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What is the difference between operating account and reserves account for HOA in Illinois?
Wiki User
∙ 8y ago
The operating account is available for paying monthly expenses of the HOA and its operations.
The reserve account is available only for use by the board to pay for 'capital improvements'. Reserve account contributions are not readily available for other purposes without significant notice to owners, and often a repayment plan within a specified period.
These accounts must be kept separately.
Wiki User
∙ 8y ago
An operating account is used for day-to-day expenses of the HOA, such as maintenance, repairs, and utilities. It is funded by monthly dues and other regular income. A reserves account, on the other hand, is specifically designated for major repairs and replacements, such as roof replacements or pavement repairs. This account is funded by setting aside a portion of the monthly dues into a separate reserves fund to ensure that there are sufficient funds available for these larger expenses when they arise.
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Read your governing documents to determine how 'restricted reserves' are treated as accounts. Often, and state laws can dictate -- that 'restricted reserves' are mandated to be kept in separate accounts, in a bank, for example. Whether these are 'maintenance reserves' , 'capital reserves' or 'insurance deductible reserves', your chart of accounts should differentiate (each of) them from the association's operating account.
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