Property Management

In South Carolina, what is 'replacement reserve' in property management accounting?

AA reserve for replacing tenants who vacate early
BFunds set aside to replace major capital items (roof, HVAC, parking lot) as they wear out over time✓ Correct
CA reserve fund required by SC law for all rental properties
DThe landlord's emergency fund for unexpected repairs

Explanation

Replacement reserves are funds set aside periodically for future replacement of major capital items with long but finite useful lives (roof, HVAC systems, parking lot). Lenders often require reserves as part of their underwriting, and good property management includes planning for capital replacements.

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