HOA Directors Can Use Reserve Funds for Different Line Items Then Originally Planned For
A homeowners association’s reserve funds are established to cover various line items representing the different components within the association’s common area for which the reserve funds are being accumulated. Although the goal is to have the funds required for the maintenance, repair and/or replacement of the common area components on deposit in the reserve bank account and available for use when needed for a particular component, associations commonly experience situations where there are not sufficient funds allocated to a particular line item at a time when there is a need for those funds to address issues with that line item component. This results in a need for the association’s directors to authorize the use of reserve funds that were designated for a particular line item in the association’s reserve study for another reserve item that does not have sufficient funds allocated to it in the reserve account.
The need to use reserve funds that were allocated for a different component generally results from: