Condominium Management Services: Obstacles to Establishing a Reserve Fund

Establishing a reserve fund that has enough money to pay for a condo community’s emergency needs is crucial for the success of the complex. But there are often barriers to establishing such an account, obstacles that are often set in place during the home buying process — a time when prospective homeowners may be misinformed about the reality of assessment fees and the importance of using them to pay for more than maintenance and development.

Reserve Fund Obstacles

A condominium management services provider can help a community build an emergency fund, but it may have to challenge misconceptions that residents and board members have about how assessment fees should be used. If your community is struggling to come to terms with the need to build a meaningful reserve fund, chances are that one or more of the following obstacles are standing in the way, and must be addressed before progress can be made.

Residents Were Promised Stable Fees

Prospective homeowners don’t want to hear that assessment costs may rise. Consequently, realtors may tell them that fees will remain stable. The more development a community experiences, the more money it needs in reserve to sustain the development when unexpected expenses arise. With this in  IT Support mind, HOA management services can help board members develop a resource that accurately portrays the financial obligations of living in the community.

Fees Were Artificially Low During Introductory Marketing

Providers of HOA management services caution community owners against making assessment fees artificially low during the introductory marketing period. Once the period ends, costs must often be raised to pay for standard services, not to mention building an emergency fund. Low payments during the introductory marketing period may attract buyers, but it ultimately does them a disservice as members of the community. If assessments are artificially low for a period of time, prospective buyers should be aware of it.

Protest to Increased Costs

Building a reserve fund can be set back when board members are voted out, or the contract with an HOA management services provider is not renewed, in protest over raised assessment fees. Electing new board members and choosing a different condominium management services provider doesn’t solve the problem, though — it only forestalls the collection of money that is needed to build an acceptable emergency fund.


When a community has difficulty building a reserve fund, more than financial mismanagement may be to blame. Residents and board members can be misled into thinking that maintaining a reserve account is not worth raising assessment fees. When this happens, a provider of condominium management services can help resolve the matter by demonstrating the need for financial reserves, and developing an affordable plan to attain them.

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