5 Reasons to Have a Reserve Study Required By State Law and Most Governing Documents Many States require Community Associations to have a Reserve Study. The Governing Documents of most associations also require the Board to collect an "appropriate" amount of money on a regular basis to offset the ongoing deterioration of the common areas. Thousands of dollars can be spent on Litigation as a result of neglecting to conduct a reserve study. Avoid Special Assessments By planning for long term major expenses and saving the appropriate amount of money in a reserve fund (Usually just a few dollars a month, per member) special assessments of thousands of dollars can be avoided. Save Money  By Planning for reserve items, repair and replacement bids can be obtained and coordinated to utilize funds efficiently. Emergency repairs always cost more! Maintain Value Many associations find themselves in the unfortunate situation where funds are not sufficient, In this situation the monthly dues usually need to be increased, while the physical condition of the property deteriorates. This leaves homeowners with lower home value and higher monthly dues. Avoid Collateral damage In most situations where repairs and replacements are not planned for, repairs usually are not conducted until several years after the useful life of the component is expired. This can cause damage to the structure and other components, costing the homeowners far more than just the original component. |