Country Living Association

The reserve funds that a home owners association sets aside are extremely important. Its like a savings account that you dip into only when your regular funds arent adequate.

All too often, home owners associations let the reserve funds dwindle and that can be dangerous. If the board isnt paying close attention and keeps tapping into the reserves for every other little, then when something big does come up, there may not be enough to cover it. The general rule is that 20-25% of all dues should go into the reserve fund and stay there. There also needs to be a long term schedule that money in the annual budget. The budget should always contain projections of maintenance items that are coming up like pool repair, painting, elevator repairs or replacement. The list can get long, and some of the items will be expensive which is why you want to know when theyll be coming up to be done. It is also suggested that the reserve account should consist of no less than 70% of the projected reserve budget. If you find that there is 30% or less in the fund, then know that assessments will be forthcoming. And speaking of assessments, if something major goes wrong, something very critical and expensive like a boiler or power system, and there isnt enough to cover it, expect that everyone will be upset when they are assessed numbers a hefty amount and with no notice. Thats a good way for some board yelling matches to start. Its perfectly acceptable to ask what is in the reserve funds if you have any questions. After all, youve contributed and some of that money belongs to you. Dont feel shy about it, just be diplomatic when you find out it is short.