An HOA reserve specialist conducts a study of the major capital systems within an homeowners association. The specialist evaluates the condition of major items, estimates when the item will need replacing, and projects the cost of replacement. The purpose of such study is for associations to decide how much money to set aside for major upgrades and replacements. A reserve study serves as a guide to timeline estimates and projected costs.
Is a Reserve Specialist or Study Required by Law?
Several states require HOAs to have a reserve study. California is one such state, requiring yearly updates to studies and on-site visits every third year. Massachusetts law requires that a condo HOA has a reserve fund; however, it doesn't require a certain balance. The law also makes no mention of reserve studies. Other states have similar laws that while not requiring a reserve study, the law language often implies some rule regarding a reserve fund.
If Not Required in My State, Why Do It?
Many HOAs consider a reserve study a blueprint for the future. It is a planning tool for knowing how much to save for a rainy day. A reserve study also offers protection for HOA board members. A study is an evidence document for when association members question the need for a new roof. It is the "we knew this was coming" and "we're prepared" piece of mind that shows residents the board members were proactive in their thinking rather than being reactive when the roof starts leaking.
Hire an Expert
When seeking professional advice and estimates regarding roofing, siding, heating systems and other major items, it is vital that you hire an experienced reserve specialist. There are career specialists that are certified and that do this type of work full-time. A professional reserve specialist will deliver a detailed report. It is important to note that such a report is one based solely on estimates. No one can predict the future, especially when it comes to pricing. Hiring a professional reserve specialist will not come cheap. The fee will depend upon the property. If it is a gated community with lots of amenities, the fee is higher than a smaller condo building.
Nothing Lasts Forever
It is easy to put aside planning for future needs. In a society focused on the here and now, leaky roofs and cracked swimming pools are not a top-of-mind concern. Not having a plan, or even worse, the funds, when an emergency strikes results in chaos and anger. One of the first questions asked is often,"Why weren't we prepared?" Having a study, whether required by the state or not, is a responsible way to plan for future needs and to avoid upset members.
Where to Start
It is a good idea to review the law in your state. Research reserve specialists available in the area. Talk with other associations and seek recommendations. Verify background credentials and keep association members in the loop. Communication about the process and frequent updates bring is a great way to engage members throughout the process. Invite the reserve specialist to speak at an association meeting and answer any questions members may have. Having an open process will help in building a strong association community.
How We Can Help
GrandManors is an experienced lifestyle HOA management company. On-site management services include a fully integrated package of staff, technology, and best practices to ensure a great lifestyle and thriving community. For information about how we can assist your HOA, contact us. Our experienced staff is eager to help your board, and members understand reserve studies and any other issues of concern.