What is an HOA reserve fund?

Reserves are separate from the operating budget, which pays for routine costs like landscaping and utilities. They exist so that big, predictable expenses are paid for gradually by every owner who benefits, instead of by a large special assessment when something fails.

A reserve study lists each major component, its remaining useful life and its expected replacement cost, then sets out a contribution plan. Associations often describe their position as percent funded: the reserve balance compared with the value of the components already used up.

Some states require reserve studies, reserve disclosures to owners, or both. Your association's governing documents may add their own requirements.