3
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, and fees. 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left alone to mature, only being withdrawn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. Failure to adequately save raises the
risk of requiring a special assessment to
fund needed capital projects, which can be
financially burdensome to owners.
7
6
5
4
8
9
10
11
3
2
