For a homeowners’ association (HOA) to last long term, its major components, like elevators, clubhouses, and swimming pools, will eventually need maintenance or replacement. The funding for these capital improvements comes from the money set aside in a reserve fund.

 

An HOA reserve fund is cash saved by a community association for additions to components the association is obligated to maintain and future replacements and repairs that don't occur on an annual basis. Funding a community’s reserves is more than just another budget item—HOA board members must know how to manage their reserve fund successfully so the community has the best chance to optimize the health and wealth of the monies saved. Read on to learn four best practices for managing your reserve fund and the benefits of well-funded reserves.