Blog

By Clifford Bates

Is a reserve study a science or an art form? I say it is both. The Cambridge English Corpus states, "Science shows the unity, while art shows the diversity of the riddle which we call the world." So now we have introduced a "riddle," which is defined as, "A baffling, misleading, or puzzling question presented as a problem to be solved or guessed." It appears that I am not making the concept of reserve studies any clearer to the reader, but stay with me and I will explain.

You do not have to look very far into the history of homeowner association management to see the birth of reserve studies. There was a time, not very long ago, when neither the governing documents nor the regulating agencies had any requirements that were to be adhered to regarding long-term maintenance, repair, or replacement. As the concept of identifying future, long-term costs for repairing and replacing common area components for aging facilities became more customary and accepted...

…and Preparing for the Unknown

By Kumar S. Raja & Shelby D. Bennett

Throughout the state, many older common interest developments (CIDs) are struggling with costly repairs and large maintenance projects as buildings age. Is your CID prepared to replace major components without a special assessment? Do you have funds available to finance a roof replacement project? This article will review the importance of adequately funding reserves and identify future considerations that might impact current planning.

SETTING MINIMUM RESERVE REQUIREMENTS

California law requires that CIDs conduct reserve studies every three years – and yet it does not set forth minimum funding requirements for reserve accounts. This means that a CID can conduct a reserve study and still not be prepared for replacing major components, such as common area roofs and structural components. The law provides some direction regarding reserve account maintenance. In short, boards must...