Choosing to live in an association-governed community, whether it’s a highrise condominium or a gated community of single family homes, certainly has many perks. One major convenience is the maintenance of the property. As part of such a community, homeowners enjoy care-free living while the homeowners association or HOA is tasked with ensuring that all of the common areas of the property are well-maintained.

Association-governed communities come in all types, shapes, and sizes. They may be known by different acronyms — Condos, Co-Ops, HOAs, POAs, or PUDs — and residents choose to live there for a variety of different reasons. One of those reasons is having affordable access to amenities related to leisure activities. This can include a pool, a fitness facility, tennis courts, playgrounds, parks, golf course, and more. And keeping these desirable community features up to date and well-maintained over the years requires a predictable amount of capital. This capital is called the Reserve Fund.

Good question! There are two ways to answer a question regarding the appropriate use of Reserve Funds in 2020, depending on how it is asked. But first, it helps to know what the purpose is of a Reserve Fund.

All buildings begin to deteriorate the moment they are built. Anyone who owns a home quickly learns that they are guaranteed to have repair costs and replacement expenses down the road. But owners of homes in Association-governed communities face a unique challenge.

A Reserve Study helps you to anticipate and prepare for repair and replacement expenses at your property. All buildings begin to physically deteriorate the moment they are completed, making the need for repairs not a question of if but when? This is where a Reserve Study comes in, turning these projects into predictable expenses, rather than a financial surprise.

As we look towards the final months of this year, it’s time to begin planning for 2020 and consider the important role of HOA Reserve Studies. An updated Reserve Study guides your association to have sufficient funds before a major physical asset fails. Otherwise, you’ll be forced to scramble for additional funding to cover essential common area repairs and replacements that are both inevitable and predictable.

Reserve Studies are intended as a tool to anticipate and budget for the expense of repairing, refurbishing, or replacing common areas in an Association-governed community. In order for these shared locations to be properly maintained, enough funds must be allocated to “reserves” so that any deterioration and/or damage that occurs on the property may be fixed in a timely manner.