While day-to-day expenses may be well-managed, unexpected repairs or major replacements can quickly overwhelm an HOA without proper financial planning. That’s why understanding and implementing best practices for managing HOA reserve funds is a crucial responsibility for every board. Read the article…………………………….
New Legislation Requires Condominiums To Fund The Amounts Specified In a Reserve Study (MD)
Since the collapse of the Champlain Towers South Condominium in Surfside, Florida during 2021, adequate funding for building reserves has become a much-discussed topic. Under Section 11-109.4 of the Maryland Condominium Act, condominiums have been required to have reserve studies performed at least every five years. However, the law has only required that the reserve […]
Condo Reserve Fund: How Much is Enough? (ON)
Condo owners and board members often ask, “Do we have enough in our condo reserve fund?” It’s a crucial question, as an underfunded reserve can lead to special assessments, potential financial strain on owners, legal risks and even lower property values. However, there’s no single answer to how much a condo should have in its […]
The Hidden Cost of Underfunded Reserves: What Florida’s Condo Real Estate Challenges Teach Us
In recent months, headlines from Florida have brought increased attention to the rising cost of condo ownership. Legislation requires condominiums of three or more stories to conduct structural inspections and mandates reserve funding for all structural assets, so condos can no longer vote to waive or partially fund reserves. Read the article…………………………….
How much money should a HOA have in reserve?
Unfortunately, many associations’ reserve accounts are underfunded, which puts them at a high risk for special assessments, which unfairly penalizes current homeowners with charges to cover the underfunded reserve expenditures. Ideally, an association should have a “Fully Funded Balance” (FBB), which is a calculated accumulative total cost to maintain, repair, and replace the reserve components. […]
Defining Adequate Reserves in Homeowners and Condominium Associations
Properly funded reserves are a fundamental aspect of financial health for homeowners associations (HOAs) and condominium associations. Reserve funds ensure communities are able to address major capital expenditures without relying on special assessments or deferred maintenance. The concept of “adequate reserves” is often subject to differing interpretations, and many boards struggle to establish a clear, […]
Reserves and Reserve Studies
The following articles cover a lot of information about reserves, reserve studies and reserve funding: The Importance of Regular Reserve Fund Assessments Step-by-Step Reserve Study Guidelines for Homeowners Association Budgets Breaking Down What Goes into a Homeowners Association Reserve Fund What Can HOA Reserve Funds Be Used For? Homeowners Association Reserve Study: Examining Your Association’s […]
Reserve Disclosures; the Lending “Blacklist” (CA)
Despite great efforts to lessen the problem, too many HOAs still have inadequate reserve fund savings. Civil Code Sections 5300(b)(2-7) and 5570 require detailed disclosures regarding reserves. The problem is so serious that the Department of Real Estate in September 2012 issued a “Consumer Warning: Underfunded Homeowners Associations” bulletin- still available on the www.dre.ca.gov website. […]
Questions regarding Reserves Part 2 (CA)
Question: Can major landscape renovation use reserve funds when too little funds are available as a line item? Question: Should HOA boards expense directly out of reserves without establishing a maintenance budget annually? Read the Q&A………………………………..
Reserve Studies 102: The Financial Analysis
Do you know how your HOA reserve fund is really doing? How are you matching up to other community associations around you? In our Reserve Studies 102: The Financial Analysis webinar, we’ll show you how to determine the strength of your HOA reserves, your budget for this year, the funding goals you could be aiming […]
Managing Your HOA Reserve Funds
Today, let’s explore some of the most critical aspects of managing your HOA’s reserve funds. Proper management of these funds is crucial for long-term stability and the function of any homeowners association. It’s an important and ongoing topic for HOA board members and community developers across Dallas and Houston, so we want to do it […]
When can HOAs tap reserve funds? (CA)
Q. Can major landscape renovation use reserve funds when too little funds are available as a line item? Q. Should HOA boards expense directly out of reserves without establishing a maintenance budget annually? Q. Our board believes the reserve fund is just a bank account and the required reserve study is just advisory. Therefore no […]
What you need to know about HOA reserves (CA)
Q: Our HOA reserves for replacement are severely underfunded. Does California law require that HOAs undertake a third-party analysis of future replacement costs, and, if so, at what intervals? Is there a standard in California law or practice for a minimum percentage of projected reserves? Florida has recently booked state law, or so I understand, […]
HOA Homefront: What to do when reserves run thin (CA)
Q: Our HOA reserves for replacement are severely underfunded. Does California law require that HOAs undertake a third-party analysis of future replacement costs, and, if so, at what intervals? Is there a standard in California law or practice for a minimum percentage of projected reserves? Read the article…………………………….
State Senator Files Bill to Allow Condo Boards to Invest Reserve Funds (FL)
Legislation aimed at helping condo boards manage large amounts of reserve cash is moving forward in Tallahassee. State Senator Jennifer Bradley is sponsoring the bill that allows boards to invest the mandatory reserve money needed for repairs to prevent another Surfside collapse……SB 1742 would set parameters on hiring an investment firm and for making “prudent” […]
How Much Reserves Should an HOA Have?
Determining the appropriate amount of reserves for a homeowners association (HOA) is a critical aspect of effective property management. Reserves, often referred to as reserve funds, are essential for covering future repair and replacement costs of common areas and shared amenities. This post explores the factors influencing reserve requirements, offers guidelines for calculating the ideal […]
Building A Financial Foundation
This webinar covers essential strategies for building a solid financial foundation for community associations, focusing on reserve funds and capital planning. We define the role of reserve studies and their importance in making informed financial decisions, especially for new board members and managers. The webinar explores various funding options, such as reserve contributions, special assessments, […]
Reserve Studies 101: The Component List (2025)
What’s the basis for every reserve study? It all starts with the components. But what qualifies as a reserve component? What about insurance? In our Reserve Studies 101 webinar, we’ll take a deeper look at the reserve component list so you can better understand your reserve study, how components affect your reserve study, what different […]
Hartman seeks extension on condo reserve mandate (MD)
Condominium associations could get another two more years to come up with state-mandated cash reserves under proposed legislation from a Lower Shore delegate in Annapolis. It’s the second year that Del. Wayne Hartman (D-38C, Worcester) has sponsored a bill to extend the payment window for reserve studies. His House Bill 1215 is scheduled for a […]
Fighting the Fight Without Losing Your Mind and Breaking the Bank (IL)
One topic of discussion at the seminar was addressing legal fees incurred by associations as a result of the actions (or inactions) of unit owners. The presentation focused on the financial challenges this presents for community associations when the claims asserted against the association (or its agents) are without merit. We heard stories of unit […]
Inflation and Reserves Planning: Adjusting to Rising Costs
Inflation is an economic force that affects everything, from household expenses to the long-term financial planning of homeowners associations (HOAs). For HOAs, reserve planning is particularly vulnerable to inflationary pressures, as rising costs for materials, labor, and services directly impact the ability to fund major projects. A $50,000 roof replacement a decade ago might easily […]
Trees and Landscaping: Operating or Reserve Expense?
The Community Associations Institute’s Reserve Study Standards do not present a minimum cost threshold for a component’s inclusion as either a reserve or operating expense. While certain components, like roofs, streets, and pools, are clearly capital intensive and fall within the reserve expense threshold, the classification of components like landscaping and trees can be more […]
Structural Integrity and Reserve Law – 1 Year Later (NJ)
We are now a year into the effective date of what is colloquially known as the Structural Integrity Act (Act). The law combines two important obligations condominium associations or cooperatives must now adhere to, inspection of the structure of the building (does not apply to all types of community associations) by a licensed engineer versed […]
How Reserve Funds Protect Your HOA and Boost Property Value
Have you ever wondered what happens when your HOA faces a significant expense it didn’t see coming? Whether it’s a sudden roof repair or a planned road repaving, the answer lies in a little something called reserve funds. These funds keep your community running correctly, protect your property value, and give everyone peace of mind. […]
East Tennessee HOAs: Tips to Strengthen Your Reserve Fund
Is your East Tennessee HOA reserve fund ready for the unexpected? A well-managed reserve fund can save the day if you have unexpected problems with a roof replacement, road repair, or a surprise maintenance issue. But building and maintaining that financial cushion takes effort and strategy. Read the article…………………………….
Reserve Funding Legislation – Not a “Silver Bullet”
“We’ve got to do something about this!” That was the sentiment I heard from a number of my friends in the community association industry in the days and weeks following the tragic collapse of Champlain Towers South on June 24, 2021. For decades we’d joked about the regular annoying parts of community association life: pets, […]
What Does Fully Funded Reserves Mean?
Managing finances in a homeowners association (HOA) often feels like walking a tightrope. You need enough money saved for emergencies and future repairs, but figuring out just how much is enough can be tricky. One term you might have come across is “fully funded reserves,” but what does it really mean? According to the National […]
How Much Should An HOA Have In Reserves?
Deciding on the right amount for an HOA to hold in reserve funds can be tricky. Many boards struggle with finding that sweet spot—too little and they risk not covering future expenses, too much and they may overburden homeowners with fees. Read the article…………………………….
HOA Budget Best Practices for Effective Financial Planning
Crafting the perfect HOA budget often feels like a tightrope walk. Board members strive to balance costs without tipping over into financial instability. One key fact stands tall – making conservative projections is foundational in effective HOA budgeting, given the unpredictable nature of expenses. Our article cuts through the complexity, offering straightforward best practices for […]
HOA Reserves Rule Of Thumb: Everything You Need To Know
Managing an HOA comes with its share of financial responsibilities, one of the most critical being the maintenance of a healthy reserve fund. Many board members face challenges in determining how much should ideally be kept in these reserves to cover unexpected or substantial expenses down the line. Here’s a fact: The rule of thumb […]
HOA Homefront: Can we spend reserve funds on insurance? (CA)
Q: Last year after insurance skyrocketed, the HOA board borrowed from the reserves and then paid back the reserves with an assessment. We then learned that the board borrows from the reserves every year to pay the insurance and then pays it back over time, without notice to the residents. Read the Q&A………………………………..
Create the Best HOA Reserve Funding Plan (Are You Funding Enough?)
Just like any building or asset, your community has components that will deteriorate over time. HOA reserves are the funds set aside to address these inevitable repairs and replacements, preventing special assessments and protecting property values. It’s the money you collect to pay for future repairs and replacements of your common areas like pools, roofs, […]
How to Plan HOA Reserve Funding for Long-Term Success
HOA reserve funding plays a vital role in successful community management and financial stability. Communities that plan properly protect their property values and avoid unexpected special assessments. These well-managed reserve funds shield homeowners from sudden financial burdens and help maintain community standards. Read the article…………………………….
Assessing HOA Reserve Fund Strength for Financial Stability
For homeowners associations (HOAs), maintaining a healthy reserve fund is essential for covering major repairs and replacements over time. HOA Reserve fund strength is a key indicator of financial health, helping HOAs plan ahead and avoid unexpected financial strain on homeowners. This guide will explain what reserve fund strength means, how to calculate it, and […]
Top Strategies for Managing HOA Reserves in Arizona
HOA reserves play a crucial role in maintaining the financial health and stability of homeowners associations in Arizona. These funds are set aside to cover future repair and replacement costs of community assets, ensuring that unexpected expenses don’t burden homeowners with sudden, hefty assessments. Proper management of HOA reserves is essential for preserving property values […]
Ohio Condominium Law Reserve Funds Explained
Ohio condominium law reserve funds play a crucial role in maintaining the financial health and stability of condominium associations. These funds are essential for long-term financial planning and preserving property values. By setting aside money for future repairs and replacements, associations can avoid sudden special assessments and ensure the community’s continued well-being. Read the […]
Understanding the Importance of Reserves for Your Condo or HOA in 2024 (FL)
As a board member of a condominium or homeowners association (HOA), managing your community’s reserve funds is a critical task. Reserves are your association’s financial safety net, set aside for future repairs and replacements. In 2024, with new Florida laws tightening regulations around reserve funds, having a solid financial plan in place has never been […]
Investing in the future: Building community reserve funds
Reserve studies and funds have been receiving an increasing focus in community associations since the tragic collapse of Champlain Towers South in 2021. These multiyear plans anticipate and responsibly provide for ongoing preventive maintenance, periodic structural inspections, and the timely repair and replacement of community components such as roofs, sidewalks, lighting, air conditioning, and more. […]
HOA Reserve Funds Best Practices for Board Members
Maintaining a healthy reserve fund is one of the most important responsibilities of HOA boards. Properly managed reserves ensure that the community can cover major repairs and replacements without imposing sudden financial burdens on homeowners. In this blog, we’ll explore best practices for managing HOA reserve funds, providing board members with actionable insights to ensure […]
Florida Reserve Funding Methods: Component, Cash Flow, and Making the Switch
In Florida, there are numerous strategies associations can utilize to fund reserves, but there are two primary methods of calculating annual reserve funding requirements: the component method (straight line or restricted reserves) and the cash flow method (pooled reserves). Funding using the component method was legally required in Florida for decades, meaning reserves were only […]
Four HOA Reserve Fund Investment Hurdles
HOA boards are faced with a challenge. They have limited time and resources, yet must meet the financial obligations of the reserve study by following a funding plan that provides adequate member contributions and additional revenue from prudent investment of reserve funds that reduce those member contributions. Here are four hurdles the board must jump […]
New Reserve Law in New Jersey – Community Association Compliance Required
We are now halfway through 2024 and we want to again remind our New Jersey community association clients to check their reserve study status to ensure compliance with the January 8, 2024 law relating to reserve studies and reserve funding. Who must comply? All New Jersey community associations are required to comply with the new […]
New Reserve Requirements for NJ Shared Interest Communities
In response to the 2021 Surfside Condominium tragedy in Florida, many states and municipalities have adopted, are considering adopting, or are updating existing rules governing reserves, reserve studies and maintenance schedules for multifamily buildings. New Jersey has passed new statewide regulations concerning all the above. Read the article…………………………….
New Reserve Law – Community Association Compliance Required (NJ)
We are now halfway through 2024 and we want to again remind our community association clients to check their reserve study status to ensure compliance with the January 8, 2024 law relating to reserve studies and reserve funding. Who must comply? All community associations are required to comply with the new reserve law. The only […]
What are Maryland developers’ responsibilities for condo and homeowners associations amid legislation changes?
Back in the 2022 Maryland legislative session, mandatory reserve requirements were passed that applied statewide to all condominium and homeowners associations. Not only did these reserve requirements apply to existing condominium and homeowners associations, but the legislation also applied to newly formed associations before control transitioned to homeowners. Read the article…………………………….
Maximize your Return on Reserve Interest
Over the last three years, inflation has reached 40-year highs. As a result, board members of homeowners associations have been put in a difficult position when trying to optimize their community’s expenses. Inflation was resulted in the expenses incurred by your property increasing in addition to more expense rates when it is necessary for the […]
Is Investing HOA Reserve Funds the Right Move?
In the world of Homeowners Associations (HOAs), managing reserve funds effectively is crucial for maintaining property values and ensuring the community’s long-term financial health. A question that often arises is: Can HOAs invest their reserve funds? The answer isn’t straightforward, but understanding the nuances can help HOA boards make informed decisions. Read the article…………………………….
Does law now require condo owners pay catch-up fees for years when reserves were waived? (FL)
Question: For the last two years, my fellow condominium board members have been running around with their hair on fire because we have been told the new Florida statutes require us to not only fully fund reserves on an annual basis beginning next year, but also to replace the approximately $4 million that would have […]
The State of HOA Reserve Funding: Are Associations Nationwide Meeting the 70% Benchmark?
Homeowners associations (HOAs) play a critical role in managing and maintaining the common areas and amenities that enhance the quality of life for residents in communities across the United States. One of the key responsibilities of an HOA board is to ensure the association has adequate reserve funds to cover the future repair and replacement […]
Condo reserves a growing issue (Part 2)
A few weeks ago, we wrote about condo and co-op reserves and the new Florida State law. This new law, passed in the wake of the Surfside collapse in 2021, mandates condo and co-op buildings at least 30 years old do milestone structural inspections by Dec. 31, 2024. They must do additional milestone structural inspections […]