Since a Reserve Study functions as a budget planning mechanism, most properties begin the process by requesting a Reserve Study proposal at least six months ahead of their fiscal year end. This gives the property’s management a month or two to choose a Reserve Specialist, a month or two to complete the Reserve Study, a month to review the finalized report, and enough time to incorporate the funding recommendations into the budget for the upcoming fiscal year.

The Community Associations Institute created the Reserve Specialist (RS) certification to enhance the quality of Reserve Studies. To obtain the RS designation, applicants must undergo a these part review process that assesses.

1. Educational background (meeting minimum criteria)

2. Reserve Study experience (meeting a minimum requirement)

3. Sample work product (meeting minimum reporting requirements)

4. Client references (a minimum of 5)

In level 2 Reserve study (modify with on site visit) again the following five tasks: First Create a list for components (inventory of components), condition evaluation based on visual on site inspection, creating funding plan, making funding status, and estimation of life and valuation.

Note: The validity of previous Reserve Studies is essential for updates.

National Reserve Study Standards are a set of guidelines established by the Community Associations Institute (CAI) in 1998. These standards seek to:

1. Provide consistent terminology.

2. Standardize the levels of Reserve Study services.

3. Make a set of common disclosures within the Reserve Study.

4. Establish a Reserve Specialist (RS) credential program.

Every Reserve Study, in accordance with the National Reserve Study Standards, provides three critical pieces of information that are valuable for both annual budget planning and disclosure purposes:

1. Component List (also known as what you are reserving for)

2. Percent Funded (also known as the Strength of the Reserve Fund)

3. Recommended Funding Plan

During a property inspection, which occurs after reviewing documents that establish and identify common area assets, the estimated life expectancies and life cycles of common area components are determined based on readily accessible and visible conditions, without any intrusive or destructive investigation. Contacting the component’s contractor or vendor can provide additional information if required.

The cost of a Reserve Study can vary depending on various factors such as the size and complexity of the property, the level of detail required, and the qualifications of the professional performing the study. However, the cost of a Reserve Study is typically a small fraction of the long-term maintenance and replacement costs that it helps property owners avoid.

A Reserve Study provides several benefits to property owners and community associations, including:

– A long-term maintenance plan that helps prevent unexpected repair and replacement costs.
– A funding plan that ensures sufficient funds are available to pay for future maintenance and replacement needs.
– A clear understanding of the condition and remaining useful life of common area components.
– Improved decision-making and transparency for property owners and community associations.
– Increased property values through well-maintained common areas and components.

Conducting a reserve study is essential for protecting your property value, achieving fairness in member contributions, maintaining and improving common areas, and being financially prepared for upcoming expenses.

Common area components are the physical assets that are owned and maintained by a property owner or community association and are used by all owners or tenants. Examples of common area components include roofs, building facades, parking lots, swimming pools, elevators, and landscaping.