55.1-1800
- Reserve study: means a capital budget planning tool used to determine the physical status and estimated repair or replacement cost of capital components and an analysis of association funding capacity to maintain, repair, and replace capital components. See Virginia Code 55.1-1800
B. The board of directors shall:
1. Conduct at least once every five years a study to determine the necessity and amount of reserves required to repair, replace, and restore the capital components as defined in § 55.1-1800;
2. Review the results of that study at least annually to determine if reserves are sufficient; and
3. Make any adjustments to the annual budget and annual assessment the board of directors deems necessary to maintain reserves, as appropriate.
C. To the extent that the reserve study conducted in accordance with this section indicates a need to budget for reserves, the association budget shall include:
1. The current estimated replacement cost, estimated remaining life, and estimated useful life of the capital components as defined in § 55.1-1800;
2. As of the beginning of the fiscal year for which the budget is prepared, the current amount of accumulated cash reserves set aside to repair, replace, or restore capital components and the amount of the expected contribution to the reserve fund for that year;
3. A statement describing the procedures used for estimation and accumulation of cash reserves pursuant to this section; and
4. A statement of the amount of reserves recommended in the study and the amount of current cash for replacement reserves.
D. The board of directors shall have the discretion to meet repair and replacement requirements through replacement reserves, additional assessments, or borrowed funds.
2002, c. 459, § 55-514.1; 2019, cc. 33, 44, 712; 2024, c. 324.