RayD3 (Nevada)
Posts: 10
Posts: 10
Posted:
Is there a set % rule as to amount required in a HOA reserve fund.
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Reserve Fund
Started by RayD3 • 3 replies • 1378 views
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SheliaH (Indiana)
Posts: 6,964
Posts: 6,964
Posted:
There's no rule as far as I know of - it's really based on your community's needs. If you haven't already done so, get a reserve study - that'll help answer this question.
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
Ray,
The reserve fund is more than just a contingency fund. The reserves are supposed to be there to repair/replace your Associations capital components. A capital component would be things like playground equipment, roads, sidewalks, entrance signs, clubhouse, pool, etc. A contingency fund is enough money set aside for unexpected expenses.
A general rule for any homeowner is to have 6 months worth of expenses (mortgage payments, utilities, car payments, food money, etc.) set aside in savings for emergencies (a contingency fund). I've heard that Associations should have an amount equal to 1/12 to 6/12 of annual assessments set aside for contingencies. This is in addition to the amount that should be set aside each year for repair/replacement of capital components (a reserve fund).
Each Association is different, so there is no set amount or percentage. As was previously recommended, a Reserve study should be done to assist the Board in deciding what these percentages should be. A study can be completed by the Board, a committee or by hiring an outside contractor.
Tim
The reserve fund is more than just a contingency fund. The reserves are supposed to be there to repair/replace your Associations capital components. A capital component would be things like playground equipment, roads, sidewalks, entrance signs, clubhouse, pool, etc. A contingency fund is enough money set aside for unexpected expenses.
A general rule for any homeowner is to have 6 months worth of expenses (mortgage payments, utilities, car payments, food money, etc.) set aside in savings for emergencies (a contingency fund). I've heard that Associations should have an amount equal to 1/12 to 6/12 of annual assessments set aside for contingencies. This is in addition to the amount that should be set aside each year for repair/replacement of capital components (a reserve fund).
Each Association is different, so there is no set amount or percentage. As was previously recommended, a Reserve study should be done to assist the Board in deciding what these percentages should be. A study can be completed by the Board, a committee or by hiring an outside contractor.
Tim
SusanW1 (Michigan)
Posts: 5,202
Posts: 5,202
Posted:
Ray - 60% of our dues must be placed in the Reserve Fund.
Is that what you are asking?
Is that what you are asking?
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