To understand the reserve study, you must first know what a reserve fund is. What is an HOA reserve fund?
Reserve funds are funds that homeowners associations set aside for future financial obligations such as major repairs, replacements, and maintenance
The main purpose of a reserve study is to analyze the overall components of an HOA to try and determine how long it will be before assets will need repair or replacement and estimate the cost of such upkeep.Reserve studies also serve to enable the board of directors to analyze the overall strength of the reserve fund. The reserve study is vital in assisting the board with funding reserves – that is, the ability to closely estimate the amount of funds that will be needed to keep the association in good repair without having to impose special assessments or gain outside funding.
The reserve fund is essentially a savings account for the HOA. Funds in this account are used to offset the association’s ongoing disrepair and projected future costs. When an HOA has less than 70% of a funded reserve, they risk having to implement special assessments or raise association fees to cover costs
Our current reserve balance is $63,799.86 ( Based on 3/31/22 financials , updated 4/13/22)