Each of the following are reasons for maintaining a replacement fund EXCEPT:

• A. Maintaining a replacement fund equalizes the contributions of old and new owners
• B. Maintaining a replacement fund enhances resale values
• C. Maintaining a replacement fund meets legal, fiduciary, and professional requirements
• D. Maintaining a replacement fund increases the likelihood that an association will require a special assessment

Answer: (D)

A replacement reserve fund is set up to cover future major repairs and replacements, so the association can handle big costs without sudden, uneven charges to owners. This planning keeps budgets stable, supports long‑term asset health, and protects property values.

Maintaining a reserve helps equalize contributions across owners as ownership changes, so new owners aren’t hit with large, unforeseen costs and long‑standing owners aren’t subsidizing ongoing needs unfairly. It also boosts resale values because buyers see there’s money set aside to address future needs, reducing worry about future assessments. Legally and ethically, boards have fiduciary responsibilities to plan for these future costs and to follow professional standards and requirements, such as conducting reserve studies and funding accordingly.

The statement that it would increase the likelihood of a special assessment is not a reason to maintain a replacement fund. In fact, a well-funded reserve typically reduces the need for special assessments by providing funds for major projects when they arise.