Nevada Timeshare License Practice Exam

What is a portion of the maintenance fee set aside for long-term repairs called?

1. Capital Improvement Fund

2. Operating Fund

3. Reserve Account

4. Maintenance Reserve

The correct answer is: Reserve Account

The portion of the maintenance fee set aside for long-term repairs is referred to as a Reserve Account. This account is essential for ensuring that funds are available for necessary repairs and replacements without needing to impose special assessments on timeshare owners. A Reserve Account is critical for the financial health of a timeshare community. It allows for the planning and funding of significant repairs, such as replacing roofs or updating plumbing systems, which are not part of the routine maintenance budget. By allocating funds into this account regularly, the timeshare association can prevent financial strain on owners when unexpected repairs arise. In contrast, options such as the Capital Improvement Fund generally refer to funds allocated for enhancements or upgrades to the property rather than repairs and maintenance. The Operating Fund typically covers day-to-day expenses and basic operational costs, while the Maintenance Reserve focuses on immediate repairs instead of long-term maintenance planning, making the Reserve Account the most suitable term for funds set aside for future repairs.