Guidelines For Selecting A Reserve Professional

An association’s financial well-being is often related to the size of their reserve fund. The purpose of a reserve fund is to provide a mechanism for the Board to save money (on an annual basis) that will provide the funds for the repair and replacement of the common elements of an association.

In light of recent changes in Ohio Condominium Law, associations, including homeowners associations, have begun to take notice of reserve funds and the adequacy of those funds to support the community. Some consider hiring a Reserve Specialist in order to perform a reserve study of the association.

A reserve study provides an analysis of the association’s common areas, with a calculation of the projected cost of repair or replacement of the common area at the end of its useful life. A study assesses the financial situation of the association and determines what kind of assessments the association should be charging owners to avoid the necessity of a special assessment.

If an association chooses to hire a reserve specialist, it should consider how much experience the company and the reserve planner have. Ask how much experience the specialist has in your area, or even in the State of Ohio. Many companies are based out of state, but still do regular projects within the State of Ohio.

Check for certifications as Reserve Specialists. This is a designation given by the Community Associations Institute to those with bachelor’s degrees in construction management, engineering, architecture, or equivalent experience and have prepared at least 30 reserve studies in a three year period.

Ask if the company will provide a 20 to 30 year cash-flow analysis to help the Board plan and budget future expenses and replacements of common elements. Some will provide a current funding analysis to show and project where the association will stand if it continues to fund in the manner it has done in the past through the same time period as the cash-flow analysis.

Find out what type of reserve study they will perform. There are three general types of studies:

Full Reserve Study: Includes an inventory of the association’s common elements and provides estimates of replacement. It includes a site visit to assess the current condition of the property to determine when the repairs or replacements will be needed. It will provide a review of the existing reserve fund along with a plan to enable the association to reach the funding level necessary to avoid assessments.

Reserve Study Update: Uses an existing common element inventory along with a site visit to assess the condition of the property, the reserve fund status and the status of the plan from the full reserve study.

Update with No Site Visit: Incorporates updated replacement and repair cost estimates with updates on the remaining life of the common element before repair based on time elapse since full reserve study, plus it evaluates the reserve fund’s status.

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