There are two principle reasons why many condo associations prefer reserve funds to assessments:

• A reserve fund makes it easier for the condo board to replace, maintain, and upgrade high priced items, like the roof, siding, garden, plumbing systems, and so on. Condo associations with inadequate reserves might put off work rather than organize an assessment.
• Many unit owners would rather pay higher monthly fees than be hit with a large assessment, perhaps unexpectedly.

That said, some unit owners prefer assessments to higher fees. This is common among senior citizens who may not want to invest now in a roof that won't be replaced for 15 years. But, younger owners, too, sometimes prefer assessments because it gives them more control over the money, allowing them to invest more aggressively than a condo board might.

To estimate how much should be in your reserve, you can put together a reserve schedule, which is described elsewhere in this FAQ. But, for a common sense estimate on how large your reserve should be, consider some costs for a 16-unit brick building in the Boston area: Repointing -- $240,000, New rubber roof --$50,000; new furnance -- $25,000; new storm windows -- $25,000; redecorating the hallways -- $12,000; deleading -- $10,000; new fence -- $10,000; unexpected increase in heating oil -- $6,000.

As a rule of thumb, a small to midsize condo association without major problems would be wise to set aside between $500 and $1,000 per unit per year, and to have in the reserves an amount equivalent to $2,000 to $3,000 per unit. This won't cover every possible contingency, but it will give the association a good head start to deal with costly replacement and improvement projects. According to an article on Yahoo, "Lester Giese, the author of The 99 Best Residential & Recreational Communities in America, recommends the following formula: If the complex is one to ten years old, the reserve fund should have 10% of the cost of replaceable items (roofs, roads, tennis courts, etc.). Between 10 and 20 years old, the repair fund should be at 25% to 30%. At 20 years, that amount should be 50% or above. Residents who brag that they don't pay much in maintenance may be in a complex that either is not being kept up well or is living beyond its means."

One last point, if the reserve fund is flush and the building has no major needs, a condo board would be wise to occasionally reduce its annual contribution to the fund so as to keep monthly condo fees low. No one will complain!