In many cases, the reserve funds are misunderstood by the members of the homeowners association, as well as the members of the Board. There are some that view the funds as a type of rainy day fund that can be used if the HOA runs low in funds, while others understand the necessity of the reserve cash but do not connect that the funds are being reserved for specific areas in the community that the HOA is responsible for, such as replacing equipment, painting, fencing, siding, roofing and roads.
The misconceptions of these reserve funds may be well-intentioned; for example, working to keep members fees low. However, the fact is that when someone runs for the Board and claims they plan to reduce the fees, this is not a realistic goal – especially if you want the HOA to remain successful.
The fact is that the work that is covered by the reserve funds cannot be handled by the same amount that was needed a few decades ago. The Board members of an HOA have a fiduciary duty in order to make sure that the reserve funds are present.
The reserve fund is generally used for larger projects, including things such as painting of community buildings, a new pump at the pool, fencing replacement in community areas and other projects that will cost more than general, daily needs.
While the reserve fund is best to be left for larger projects, there are special assessments that can be made, which should be determined by the Board and the members. It is the responsibility of the HOA Board to pay for any expenses that are incurred by the community. While some will be handled by the operating fund, the larger and more costly projects will need to be covered by the reserve fund.
National Property Management Group has extensive experience managing HOAs. Our professional staff is knowledgeable about HOA management in Southern California, serving Los Angeles, Santa Clarita, Valencia, and the surrounding areas. We can manage your HOA properties for you so you have less to stress about. We provide innovative property management solutions that outshine our competitors. There is no property too large or too small that we cannot service.
National Property Management Group
25115 Avenue Stanford A300
Valencia, CA 91355
(661) 295-5966
www.npmgonline.com