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3. How much money should an HOA have in reserve?
There isn't a "one-size-fits-all," amount HOAs should have in reserve. Instead, your reserve
amount will depend entirely on your community's needs, size, type, location, and many other
factors. For example, a condo association with shared roofs, pools, and other expensive
amenities may require far more funds compared to a small, single-family home community with
limited common property or anticipated repairs.
To determine how much your community needs, you have to crunch some numbers. Determine
what your association owns, estimate how much time you have until things will need to be
replaced, and then calculate how much everything is going to cost. A simple, straightforward
way to figure out these seemingly complicated details is by paying for a professional reserve
study (see question five below).
4. What can HOA reserve funds be used for?
Your HOA reserve is not a piggy bank that can be dipped into at any time for any reason.
Some states, like California, have strict laws against using reserve funds for regular, everyday
expenses. Be sure to check your governing documents as well as your state laws before
allocating any reserve funds.
In general, reserve funds will have a plan in place for how and when any money can be spent.
Reserve fund expenditures often include, but are not limited to:
• Roof replacements
• Pool pumps
• Playground equipment
• Replacing fencing in common areas
• Painting of community-associated
buildings
• Major landscaping projects
• Construction and major renovations
• Road and sidewalk resurfacing
