Reserve requirements for a common interest community modified.

A bill for an act

relating to the Minnesota Common Interest Ownership Act; modifying reserve

requirements for a common interest community; amending Minnesota Statutes

2024, section 515B.3-114.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 515B.3-114, is amended to read:

515B.3-114 RESERVES; SURPLUS FUNDS.

(a) The annual budgets of the association shall provide from year to year, on a cumulative

basis, for adequate reserve funds to cover the replacement of those parts of the common

interest community which the association is obligated to replace
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by reason of ordinary wear

and tear, obsolescence, or to provide sustainable energy saving technology or to meet changes

in statutory energy performance standards
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. These reserve requirements shall not apply to a

common interest community which is restricted to nonresidential use.
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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 on

the estimated remaining useful life of each component and shall include evaluation of

sustainable energy saving alternatives and reflect statutory changes in energy performance

standards over the period of the reserves, provided that portions of replacement reserves

are not required to be segregated for the replacement of specific components. Unless

otherwise required by the declaration, annual budgets are not required to include reserves

for the replacement of components that have a remaining useful life of more than 30 years,

or components whose replacement will be funded by assessments authorized under section

515B.3-1151, paragraph (e), clause (1).
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(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 before January 1, 2012.