HOA Management Blog
The reserve fund of a homeowners association is often misunderstood by members and sometimes the HOA board as well. Some see it as a slush fund that is to be used on a "rainy day"' when the association gets low on cash in the operating account. Others, although they may understand the need to have some measure of reserve cash, do not make the connection that reserve funds are being reserved for the particular components within the community that the association is responsible for, such as roads, roofing, siding, fencing, painting, and equipment replacement.
You have many responsibilities as an HOA board member that require you to make decisions and take action. Some of the most important decisions the Board of a homeowners association has to make are financial decisions. It’s challenging to try and remember what funds from the operating budget covers and what funds from the reserve budget will pay for.
“What is a reserve study and how do we do one?” This is an important question that board members should be asking in your homeowners association. If you don’t know the last time a reserve study was done in your association or why you should even do one, then you’re in the right place to learn the answers to frequently asked questions about reserve studies.
An HOA Reserve Fund is one of the most important things a Board can plan for its association, however, many Board members misunderstand what it is, why it’s needed, or how to get it implemented. Knowing the basics about an HOA reserve fund and the reasons it’s crucial you have one will help set your community up for success.
