A property manager oversees a 40-unit apartment complex and budgets $75 per unit per month, totaling $3,000, into a dedicated account designated solely for foreseeable repair and upkeep needs. Over twelve months, $36,000 accumulates. In month ten, the building's HVAC system requires a $28,000 replacement, and the manager draws funds from this dedicated account to cover the repair without issuing a special assessment to the owner or deferring the work. The account targets predictable, recurring maintenance — not catastrophic emergencies or operating overhead. Which budget item does the dedicated account represent?
Correct Answer
A) Maintenance reserve
The account targets predictable recurring upkeep — not the manager's compensation, not a contingency for catastrophes, but funds set aside in advance for foreseeable physical maintenance. That budget category is a maintenance reserve.
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