(a) The association shall include in its annual budgets replacement reserves projected by the board to be adequate, together with past and future contributions to replacement reserves, to fund the replacement of those components of the common interest community which the association is obligated to replace by reason of ordinary wear and tear or obsolescence, subject to the following:
(1) The amount annually budgeted for replacement reserves shall be adequate, together with past and future contributions to replacement reserves, to replace the components as determined based upon the estimated remaining useful life of each component; provided that portions of replacement reserves need not be segregated for the replacement of specific components.
(2) Unless otherwise required by the declaration, annual budgets need not include reserves for the replacement of (i) components that a remaining useful life of more than 30 years, or (ii) components whose replacement will be funded by assessments authorized under section 515B.3-1151(e)(1), or approved in compliance with clause (5).
(3) The association shall keep the replacement reserves in an account or accounts separate from the association's operating funds, and shall not use or borrow from the replacement reserves to fund the association's operating expenses, provided that this restriction shall not affect the association's authority to pledge the replacement reserves as security for a loan to the association.
(4) The association shall reevaluate the adequacy of its budgeted replacement reserves at least every third year after the recording of the declaration creating the common interest community.
(5) Unless otherwise required by the declaration, after the termination of the period of declarant control, and subject to approval by (i) the board, and (ii) unit owners, other than the declarant or its affiliates, of units to which 51 percent of the votes in the association are allocated, the association need not annually assess for replacement reserves to replace those components whose replacement is planned to be paid for by special assessments, if the declaration authorizes special assessments, or by assessments levied under section 515B.3-1151(e)(2). The approval provided for in the preceding sentence shall be effective for no more than the association's current and three following fiscal years, subject to modification or renewal by the same approval standards.
(6) Unless otherwise required by the declaration, subsection (a) shall not apply to a common interest community which is restricted to nonresidential use.
(b) Unless the declaration provides otherwise, any surplus funds that the association has remaining after payment of or provision for common expenses and reserves shall be (i) credited to the unit owners to reduce their future common expense assessments or (ii) credited to reserves, or any combination thereof, as determined by the board of directors.
(c) This section applies to common interest communities only for their fiscal years commencing on or after January 1, 2012.
2011 c 116 art 2 s 15
Structure Minnesota Statutes
Chapters 500 - 515B — Property And Property Interests
Chapter 515B — Minnesota Common Interest Ownership Act
Section 515B.1-101 — Short Title.
Section 515B.1-102 — Applicability.
Section 515B.1-103 — Definitions.
Section 515B.1-104 — Variation By Agreement.
Section 515B.1-105 — Separate Titles And Taxation.
Section 515B.1-106 — Applicability Of Local Requirements.
Section 515B.1-107 — Eminent Domain.
Section 515B.1-108 — This Chapter Prevails; Supplemental Law.
Section 515B.1-109 — Construction Against Implicit Repeal.
Section 515B.1-1105 — Vacation Of Abutting Publicly Dedicated Property.
Section 515B.1-112 — Unconscionable Agreement Or Term Of Contract.
Section 515B.1-113 — Obligation Of Good Faith.
Section 515B.1-114 — Remedies To Be Liberally Administered.
Section 515B.1-116 — Recording.
Section 515B.2-101 — Creation Of Common Interest Communities.
Section 515B.2-102 — Unit Boundaries.
Section 515B.2-103 — Construction And Validity Of Declaration And Bylaws.
Section 515B.2-104 — Description Of Units.
Section 515B.2-105 — Declaration Contents; All Common Interest Communities.
Section 515B.2-106 — Declaration Of Flexible Common Interest Communities.
Section 515B.2-107 — Declaration Of Leasehold Common Interest Communities.
Section 515B.2-108 — Allocation Of Interests.
Section 515B.2-109 — Common Elements And Limited Common Elements.
Section 515B.2-110 — Common Interest Community Plat (cic Plat); Cic Created Before August 1, 2010.
Section 515B.2-111 — Expansion Of Flexible Common Interest Community.
Section 515B.2-112 — Subdivision, Combination, Or Conversion Of Units.
Section 515B.2-113 — Alteration Of Units.
Section 515B.2-114 — Relocation Of Boundaries Between Adjoining Units.
Section 515B.2-115 — Minor Variations In Boundaries.
Section 515B.2-116 — Use For Sales Purposes.
Section 515B.2-117 — Declarant's Easement Rights.
Section 515B.2-118 — Amendment Of Declaration.
Section 515B.2-119 — Termination Of Common Interest Community.
Section 515B.2-120 — Rights Of Secured Parties.
Section 515B.2-121 — Master Associations.
Section 515B.2-122 — Merger Or Consolidation Of Common Interest Communities.
Section 515B.2-123 — Change Of Form Of Common Interest Community.
Section 515B.2-124 — Severance Of Common Interest Community.
Section 515B.2-125 — Addition Of Common Elements.
Section 515B.3-101 — Organization Of Unit Owners' Association.
Section 515B.3-102 — Powers Of Unit Owners' Association.
Section 515B.3-103 — Board Of Directors, Officers And Declarant Control.
Section 515B.3-105 — Termination Of Contracts, Leases; Cic Created Before August 1, 2010.
Section 515B.3-106 — Bylaws; Annual Report.
Section 515B.3-107 — Upkeep Of Common Interest Community.
Section 515B.3-108 — Meetings.
Section 515B.3-110 — Voting; Proxies.
Section 515B.3-111 — Tort And Contract Liability.
Section 515B.3-112 — Conveyance Of, Or Creation Of Security Interests In, Common Elements.
Section 515B.3-113 — Insurance.
Section 515B.3-114 — Reserves; Surplus Funds.
Section 515B.3-1141 — Replacement Reserves.
Section 515B.3-115 — Assessments For Common Expenses; Cic Created Before August 1, 2010.
Section 515B.3-1151 — Assessments For Common Expenses; Cic Created On Or After August 1, 2010.
Section 515B.3-116 — Lien For Assessments.
Section 515B.3-117 — Other Liens.
Section 515B.3-118 — Association Records.
Section 515B.3-119 — Association As Trustee.
Section 515B.3-120 — Declarant Duties; Turnover Of Records.
Section 515B.3-121 — Accounting Controls.
Section 515B.4-101 — Applicability; Delivery Of Disclosure Statement.
Section 515B.4-102 — Disclosure Statement; General Provisions; Cic Created Before August 1, 2010.
Section 515B.4-103 — Common Interest Communities Subject To Rights To Add Additional Real Estate.
Section 515B.4-104 — Time Shares.
Section 515B.4-105 — Common Interest Community With Building Once Occupied.
Section 515B.4-106 — Purchaser's Right To Cancel.
Section 515B.4-107 — Resale Of Units.
Section 515B.4-108 — Purchaser's Right To Cancel Resale.
Section 515B.4-109 — Escrow Deposits.
Section 515B.4-110 — Obligation To Release Liens.
Section 515B.4-111 — Conversion Property.
Section 515B.4-112 — Express Warranties.
Section 515B.4-113 — Implied Warranties.
Section 515B.4-114 — Exclusion Or Change Of Implied Warranties.
Section 515B.4-115 — Statute Of Limitations For Warranties; Cic Created Before August 1, 2010.
Section 515B.4-1152 — Statute Of Limitations For Warranties; Cic Created On Or After August 1, 2011.
Section 515B.4-116 — Rights Of Action; Attorney's Fees.
Section 515B.4-117 — Labeling Of Promotional Material.
Section 515B.4-118 — Declarant's Obligation To Complete And Restore.