Stevens & Goldwyn, P.A. Discuss Why an HOA Needs Adequate Cash Reserves
FORT LAUDERDALE, Fla., January 31, 2019 (Newswire.com) - Unanticipated expenses are a given when living in an HOA. For example, if there are repairs that have not been addressed previously, such as within an older retirement community that did not prioritize reserve funds, then successive special assessments can come cascading down on newer residents, which can squeeze the finances of association owners, according to the the homeowners’ association attorneys at Stevens & Goldwyn, P.A. Creating a reserve fund is an effective way to cover large, infrequent or, unexpected common area costs. This also includes fundamental expenses, such as concrete restoration, structural improvements, and HVAC systems.
The Responsibility of an HOA
Every HOA has a set of governing documents known as the Covenants, Conditions, Restrictions, and Easements (CC&R's) which obligate an HOA to maintain common areas and ensure adequate maintenance. Common areas are generally defined as places that all residents can enjoy and have the right to use.
How Common Areas are Paid for by the HOA
The governing documents outlay both owners timetables for the payment of dues from each of the homeowners. It also establishes the cost of ongoing maintenance programs as well as maintaining outdoor lighting, pools, spas, or even tennis courts. An effective development will not only address operational and maintenance costs, but will provide for a reserve, or “rainy day” fund.
How Much Money Should an HOA Reserve Fund Have?
Similar to the old adage of saving approximately six months of salary, an HOA fund should have an appropriate amount of money available for any unforeseen needs or repairs. Generally, an accountant will prepare a “reserve study” that will determine the costs of common area upkeep and repairs over a timeline of several decades.
Reserve Funds are Necessary, Otherwise, Special Assessments are Needed
When an HOA runs into a necessary expense that falls outside of its operating budget, it is faced with two choices: levy higher dues or introduce a special assessment. Special assessments can be costly, and most times homeowners will have difficulty coming up with the funds to cover them.
About Stevens & Goldwyn: The homeowners’ association attorneys at Stevens & Goldwyn, P.A. are experts in condominium law, contractual disputes, and HOA litigation. They specialize in representation for homeowners associations, assessment collection, foreclosures, civil litigation, and more. Stevens & Goldwyn, P.A. is located in Plantation, FL and provides services throughout Florida, including Fort Lauderdale, Miami, Palm Beach, Plantation, Pembroke Pines, Miami Beach, Pompano Beach, Hollywood, Aventura, and more.
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Source: Stevens & Goldwyn, P.A.