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1. WHAT'S AN
HOA RESERVE
FUND?
Two main accounts are used to pay for
HOA expenditures—the operating fund and
the reserve fund. While the operating fund
is used to pay for everyday and planned
yearly expenses such as insurance, taxes,
landscaping, legal fees, and other paid
contractors, the reserve fund is set aside
for future replacements and repairs that
don't occur on a regular basis.
Reserves are funded by association
member assessments, dues, fees, and
fines. Additional money can come from
interest and returns earned from existing
reserve funds.
For the reserve account to become fully
funded and be used for its intended
purpose, several things must occur.
Money should be set aside on a planned
schedule and then left alone to mature,
only being withdrawn at the appropriate
time and place. And, it's best to start
saving as soon as possible—giving you
years rather than months to save.
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