What does reserve funds mean?
Essentially, a reserve fund is a type of fund in which you can set aside money to cover your routine, scheduled and unscheduled expenses, which you would otherwise draw from your available savings. You can create a general reserve fund for your family and use it to pay for your planned and unplanned expenses.
What is a reserve expense?
Expense Reserve — a liability item for expenses incurred but not paid.
What is reserve account?
Reserves are like savings accounts – an accumulation of funds for a future purpose. The source of funding for a reserve might be surpluses from operations, or scheduled transfers that have been planned and budgeted.
What is reserve fund in condominium?
A reserve fund is a special account with a financial institution such as a bank, loan and trust corporation or credit union. This account is separate from the condominium’s operating fund, and it is used to pay for major repairs and replacements to the condominium’s common elements.
Is a reserve fund an expense?
A reserve fund is a savings account or other liquid asset managed by a condominium, business or individual for anticipated future expenditures, such as major repairs and improvements. Reserve funds usually are set aside in an account separate from the general operating funds.
What are examples of reserves?
Examples of such reserves include Dividend Equalization Reserve, Debenture Redemption Reserves, Contingency Reserves, Capital Redemption Reserves and more.
What is a good amount for condo reserve fund?
In general, funds need at least $2,000 per unit per year to avoid under funding. An average for a new building might be just $500 per unit per year while older buildings can be as much as $4,000.
What are different types of reserves?
Reserves are divided into two types:
- Revenue Reserves.
- Capital Reserves.
Are reserve funds refundable?
Contributions to the reserve/ sinking fund are generally not repayable when a flat is sold. However, the terms of the lease must be checked to see whether the lease provides that any money in the fund should be refunded to a leaseholder who is selling their flat.