Every year we pay our Vistoso Community Association dues and a chunk of that money is for the purpose of conducting a reserve study and setting aside money in the reserve fund. So, what is this all about and why is part of our dues being spent this way.
Before going into the “why”, let’s look at what a reserve study and a reserve fund are. Simply put a reserve study is an analysis of an HOA’s large components/assets that determines how long it will be before these assets need repair/replacement and the cost of such upkeep. Once the analysis is complete, money is set aside for future repair/replacement which is a reserve fund. The reserve study and fund should be reviewed annually to make sure they are up-to-date.
So, why go through all of this instead of just paying for these repairs/replacements as they come along. One huge reason is that no one likes a surprise bill (special assessment). This sort of assessment too often occurs when a large, expensive asset needs to be replaced unexpectedly. Special assessments can be in just about any amount and often are thousands of dollars per HOA member.
When money is not available through a reserve fund or a special assessment to replace or properly repair major assets of an HOA, the needed work is often postponed or the work is completed in a cheap manner. The end result of delays and shortcuts is increased expense in the long run. You might recall the old ad “Pay me now or pay me later”. We all know this means keep things properly maintained or you’ll pay more in the long run and/or you’ll have run down looking property.
In summary, homeowner associations that don’t regularly perform reserve studies and that don’t properly fund reserves nearly always have very unhappy members who have to pay that unwanted special assessment. The other alternative when a plan is not in place is that the common areas are poorly maintained or simply not functional. The end result when this occurs is the HOA members’ property values are diminished. Fortunately VCA isn’t one of these HOA’s as we have a plan and funds in place to best assure our many valuable common area facilities are properly maintained and replaced when needed. This means no special assessments for us and well supported property values.
