common misconception is that if you have a reserve study done, you
must set aside reserves for each component listed. However, it is
your right to fund reserves based on your financial goals. As long
as the analysis has been completed in compliance with state statute,
your fiduciary responsibility has been met.
a reserve study provider, consider the following:
- How long
has the company been in business?
- Has the provider
completed studies in your immediate marketplace and will they
- Has the provider
offered to complete annual reserve study updates, so that you
will continue to be properly funded in the future?
- Will a designated
reserve specialist (RS) complete your reserve study?
The RS designation
is conferred by the Community Associations Institute (CAI) to reserve
study professionals who have proven their expertise through formal
education and have substantial field experience. All reserve studies
provided by a designated reserve specialist are completed under
the guidelines of the National Reserve Study Standards of CAI and
must conform to CAI’s Professional Reserve Specialist Code
Brubaker, RS, is a regional appraiser with GAB Robins. Mr. Brubaker
is also a certified construction inspector with the Association of
Construction Inspectors. BY STEPHEN BRUBAKER, RS
it is budget-planning time for most associations. An old saying
states that if you don’t have a goal you will never know when
you have reached it. The same can be true for preparing a budget.
A professionally prepared, properly completed reserve study can
be an invaluable tool to assist in setting your annual budget goals
and will show you how to meet them. Your association can then make
a much more informed decision regarding full funding requirements,
thereby avoiding the likelihood of a special assessment.
A reserve study
helps to identify major repairs or replacements a property can expect
and is designed to establish a stable and equitable plan to pay
for these anticipated expenditures. For example, Florida statute
mandates that condominiums, cooperatives, and timeshare condominiums
perform a reserve study on an annual basis. Property owner’s
associations, homeowner’s associations and country clubs also
rely on reserve studies for funding of predictable replacement items.
Each year board
members, association members and property managers ask themselves
if their reserves are funded properly, but some perform their own
In doing so, they run the risk of improperly estimating the useful
lives and replacement costs of their reserve components or completely
omit important elements. As a board member or property manager,
why assume the risk of an erroneous or incomplete reserve study
when a qualified specialist can work with you to assure that your
reserves are properly identified and funded?
Every new reserve
study should include a thorough review of your reserve budget. Along
with property representatives, the reserve specialist should identify
appropriate reserve components, as outlined in applicable state
statute and in your reserve budget. All components should be physically
inspected, with careful attention paid to the date of installation
or replacement. The size of the reserve component must be accurately
measured, whether by review of construction plans or on-site measurement.
For each of the components identified, the reserve specialist must
accurately establish a market-supported useful life, remaining useful
life and current and future replacement costs. In addition to market
data, your actual operating histories should be carefully considered.
After gathering all this information, it is the job of the reserve
specialist to develop an analysis that will estimate the annual
funds needed to meet the required replacement reserve.