In real estate, the term reserves has different meanings depending on context. In a common interest subdivision, reserves refer to funds collected from property owners and set aside for future replacement, repair, and major maintenance of common areas and shared facilities.
In mortgage lending, reserves refer to funds accumulated by a lender from a borrower as part of each monthly mortgage payment. These funds are held to pay property taxes and insurance premiums when they become due, helping ensure that these obligations are met in a timely manner.
