Most HOA boards agree on one thing: reserve funds matter.
What’s far less certain is whether their association is actually prepared for what’s coming.
Recent survey data from HOA boards across the country shows a consistent pattern—while many associations maintain reserve accounts and even commission reserve studies, a large percentage of boards are not confident their current plans will fully cover future major repairs. That gap between intention and confidence is where real risk lives.
What Reserve Funds Are Really Meant to Do
Reserve funds exist for one simple reason:
to pay for large, predictable, long-term expenses without shocking homeowners.
That includes things like:
- Roof replacements
- Road and pavement work
- Structural components
- Mechanical systems
- Major exterior repairs
None of these are surprises. What is surprising is how often they still trigger emergency special assessments.
The Problem Isn’t Awareness — It’s Follow-Through
Most boards today understand the importance of reserve funding. The issue isn’t denial; it’s execution.
Survey responses point to common challenges:
- Reserve studies that exist but aren’t actively followed
- Funding recommendations that get deferred year after year
- Board turnover that breaks continuity
- Long-term plans tracked in spreadsheets or PDFs that no one revisits
When reserve planning lives outside day-to-day operations, it slowly drifts from reality.
Underfunded Reserves Create Cascading Problems
When reserves fall behind, the consequences go well beyond finances:
- Special assessments become unavoidable
- Insurance carriers scrutinize the association more closely
- Lenders question financial stability during resale
- Property values suffer due to uncertainty and deferred maintenance
- Board stress increases as decisions become reactive instead of planned
Reserve underfunding isn’t just an accounting issue—it’s a governance issue.
Reserve Planning Has Become Operational
Reserve funding is no longer just a math exercise.
Boards are now expected to:
- Track reserve components over decades
- Align annual budgets with long-term funding plans
- Coordinate vendors, projects, and cash flow timing
- Preserve financial knowledge across board transitions
Without systems that support this continuity, boards are forced to rely on memory, handoffs, and best guesses.
5 Questions Every HOA Board Should Ask About Reserves
If your board wants clarity—not just hope—start here:
1. Are we funding reserves according to our most recent reserve study?
Having a study isn’t the same as following it. Review whether your annual contributions align with the funding recommendations—or whether they’ve been quietly reduced over time.
2. When was our reserve study last updated?
Material costs, labor rates, and infrastructure age change. A study that’s 5–7 years old may no longer reflect today’s financial reality.
3. What percentage funded are we right now?
Boards should know this number without hesitation. It’s one of the clearest indicators of reserve health and long-term stability.
4. What major projects are expected within the next 3–5 years?
Long-term plans are important, but near-term visibility is critical. Identify large expenditures approaching soon and confirm funding is truly in place.
5. If the board turned over tomorrow, would the next board clearly understand our reserve plan?
Continuity is one of the most overlooked risks. If your reserve tracking lives in someone’s laptop or personal notes, your association is vulnerable.
Confidence Comes From Visibility
Boards that reported higher confidence in their reserve plans shared a few traits in common:
- Clear visibility into reserve balances and projections
- Regular review of reserve study assumptions
- Consistent funding discipline year over year
- Centralized access to documents, vendor history, and prior decisions
Confidence doesn’t come from hoping the numbers work out. It comes from seeing where the association stands—today and years ahead.
Final Thought
Reserve funds don’t fail all at once.
They fail slowly—through missed adjustments, forgotten assumptions, and deferred decisions.
Boards that treat reserve planning as an ongoing operational responsibility, not a once-every-few-years document, put their communities in a far stronger position to weather rising costs, leadership changes, and long-term maintenance realities.