A Reserve Study is a tool that identifies the current status of the Reserve fund contributions in a reserve account and provides a funding plan for deferred ongoing deterioration, maintenance, repairs and replacement in order to prevent special assessments.
Associations, regardless of size, are required to prepare a reserve study unless the total replacement costs are less than 50% of the annual gross budget of the association, excluding the association’s reserve account for that period.
The Civil Code requirements for reserve studies include but are not limited to the following:
- Perform Reserve Study at least every 3 years
- Update Reserve Study annually
- Identify all common area components with less than 30 year life
- Estimate life expectancy for those components
- Estimate costs to repair or replace those components
- Compile statement of monthly contributions to cover the costs
- Calculate “Percent Funded”
- Prove the adequacy of the reserve contributions with a 30-year cash flow
We are Professional performing Reserve Study Services, onsite inspections and preparing contributions for funding plan reports .
The Reserve Study assists Condominium and Homeowner Association Members and their Property Management Company to understand what they own, how much money they have, the timing of potential replacements, future costs, and, ultimately, how to pay for the replacements when they are due.
In Reserve Studies, making a HOA Reserve Funding Contribution less than the rate at which the association common elements assets are deteriorating means the current owners are paying less than their fair share, and forcing future owners to pay more than their fair share.
The Reserve Studies must establish the proper funding contributions for the Association and in many cases avoid special assessments
- Why should your association conduct a reserve study?
- Protect your property value
- Increase fairness within member contributions
- Enhance & maintain your common areas
- Be financially prepared for scheduled expenses