Condo and co-op associations collect dues every month. A certain portion of those dues are kept as reserves for future operating, maintenance and repair costs.

It is important that a homeowners association has adequate reserves to cover anticipated maintenance and repair costs, such as replacing a roof or fixing siding. Without a proper amount of reserves, the association may be required to issue an unwelcome special assessment to the homeowners.

Reserves is also used to refer to accounts held in escrow by lenders to cover property tax and homeowners insurance costs.