Definition
HOA savings accumulated for major repairs and capital replacements—roofing, paving, major systems. Strong reserves prevent special assessments and maintain property values.
Where you’ll meet it
What do I actually own, and what does the HOA control?
See it in Buying a condo or townhome · Step 1About this term
Strong reserves (typically 20-50% of annual budget) prevent special assessments for unexpected major repairs. Reserves are funded by including reserve contributions in annual budgets. Underfunded reserves are a major red flag indicating future special assessments. Reserve studies assess funding adequacy.
Pro Tip
Ask for reserve study reports and check funding levels. Underfunded reserves often signal impending special assessments.
Example
A community with $50,000 annual budget should accumulate $10,000-$25,000 annually for reserves to cover major repairs