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The Impact of Inadequate Reserve Funding by the HOA Board

May 11, 2023 / by HOA Manager

Homeowners associations are established to ensure the proper maintenance of common areas, amenities, and other community resources. To fund these, HOAs rely on the contributions made by homeowners in the form of regular assessments and reserve funds. The reserve fund is essential in ensuring that the HOA can cover unforeseen expenses, repairs, or replacement of community property. However, what happens when the HOA board fails to maintain the reserve fund at a proper level for the association?

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How Often Do You Recommend Doing a Reserve Study?

April 28, 2023 / by HOA Manager

Reserve studies are a critical tool for HOAs to help ensure that they have adequate funds available to cover future repairs, replacements, and other significant expenses. These studies provide a comprehensive financial analysis of an HOA's reserve fund, including an inventory of the property's common elements, estimates of their remaining useful life, and projected costs for their repair or replacement.

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Can the HOA Board Borrow Money from the Reserves?

April 4, 2023 / by HOA Manager

Homeowners associations (HOAs) are organizations responsible for maintaining and managing common areas and amenities within a community. To accomplish their objectives, HOAs require funds, which are raised through member assessments.

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7 Common Questions HOA Board Members Ask About Budgets

August 26, 2022 / by HOA Manager

Many HOA board members get into trouble due to not understanding the operating fund and reserve fund in a homeowners Association. If these two funds aren’t properly maintained, a Board can unintentionally cause the Association to fail financially. Therefore, it’s crucial that Boards understand how to correctly use the operating fund and reserve fund.

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What HOA Boards Can Learn from the Surfside Condo Collapse

July 19, 2021 / by HOA Manager

A homeowner’s association’s worst nightmare occurred on June 23, 2021, when a 12-story beachfront condominium in the Miami suburb of Surfside, Florida partially collapsed. Many people died, many were injured, making it one of the deadliest building collapses in American history. It’s important to acknowledge and address a tragedy like this to respect the lives that were lost and the families affected, while also learning from the experience to make sure it doesn’t happen again.

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Can the Reserves Be Adjusted for Items Costing More Than Planned For?

October 7, 2020 / by HOA Manager

Picture yourself in this scenario: The clubhouse needs a new water heater and it will cost $10,000. But all prior reserve studies that have been done in the association have only allocated $6,000 for replacement. What are the board’s options to make up the additional $4,000 difference?

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3 Options if You Need to Make a Big Repair NOW in Your Association

September 29, 2020 / by HOA Manager

As a general practice, what does an HOA board do if there’s a problem in the association that exists right now, but not enough money in the reserves to fix it? Is issuing a special assessment the way to go, or can the board use other funds in the reserves?

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What is a Reserve Study, Really?

September 25, 2020 / by HOA Manager

The slightly technical definition of a reserve study is: a budgeting tool based on the art and science of anticipating and preparing for major common area repairs and replacement expenses an association will face in the future.

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How a Reserve Plan Helps an HOA Board Protect Current Homeowners

August 27, 2020 / by HOA Manager

Planning for future repairs and maintenance costs of common areas in the homeowner’s association is one of the most important jobs of an HOA board – and also one of the most neglected. Sometimes, boards are just short-sighted, focusing on the essentials that need to be done in the association now. While today is important, tomorrow must not be forgotten.

One issue that makes it difficult for boards to plan for the reserves is the pushback they receive from current homeowners because they have a hard time seeing how assessments for future projects will benefit them now. Learn how a reserve study protects owner value for both future and current homeowners in the association in the article excerpt below.  

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How to Eliminate the Risks of Inadequate HOA Reserve Funds

July 14, 2020 / by HOA Manager

The risks of not having enough HOA reserve funds for your community are as serious as the risks of not having enough emergency savings for your family.  Imagine needing to pay for college tuition increases or costly medical expenses without having enough money set aside to do so. Now imagine fellow homeowners having their family budgets crushed by emergency assessments because there aren't enough HOA reserve funds for repairs.  They’ll likely call you as a board member to complain!

Why not avoid these situations altogether? Having HOA reserve funds readily available “just in case” offers you and your fellow homeowners financial peace of mind.

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