August 19, 2021 - BY Admin

What is a Reserve Study?

Staying on top of community maintenance and repairs falls under the HOA’s responsibility to the residents. This is where a Reserve Study comes in handy.

Reserve Study - a long-term budgeting and planning tool that takes into account all that is maintained by the HOA as well as the HOA’s reserve fund and helps plan proper maintenance for deterioration of HOA property over the course of several decades.

Maintenance is an ongoing battle for HOA’s. A Reserve Study looks at typical repair and replacement requirements that an HOA will commonly run into and predicts the cost of the work required to keep things running smoothly. Effectively, it’s a budgeting tool for the HOA.

So how is a reserve study created?

Make a List
Write down everything the HOA is responsible for regarding maintenance and repair. If you need help figuring out what the HOA is responsible for, it should be clearly defined in the governing documents.

Life Expectancy & Cost
The HOA should have records of work previously done on the property. This will give a good idea of how long something will last before repairs need to be done or before it needs to be replaced; it will also give an idea of the cost associated with repair and replacement. If there is no previous record keeping for items in place to pull from, check with the developer, a contractor, or look into what the national average is.

Documentation here is key. Keeping good documentation of anything that the HOA is responsible for, what its life expectancy is, what it costs to maintain/repair will not only help the current HOA board prepare its finances for a successful future, but it will also benefit future HOA boards in knowing what costs to take into account when doing their own budgeting.

Special Note for Nevada HOA’s:

Luckily for residents of Nevada, HOAs are required to use a licensed Reserve Study Specialist in order to prepare a Reserve Study. Your Reserve Study Specialist will handle the creation and budgeting of a Reserve Study for your HOA. Typically speaking, a Reserve Study Specialist has years of experience and the proper connections to get accurate quoting to use for estimates as well as the knowledge of what an HOA is and isn’t responsible for repairing. However, that doesn’t mean that you don’t have to understand what goes into a Reserve Study and understand why they are necessary for future planning.