Reserve Study

Our HOA begin with the developer Jan.16, 2002. There has never been a reserve study to my knowledge but there was reserve funding set up by the developer. Iam sure there is NOT enough and have ask repeatedly for the BOD's to have a study....They refuse to do it saying we can't afford it and besides "are you going to be around in 20 years?".....Is there anything that can be done to force them to do this, when they know in 20 years or so when things need to be replaced that there won't be enough money and a "Special assessment" will be needed. This is so unfair, everyone should be paying their fair share as the years go by. I'm afraid most HO's would agree with them because they know they won't be there in 20 years either.

Sidney:

If your association does not have the funds for this service, I can understand why the board does not want to do a reserve study. They can be costly, however like Roger states it does not negate their obligation to fund the reserve. All HOA's should place funds aside monthly in a segregated account that accrues interest for the association. A 10-year and 20-year plan can be done by the board without a reserve study. Example; if you have a pool, get the cost from the Developer what he paid to install it. If it was $250,000.00 there is your line item for replacement of the pool. Of course no one fully replaces their pool, but in 5 to 10 years resurfacing the pool will become necessary. Price out what companies charge in your area to resurface and place that amount plus a 2% to 5% increase for the 5 to 10 years to resurafce and you are on your way to creating your own reserve plan. Keep going with tennis courts, clubhouse, cabana, etc. I have completed reserve studies for many associations without a reserve study and many have funded their reserves, as well as made numerous repairs out of the reserves without a special assessment to the community.

SidneyP,

Your HOA is faced with 2 situations. One, funds not being set aside for reserves. Two, the strong likelihood that the developer low-balled the original reserve funding schedule. Many developer's do this, because the maintenance fees are based on what needs to be budgeted. A true cost for replacements would shock initial buyers. Asking the developer for a cost for any element is not the way to go. A capital reserve study and a deficiency report by an independent Transition Engineering firm is ammunition for the the HOA to seek reimbursement from the developer and prepare for the future. Your Board is weak, and negligent.

I would inform the Management company and Board that failure to perform a reserve study, deficiency report, and fund for reserves is negligent and a breach of their fiduciary responsibility. Look to your by-laws, mine require the board to fund for reserves.

Best of success!!
GeraldT1
NNJ

Sidney, I know of no way to force the BOD except 1) the threat I previously posted; and 2) the members can vote at an annual meeting to increase the assessment above and beyond the Board's budget and have $XXXXX placed in the reserve fund each and every year.