What Can HOA Reserve Funds Be Used For?

Diving Into What HOAs Can Put Their Funds Towards

A reserve fund is a savings account set aside by the HOA to cover major repairs and replacements of commonly owned assets. This is separate from the HOA’s operating budget, which covers routine expenses like landscaping, utilities, insurance, and administrative costs. The reserve fund exists to prepare the association for significant future costs, without needing to impose sudden special assessments on homeowners.

What Reserve Funds Can Be Used For

Reserve funds are essential to an HOA’s financial stability, helping cover the cost of major repairs and replacements across the community. These funds aren’t meant for daily operations but are set aside for capital expenses based on asset lifespans and projected deterioration. A general breakdown by common component categories is as follows:

     • External Building Components

Reserve funds support the upkeep of exterior facade elements.
Common uses include:

• Roof replacements and repairs
• Exterior painting or siding replacements
• Balcony or deck restoration
• Window or door replacements 
• Gutter and drainage system replacements
• Light fixture replacements

     • Internal Building Components

For HOAs with shared indoor spaces, reserves help manage interior upkeep.
Common uses include:

• Hallway flooring replacement
• Interior painting of common areas
• Ceiling repairs or lighting upgrades
• Lobby improvements
• Bathroom renovations
• Exercise equipment replacements

     • Service Components

These are critical systems that serve the entire building or community.
Common uses include:

• Elevator repairs or replacements
• Fire detection and sprinkler system upgrades
• Plumbing and sewer line replacements 
• Electrical system overhauls
• HVAC system replacements
• Security cameras and systems

     • Site Components

Outdoor and structural features that require long-term maintenance.
Common uses include:

• Street and parking lot paving
• Sidewalk and curb repair
• Fence and wall replacements
• Retaining wall maintenance
• Outdoor lighting systems
• Playground equipment replacement
• Tennis or basketball court resurfacing
• Entry monuments and signage
• Stormwater drainage infrastructure
• Subsurface utility piping
• Pond dredging

     • Clubhouse Components

Shared indoor amenities also fall under reserve responsibilities.
Common uses include:

• HVAC or plumbing replacement
• Flooring, ceiling, or painting updates
• Furniture or appliance upgrades
• Roof or window maintenance
• Structural repairs or remodeling

     • Pool Components

Pools are high-value assets with regular capital needs.
Common uses include:

• Pool resurfacing and tile replacement
• Pump and filtration system upgrades
• Deck repair or replacement
• Fence and safety gate maintenance
• Spa or heating system replacements
• Pool furniture and accessories

     • Garage Components

HOAs with shared garages should plan for structural and mechanical upkeep.
Common uses include:

• Floor and ceiling structural repairs
• Ventilation and lighting upgrades
• Garage door and opener replacements
• Fire safety equipment
• Entry gate systems
• Light fixture replacements
• Paint applications

What Reserve Funds Cannot Be Used For

Reserve funds are not meant for day-to-day expenses that can be funded operationally. This can include:

• Landscaping maintenance
• Cleaning services
• Simple repair projects
• Utility bills
• Office supplies or management fees
• Social events or non-capital projects

Misusing reserve funds can lead to budget shortfalls, legal issues, or the inability to fund critical repairs when they’re needed most.

Final Thoughts

Building Reserves plays a key role in helping HOAs manage their reserve funds responsibly. With expert guidance and accurate reserve studies, communities can prepare for large budgetary repairs and replacements without placing unexpected financial strain on homeowners. By clearly identifying what reserve funds should be used for, Building Reserves empowers HOAs to make informed, strategic decisions that protect both the property and the people who live there.

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Written by James Newby, Architectural Engineer