Occasionally, well-meaning volunteers make unsuitable investment decisions for an association. They may have a personal tolerance for risk or make judgments based on past experiences with family or corporate finances. To further complicate matters, board members may change each year. Eager to make a contribution, new members may want to tinker with reserve investments.

The board of directors, however, has a fiduciary responsibility to all unit owners to make sure reserve funds are invested properly. That is, each director has a legal responsibility to make sure reserve funds are not invested in instruments that a prudent person would consider risky or unsafe. Directors must also ensure that the funds are available when needed.

Read More