Guide for Using Reserve Fund for HOA

Stanley Thomas By Stanley Thomas, 26th Jun 2017 | Follow this author | RSS Feed | Short URL http://nut.bz/14wn42q1/
Posted in Wikinut>News>Education

HOA is an acronym for House Owners Association, a legal association of land or homeowners who share ownership of a piece of land or a building like a condo, housing project or gated community sharing the use of common facilities and assets with other co-owners. HOA then is mandated with keeping the community under its jurisdiction safe, maintain the buildings and shared assets and replace what deteriorates as well as keep the condo association reserves intact.

Using Reserve Fund for HOA

All HOA reserve funds are owned by members of the association, who own a share in the condo or housing project, but, there is usually a board that oversees the utilization of the money. Each HOA comes up with its governing rules and regulations that bind all the members. These rules are set to give some guidelines on expected behaviour of members, member fees, contributions, and so on that keep the association functioning well and its members safe.

Money in the association reserves is used to fund current projects and pay for services that benefit everybody. These projects and services will fall either under daily, short-term or long-term expenditure. It is, therefore, important to have guidelines on how these funds are utilised to avoid misappropriation within the community. Here is a guide on how such funds could be used:

1. Short Term Expenditures:

Expenses that need to be taken care of on a daily, weekly, monthly maybe even on a quarterly basis would fall under short-term costs. These are goods and services that require cash payments or short contracts that should be paid for regularly. Such expenditures include:

  a) Salaries and wages of cleaners, grounds men and maintenance workers.
  b) Payments for utilities
  c) Payments for garbage collections
  d) Security services
  e) Insurance
  f) Office stationery (for the Association)
  g) Cleaning materials

2. Long Term Expenditures:

These are expenses that occur at least once in a year on the short term and many years down the line. Examples include:

  a) Council or municipal rates
  b) Building of perimeter fence
  c) Painting the buildings
  d) Constructing a swimming pool
  e) Landscaping
  f) Additional buildings
  g) Roof, windows or door replacement

Each community would do well to have their own document that stipulates the rules and regulations that govern their association. Due diligence should be done when planning for expenses and implementing the expenditures.

However, it is important to note that once in a while an expense not included in the schedule may arise, forcing the administrators to call on the members to make some extra contributions to pay for it. Detailed assessment should be carried out in such a case and presented to the association members for approval.

As a member of your local HOA, even if you are not a board member, an accounting officer or manager, it is important to familiarise yourself with the legal documents that govern the running of the association. You have a mandate to come forth with suggestions, insights and advise on how the condo association reserves are disbursed at any given moment for the betterment of all.

Tags

Condo Association Reserves, Condo Reserve Fund, Reserve Studies For Condominiums

Meet the author

author avatar Stanley Thomas
Hey, I'm Stanley Thomas. I am working as a freelance blogger and writer. I always love to write about subjects that I love to explore like home, Health, fashion, lifestyle, and business. I love to sho

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