What is an example of a reserve contribution?

A reserve contribution refers specifically to funds that are intentionally set aside for anticipated future expenses, particularly for major repairs or rehabilitation of community assets, such as roofs, paving, or other significant maintenance needs. This financial strategy ensures that the community association can handle these costs without having to impose sudden increases in assessments or gather additional funds at that time.

In the context of community management, setting aside funds for future repairs and maintenance allows for better financial planning and stability. It assures homeowners that there will be resources available when they are needed, minimizing the risk of financial strain on the community.

The other choices, while related to the financial operations of a community association, do not represent reserve contributions. Monthly assessments paid by homeowners are ongoing revenue used for operational costs, collections from fines are penalties assessed for violations of community rules, and special assessments are typically one-time charges levied for unexpected costs or specific projects. None of these options involve the proactive setting aside of funds for future major expenditures, which is the defining characteristic of a reserve contribution.