Delaware Code Title 25 Sec. 2244 – Repair and replacement reserve as a percentage of budget
The minimum percentage of the annual budget of a condominium that must be assigned to the repair and replacement reserve will depend on how many of the following components and systems are to be maintained, repaired and replaced by the council:
(1) One or more hallways;
(2) One or more stairwells;
(3) One or more management or administrative offices;
(4) One or more roofs;
(5) One or more windows;
(6) One or more exterior walls;
(7) One or more elevators;
(8) One or more HVAC systems;
(9) One or more swimming pools;
(10) One or more exercise facilities;
(11) One or more clubhouses;
(12) One or more parking garages (but not including surface parking lots);
(13) One or more masonry bridges used by motor vehicles;
(14) One or more bulkheads; and
(15) One or more docks.
Terms Used In Delaware Code Title 25 Sec. 2244
- Council: means a board of natural individuals of the number stated in the code of regulations all of whom shall be either residents of this State or unit owners, as defined in paragraph (21) of this section, but need not be both, and who shall manage the business operation and affairs of the property on behalf of the unit owners and in compliance with and subject to the provisions of this chapter. See Delaware Code Title 25 Sec. 2202
- Repair and replacement reserve: means a reserve fund maintained by the council solely for the repair and replacement of common elements, and for no other purpose (including operating budget shortfalls or other expenditures appropriate to a contingency reserve). See Delaware Code Title 25 Sec. 2202
- Reserve study: means an analysis, performed or updated within the last 5 years by 1 or more independent engineering, architectural or construction contractors, or other qualified persons, of the remaining useful life and the estimated cost to replace each separate system and component of the common elements, the purpose of which analysis is to inform the council and the unit owners of the amount which should be maintained from year to year in a fully funded repair and replacement reserve to minimize the need for special assessments. See Delaware Code Title 25 Sec. 2202
In the event that the council is responsible for the maintenance, repair and replacement of 4 or more of the above-described systems or components, the minimum percentage of the condominium’s annual budget that must be assigned to the repair and replacement reserve is 15%; if the responsibility extends to only 3 of the above-described systems and components, the minimum percentage is 10%; and if the responsibility extends to only 2 or fewer of the above-described systems and components, the minimum percentage is 5%. In the event that the condominium’s accountant certifies that the funds in the repair and replacement reserve are in excess of the sum required to constitute a fully funded repair and replacement reserve as defined in § 2202(8) of this title, the council shall treat the excess as a common profit subject to distribution pursuant to § 2216 of this title. In the event that the association does not have a current repair and replacement reserve as required by this chapter, the minimum percentages of the association’s budget to be assigned to the reserve study shall be the percentages prescribed in this section.