Get 1 year of free community web site hosting from!
Thursday, May 13, 2021

HOATalk is a free service of

Easy to use website tools to help your board
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: co-mingling operating budget funds with savings accout
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages


04/05/2021 1:46 PM  
Is it legal or even wise to take money out of the approved Operating Budget Account and put it into our Savings/Emergency Account? We were never required to establish a Reserve Acct. per WI State Statutes so we just call it a Savings/Emergency Fund. Since the new Board took office they feel they can co-mingle these monies. Thank you.
(South Carolina)


04/05/2021 2:56 PM  

In a properly prepared Operating Budget there will be monies assigned to a Reserve Fund. Even if the fund is called Savings/Emergency, it is basically a Reserve Fund. It should be renamed Reserve Fund to eliminate confusion.


04/05/2021 3:07 PM  
You have given us so little information here. The more we get the better the advice. If your HOA is a 4 Unit building you may be able to get away with lax rules. Please give us some more answers.

1) How many units in your HOA?
2) Single Family Homes or Condos?
3) How many Board Members do you have?
4) How old is your Association?
5) What is your annual budget and monthly dues?
6) Do you have any Amenities?

Many more questions but this is a start.


04/05/2021 3:28 PM  
As long as the accounting is properly maintained, the physical location of the money is at the boards discretion. That said, I don't think it's wise to comingle the funds. They should be two (or more) accounts.

We have two accounts.
Checking - operating funds
Savings - Reserves

We will, as time and funds permit, invest in certificate of deposits in order to obtain a better return on our money. This is typically done with the Reserve funds. this is also why I said there should be two or more accounts.


04/05/2021 3:46 PM  
I agree with John and Mark - you always start with your documents, as they should tell you what's the association's responsibility vs. homeowners.

Generally, the operating budget covers routine expenses. For example if you have a property manager, you have to pay him or her every month. Reserves are a type of savings account, but I like to think of them as a type of college find it retirement account belonged or kater, you will need to replace or need major repairs to your common areas.

For example, if your community owns the streets therein, they will need to be reoaved. You live in Wisconsin and should know how vital that is. This isn't as simple of buying a dozen bags of concrete mix from Home Depot - you should hire people with experience in relating and that's not cheap.

That is what your reserves are for - regular deposits plus the interest they earn can ensure the more hey will be there when you need it. But is not a slush fund (As I said in another conversation)

It may be your board has realized your savings fund is underfunded in a big way and is trying to build it back up. I would suggest they look at the year end financial report and if they find they have a ton of money, some of that could be placed in savings. We used to do that when I served on the board. It's not really co-mingling because once the money's placed in savings it shouldn't be touched until the appropriate time.

There are some communities who've set up a contingency fund to help cover emergency expenses or severe deficits in the operating budget. They also have rules as to when that money's used and how it's funded.

I don't know if you've asked the board any of these questions- I suggest you do and then you'll be in a better position to determine if there could be a problem. If they can't or refuse to explain why they've done this, that's when you may need to ask more questions.

And while you're at it read some old conversations on this website about reserve funds so you'll know what they are. You may need to ask your board if there's ever been a reserve study and if so when was the last one done. If no one knows what that is Or no one remembers, you probably need one done THIS YEAR. The board can use its recommendations to develop a budget that makes sense.


04/05/2021 4:19 PM  
Echoing what Tim said, it doesn't really matter what bank account is used. What matters is using proper bookkeeping "accounts" or categories.
This is called a chart of accounts. So, regardless of how you pay for it, or from which bank account, paper and printer ink is going to be taken from your office supplies account. You should also be receiving regular financial reports that show exactly what money is being spent on.

Of course, if you set up a savings account for reserve funds, it does tend to cause confusion when you use it for operating funds. You/they should clarify that the bank accounts do not necessarily correspond to your bookkeeping chart of accounts.


04/05/2021 4:46 PM  
Agree with others.

A good reason to change the name of your savings/emergency account is that certified reserve analysts explain in their introduction to the study that reserves are for predictable replacement/repair of items listed in the reserves study.

By definition "emergencies" are not predictable. So you should not include paying for things out of reserves like vandalism, autos crashing into & damaging a reserve item, storms, etc.

Do your governing documents, probably your CC&Rs state that you must maintain a reserve account or fund, Nancy????


04/05/2021 8:17 PM  
Traditional Account Rules:

1. Funds in an operating account can be used to pay operating or reserve expenses.

2. Funds in a reserve account can only used to pay reserve expenses.

Checking, Savings, CD, whatever - That's your choice. But use of funds in an account that's designated as a Reserve account is restricted.

Sikubali jukumu. Read all posts at your own risk.


04/06/2021 11:10 AM  
Thank you Mark.

We are a 20 "single family" condo development. We are all responsible for our own house (inside and out, our patios and driveways.
We have only 3 Board Members
We have been around for about 10 years
Now that all the homes are finally finished our new annual budget is $30,000.00 with the dues being $125.00
No we have no amenities

The services the association provides with our monthly dues is lawn maintenance, snow removal, insurance on the grounds and the cutting down of any trees/branches in danger of hitting a unit since we are in a heavily wooded area. A "Reserve" account was never established for this condominium and it wasn't required. If we did have a "Reserve" account the State Statutes has many rules it imposes on it and so we don't want to say we have that when we don't legally have one.

Our documents say absolutely nothing about accounts we should have. The Declaration just tells us the rules governing the land and the Bylaws are just about job descriptions and rules for meetings and fines. In the beginning there was just a checking account then after a couple years someone thought having a savings account would be good too. The checkbook has always kept the budget monies in it and we use the Savings/Emergency Account money if for some reason we have an unexpected expense come up. But here the only unexpected expenses would be more than normal snowfall or more grass cuttings due to rainfall.

My concern over co-mingling this money is that once budget money goes into the Savings it might be used for other reasons and then we may come up short once a snowy December come upon us. This just has never been done before and I'm concerned about it but don't want to ruffle feathers if my thinking is flawed. Thank you


04/06/2021 2:36 PM  
Minnesota law will not allow an HOA to co-mingle the two accounts.
(South Carolina)


04/06/2021 5:18 PM  
Posted By MichaelS56 on 04/06/2021 2:36 PM
Minnesota law will not allow an HOA to co-mingle the two accounts.

SC law allows us to do as we wish so one must consider where the OP lives.


04/06/2021 5:59 PM  
Posted By JohnC46 on 04/06/2021 5:18 PM
Posted By MichaelS56 on 04/06/2021 2:36 PM
Minnesota law will not allow an HOA to co-mingle the two accounts.

SC law allows us to do as we wish so one must consider where the OP lives.

I find these statements confusing.

If you are saying that you have 2 non-reserve accounts - one checking and one savings - I don't think there are any states that restricts comingling.

On the other hand, if you are saying that you have an operating account and a reserve account - I don't know of any state that would allow comingling.

Once you have a designated Reserve account, there are limits on what you can do everywhere that I know of.

Sikubali jukumu. Read all posts at your own risk.
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > co-mingling operating budget funds with savings accout

Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.

General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement