When Careless Attempts To Keep HOA Fees Low Impact The Reserve Fund
Posted on October 1, 2018 8:00 AM by HOA Sites
Categories: HOA Website
In some homeowners associations, there are board members that misunderstand the purpose of the reserve fund. Often, these members see it as a means to deal with every financial difficulty that hits the homeowners association. Aside from that, others view it as a tool that unnecessarily burdens members.
Potential members that are running to be on the board might use the homeowners association website to promise reduced HOA fees once they win. Even though they may have good intentions, their plan will most likely take a toll on the HOA’s well-being in the long run.
Purpose Of The Reserve Fund
Typically, the reserve fund is meant for advancing projects in the community which includes building roads, setting up or replacing structures like gates, and dealing with disasters. This fund is sourced from HOA fees and when contributions go down, the fund also diminishes over time.
In the event a natural disaster strikes or the HOA needs to complete a major project, the association might fall into a crisis since there would be no money set aside for that purpose. In that situation, the board is forced to take drastic measures like get a loan or impose a high special assessment that is unfair to residents.
One of the primary duties of board members is to make sure the association has adequate money in the reserves. Of course, reduced HOA fees are a good idea initially, but how it impacts the reserve fund should always be considered. In most cases, the reduction will do more harm than good in the long run as members may eventually have to shoulder the costs that would have been handled by the reserve funds.
If someone is running for a position on the board with the platform that they will lower HOA fees, use the homeowners association website to prove that’s not a good proposal. Likewise, stress the point that dealing with issues in advance is better than carrying a heavy burden all at once.
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