Reserve Account

Started by SashaE1 • 2 replies • 560 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

SashaE1
Posts: 110

Posted:

Hi All,

When the developers first start an HOA, that first year do they deposit money into the Reserve Account or is it $0 balance and gradually as HOA members pay their assessment fees, a portion goes to the Reserve Account and it starts to build up? If developers do deposit into the Reserve Account at the time the HOA is established, is there a standard amount?

TimB4 (Tennessee)
Posts: 21,059

Posted:

It would vary by developer and local statutes.

I would expect that the developer would put zero into any reserves at the beginning.

Also, since most developers keep assessments artifically low (by paying for many things themselves) to entice buyers, I would be surprised if there is any reserves during transition (from developer control to membership control).

I would ask the developer if a reserve study has been done and if not, why not.
If the study has been done, I would ask what percentage are the reserves being funded?

CathyA3 (Ohio)
Posts: 6,299

Posted:

One exception may be capital contributions that all new buyers make when they purchase their homes. The governing documents would need to allow this and would specify the amount (eg. two months' worth of assessments in my condo community). Capital contributions go directly into the reserve account.

Also in my community, the developer paid an assessment of some type on finished but unsold homes, a portion of which went into the reserves.

But as Tim noted, this varies. Check your CC&Rs to see what it says about assessments in your community.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here