Why Is A Reserve Study So Important?
Over time, everything wears out. Most Homeowners Associations are responsible for repairing, replacing, or maintaining the common areas and any other element of the common property identified in the Homeowners Association by-laws.
A reserve study provides a current estimate of the costs of repairing and replacing major common area components (such as roofs or pavement) over the long term. Ideally, major repair and replacement costs will be covered by funds set aside by the association as reserves, so that funds for repair and replacement are there when needed.
Because the elected HOA board is responsible for managing association funds and property, a replacement reserve budget is very important. An important tool for balancing and optimizing long-term property values and HOA dues, a reserve budget also provides owners with financial information to support the annual operating budget.
For potential buyers, understanding the reserve study is an important part of evaluating the value of the purchase. For Association Members, reserve planning helps protect property values from declining by avoiding a large cost from deferred maintenance.