First off, let’s briefly uncover what a reserve study is and what it entails. It is merely a report that reflects the useful life each common area component has remaining. Also, the report assigns dollar amounts associated with each component. These amounts reflect the amount needed from each owner to replace each item when it’s life ends.
This is a very common question and the short answer is YES!
Per Civil Code §5550, an onsite reserve study must be conducted once every three years. The following link will lead you to the actual law and guidelines:
Furthermore, this report shall be reviewed annually, and appropriate adjustments shall be made.
There are several companies in the HOA industry who conduct these reports for your common area. They utilize a special software specially for these reports. They are usually extensive and include a few dozen pages. You will find graphs, charts and lots of useful information.
The following link will take you to a reputable company for such reports: https://reservestudiesinc.com/
Then best way is to reach out to 2 or 3 companies and obtain a proposal. Upon receiving the proposals, the board shall vote in an open session and decide on which company to choose. That company then will become familiar with your building and will provide all your reserve studies.
The cool part is that these reports also provide you with important suggestions such as:
- How much your HOA monthly dues shall be
- If you shall conduct any special assessments
- How much your HOA shall have in reserves
- How many percent funded your HOA is, based on the reserves you have compared to the what’s suggested
- Time span your common area components have left
Overall, this is a great guide to make sure your HOA is headed in the right direction. Every board shall exercise due diligence in order to make the best possible decisions. Reviewing various reports is helpful for board members for operating efficiently.
The more boards plan ahead and are fiscally responsible, the smoother the HOA will run. If the monthly dues and reserves are at a proper level, less special assessments will be done. Also, the community can afford to beautify the building as well as attend to any deferred maintenance.
If you need us to evaluate your common area components or your current reserve study, please contact us now.