A method of preparing a carbamate or urea-functional compound is described comprising the step of reacting a lactone or hydroxy carboxylic acid with a compound (A) comprising a carbamate or urea group or a group that can be converted to a carbamate or urea group, and an active hydrogen group capable of reacting with the hydroxy carboxylic acid or in a ring-opening reaction with a lactone. The compound thus prepared is useful in curable compositions.