The Importance Of A Reserve Study & Why It Matters To You

Every homeowners association needs to plan for the future and one way of doing that is to conduct a reserve study.  A reserve study is performed to determine when areas of the association will need renovated or repaired and how much that will cost.  Certain areas such as the roof and parking lot are expensive to repair so money needs to be saved each month to fund those projects when mandatory.  Does your homeowners association set aside enough money to pay for future repairs?

 

 

Typically, a reserve study is prepared by someone who specializes in doing them but they can be performed by anyone.  Board members should ensure they have an extensive knowledge of HOA’s in order to accurately calculate a time frame and a budget.  An HOA board member will analyze the budget and determine how much of the HOA fees will be required to cover the expense of future projects.

 

A competent reserve study performed by a professional provides board members with valuable information as they know what to look for and offer helpful advice.  It can be difficult to predict what areas will need repaired based on appearance or when the last time any maintenance was performed.  Areas of the homeowners association need updated from time to time including the neighborhood website.  What happens if the reserve study is not performed by a professional and funds are insufficient?

 

 

The reserve study not only matters to board members but also to homeowners whether they follow the neighborhood website or not.  If the reserve study fails to include all areas of the homeowners association or the budget is not accurate then there would be a shortage of reserve funds.  Unfortunately, a shortage of reserve funds leads to a special assessment unless board members postpone projects in the community.