A Checklist to get you started reviewing the Reserve Study

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When reviewing a Reserve Study (Reserve Report), it's crucial to ask questions to understand the financial health and future planning of the Homeowners Association (HOA) or Condominium Owners Association (COA). it can also help you see what common elements and limited common elements have plans for maintenance and replacement for the next 30 years. Here are 10 questions to get you started, but are by no means all inclusive. Do your due diligence:

10 Considerations to get you started reviewing the Reserve Study:

1. What is the Current Reserve Fund Balance?
   Assess if the current balance seems adequate based on the size and needs of the community and above the 30% minimum many lender s require.

2. Are Reserve Contributions in Line with Recommendations? 
   Check if the current contributions match or exceed the suggested amounts in the report and above the 10% minimum contribution most lenders require.

3. What Major Expenses are Anticipated in the Next Few Years? 
   Identify any significant upcoming expenditures that could impact the reserve fund.

4. Are the elements updated and completed as planned?
   Does the HOA know what to do and actually do it?

5. How Often are Reserve Studies Conducted? 
   Regular studies indicate proactive financial planning.

6. What level of Reserve Study is the most current?
   Was it a Full Reserve Study, Update with a Site Visit, or Update with no site visit? 

7. What is the Condition of Major Components?
   Evaluate the reported condition of key elements like roofs, elevators, and HVAC systems.

8. What is the Estimated Useful Life of Major Components?
   Understand how long before major components will need replacement or major repairs.

9. Are There Plans for Any Special Assessments?  
   Identify any potential additional charges outside regular HOA fees.

10. What Percentage of the Budget is Allocated to the Reserve Fund?
    Check if a healthy portion of the HOA budget is dedicated to the reserve fund.  This can affect what mortgage terms that may be available. 

These questions will help you critically evaluate the reserve report, giving you a clearer picture of the financial health and management practices of the HOA or COA. The answers are useful in making an informed decision about your potential investment in a condominium

Have questions  or concerns about going through the Reserve Study? Reach out and ask us questions!