Is It Critical For Your Homeowners Association To Routinely Collect For Reserves?

Collecting for reserves routinely is a typical part of what HOA’s do as it reduces the possibility of homeowners having to shoulder an unforeseen financial burden.  For instance, when a major common asset like a swimming pool needs repaired, homeowners don’t need to cover the expensive costs unexpectedly if the HOA collects for the reserves monthly.  All homeowners associations should make it a priority to collect for the reserves regularly so homeowners never face a financial dilemma.

 

Common assets such as roads and the main gate deteriorate over time and they eventually need to be repaired or replaced.  Collecting funds monthly spreads the costs of a project over a long duration; homeowners make small contributions on a regular basis rather than paying all at once.

Imagine the board forcing members to make massive contributions to finance an urgent project because the HOA failed to routinely collect funds.  There might be belligerent posts on the community website or even a lawsuit against the board as members feel there was a mismanagement of funds.

 

Loans and special assessments are two more reasons why you tend to see so much uproar during an annual meeting and on the community website.  No homeowner is pleased to hear about a special assessment of any amount.  Regularly collecting funds for reserves not only minimizes the need for getting a loan but it also reduces a special assessment.

 

In some states, HOA’s are required to disclose the status of the reserves and this can have a substantial effect on the value of HOA properties.  More importantly, real estate agents usually take the reserve funds into consideration when estimating what a home is worth.  Collecting for the reserves throughout the year is a professional, fiduciary, and often legal requirement so every association should make it a priority.