Insights
Who needs a Reserve Study?
By
Erik M. Rivera
It’s best and some cases, required, for any organization, association, or institution that is responsible for maintaining common elements of that entity to have a reserve study conducted. This could include owners’ associations, universities, country clubs, churches and many more.
In California, according to the Davis-Sterling Act Civil Code § 5550, all associations, regardless of size, are required to prepare a reserve study, unless the total replacement costs are less than 50% of the gross budget of the association. This is after excluding the association’s reserve account for that period.
In fact, in most states you're required to do an annual update of the finances and an on-site inspection and measurement of the components every few years. Depending on the state that you live in, will depend on how often you must do a reserve study that includes a site inspection and updates. We can help determine these requirements.
Site inspections are important to do, so the Reserve Analyst can provide accurate information in the report in terms of the usable life of the components. These studies are done to not only measure usable life but to inform the Board how much is needed to ensure replacement at the end of that usable life. Just as importantly, financial updates done on an annual basis ensure the long-term financial health of the reserve accounts, keeping your plans on track.
Different types of organizations have different needs and things to consider. We are experienced analysts that understand that not every organization is the same, each requires a tailored approach that addresses those needs.