PatriiciaR (Texas)
Posts: 32
Posts: 32
Posted:
Has anyone every had a Reserve Study for your Condominium community?
Pro's
Con's
Pro's
Con's
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Reserve Study
Started by PatriiciaR • 8 replies • 211 views
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KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
There ARE no "cons."*
There ARE NO "CONS."
Most posters who've written about them have them.. A reserve study is required by statute in California every three years. Our CC&Rs (covenants; declaration) also require the study. I don’t know about Texas or your CC&Rs
Some states require a reserve account. CA doesn't but we have one*. In your previous email, I see several “components” that your HOA will need to repair and/or replace. HOW will you pay for them? They need to be listed in a reserve study with their remaining useful life estimated.
Condo roofs
Pool
Resurfacing pool interior
Repairing /replacing pool deck
Repairing/ replacing pool furniture
Pool pumps & motor
replace Pool coping
Elements of the boiler system
Camera system
Roofs for covered parking?
Some aspects of landscaping? E.g., big trees?
Sprinkler system
Exterior Lighting systems
Aspects of clubhouse even if not used, e.g., its roof.
As you can see your HOA needs to set aside a lot of $ every month in a reserves account to pay for all of the above. And I Probably missed something too.
You should read about HOA reserve accounts online to learn more. Are you absolutely certain you have no reserve account??? As you can see in your previous post, almost all responders asked about such an account. Don’t you have a community mgr whom you can ask to tell you more.
How old is your HOA?
* Some very small 4-6 condo HOAs owned by a former director here had no reserves accounts. She explained that the co-owners agreed to have special assessments when something substantial needed to be repaired/replced.
There ARE NO "CONS."
Most posters who've written about them have them.. A reserve study is required by statute in California every three years. Our CC&Rs (covenants; declaration) also require the study. I don’t know about Texas or your CC&Rs
Some states require a reserve account. CA doesn't but we have one*. In your previous email, I see several “components” that your HOA will need to repair and/or replace. HOW will you pay for them? They need to be listed in a reserve study with their remaining useful life estimated.
Condo roofs
Pool
Resurfacing pool interior
Repairing /replacing pool deck
Repairing/ replacing pool furniture
Pool pumps & motor
replace Pool coping
Elements of the boiler system
Camera system
Roofs for covered parking?
Some aspects of landscaping? E.g., big trees?
Sprinkler system
Exterior Lighting systems
Aspects of clubhouse even if not used, e.g., its roof.
As you can see your HOA needs to set aside a lot of $ every month in a reserves account to pay for all of the above. And I Probably missed something too.
You should read about HOA reserve accounts online to learn more. Are you absolutely certain you have no reserve account??? As you can see in your previous post, almost all responders asked about such an account. Don’t you have a community mgr whom you can ask to tell you more.
How old is your HOA?
* Some very small 4-6 condo HOAs owned by a former director here had no reserves accounts. She explained that the co-owners agreed to have special assessments when something substantial needed to be repaired/replced.
TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
Pros:
If done correctly, the board has a better idea how much needs to be saved every year.
Cons:
The board decides everything that is to be included in the study (specialist may recommend but the board decides)
There are two main methods in determining reserve contributions - the Board should know them and pick what they feel is the best one for their development vs the less expensive one for expenses sake.
Concerns:
Typically, the membership doesn't want to raise assessments to a level that is needed to fully finance the reserves.
Takes some education to make increased assessments happen if membership vote is required.
Example: In my last association, we did our first reserve study 20 years after the development was started. Assessments had to be increased by 20% to properly finance the reserves.
If done correctly, the board has a better idea how much needs to be saved every year.
Cons:
The board decides everything that is to be included in the study (specialist may recommend but the board decides)
There are two main methods in determining reserve contributions - the Board should know them and pick what they feel is the best one for their development vs the less expensive one for expenses sake.
Concerns:
Typically, the membership doesn't want to raise assessments to a level that is needed to fully finance the reserves.
Takes some education to make increased assessments happen if membership vote is required.
Example: In my last association, we did our first reserve study 20 years after the development was started. Assessments had to be increased by 20% to properly finance the reserves.
PatriiciaR (Texas)
Posts: 32
Posts: 32
Posted:
We have an operating account and a reserve account. I'm not sure how much money each month goes into reserves.
I have lived in this community 15+ years and before I purchased my unit as a cheap foreclosure the was no annual meeting, board meeting for over 2 years. There was also NO preventive maintenance.
Owner do not want to raise due because they feel as the fund their pay monthly should cover. Yes, this are uninvolved owners as well.
I think a reserve study would validate that we need to raise dues and that we are currently doing is what we can. We have done small projects and then increase our funds but owners want it all done at one time.
I'm not not a ware that a reserve study has every been done before me or after me.
Remember - I am new to this forum.
Thanks
I have lived in this community 15+ years and before I purchased my unit as a cheap foreclosure the was no annual meeting, board meeting for over 2 years. There was also NO preventive maintenance.
Owner do not want to raise due because they feel as the fund their pay monthly should cover. Yes, this are uninvolved owners as well.
I think a reserve study would validate that we need to raise dues and that we are currently doing is what we can. We have done small projects and then increase our funds but owners want it all done at one time.
I'm not not a ware that a reserve study has every been done before me or after me.
Remember - I am new to this forum.
Thanks
LoriM15 (Florida)
Posts: 1,009
Posts: 1,009
Posted:
The owners in your community are going to pay now or they are going to pay later. There are roofs and paint and paving that need to be paid for. Either your monthly fee is enough to cover this stuff when it needs to be done, or you are going to end up with a special assessment when it needs to be done. There's no magic way to raise money to pay the bills.
Your situation is not uncommon. Uninvolved owners don't think about the bill that is going to come due. You're in Texas. What happens if you get a hurricane or tornado that destroys your roofs and you don't have enough to pay the deductible (or the full cost is for some reason your insurance doesn't pay?). These are real situations that can happen.
A reserve study isn't an option - it's a necessity. The reserve study will tell you the life expectancy of the components in your community so you can plan and reserve enough to pay for them. Many owners know that if they do a reserve study their assessments will most likely go up so they don't want to do one.
I don't think there's an easy answer for you. You would have to get on the board and try and convince the other board members to hire someone to do the study, knowing that most likely there will be a very unpopular increase in fees unless you have plenty of funds in your reserve account.
Maybe your treasurer has a spreadsheet that lays out something like a reserve study and knows the amount in your reserves is enough to cover the expenses. You may want to start there.
Your situation is not uncommon. Uninvolved owners don't think about the bill that is going to come due. You're in Texas. What happens if you get a hurricane or tornado that destroys your roofs and you don't have enough to pay the deductible (or the full cost is for some reason your insurance doesn't pay?). These are real situations that can happen.
A reserve study isn't an option - it's a necessity. The reserve study will tell you the life expectancy of the components in your community so you can plan and reserve enough to pay for them. Many owners know that if they do a reserve study their assessments will most likely go up so they don't want to do one.
I don't think there's an easy answer for you. You would have to get on the board and try and convince the other board members to hire someone to do the study, knowing that most likely there will be a very unpopular increase in fees unless you have plenty of funds in your reserve account.
Maybe your treasurer has a spreadsheet that lays out something like a reserve study and knows the amount in your reserves is enough to cover the expenses. You may want to start there.
TimB4 (Tennessee)
Posts: 21,059
Posts: 21,059
Posted:
Quote:
Posted By PatriiciaR on 03/17/2025 11:01 AM
I'm not not a ware that a reserve study has every been done before me or after me.
I'm not not a ware that a reserve study has every been done before me or after me.
Something to ask your board.
Something to volunteer to handle (you can do one yourself, but it won't be as accurate and will miss items (as you will be learning).
However, one done yourself is better than none.
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
WHAT size is your HOA? Are you on the Board, Patricia? How old is it?
Is there a community manager who can explain your HOA's monthly financial statement to you? OR can you attend an open board meeting and ask the Board how much is in your reserve account? B/c there IS an account, I'm guessing that either TX requires it OR your own CC&Rs do.
Yes, you are right, a qualified reserves specialist would be willing to present to your HOA members what a reserve study involves and how much the reserve study would cost. Owners will not like it, but nowadays, lenders do not like to lend at HOAs that have skimpy reserves.
The reserve specialists are experts-just like CPAs, HOA attys--and Boards should listen to them. Occasionally, a specialist (RS) might under- or overestimate how long components will last or how much it'll cost to replace them, but the specialists have tons of resources at their fingertips to make good estimates. IF a RS writes, "these 23 year old pool deck tiles are reportedly slippery..." and a Board refuses to replace it,* and someone slips and is injured, the Board and entire HOA could be sued AND lose.
In your case with so many reserve components, I'd never recommend you do it yourself. Do you know how to contact manufacturers to see how long that pool pump should last? Or how long your condo roof should last in your climate?
*as almost just happend in my HOA
Is there a community manager who can explain your HOA's monthly financial statement to you? OR can you attend an open board meeting and ask the Board how much is in your reserve account? B/c there IS an account, I'm guessing that either TX requires it OR your own CC&Rs do.
Yes, you are right, a qualified reserves specialist would be willing to present to your HOA members what a reserve study involves and how much the reserve study would cost. Owners will not like it, but nowadays, lenders do not like to lend at HOAs that have skimpy reserves.
The reserve specialists are experts-just like CPAs, HOA attys--and Boards should listen to them. Occasionally, a specialist (RS) might under- or overestimate how long components will last or how much it'll cost to replace them, but the specialists have tons of resources at their fingertips to make good estimates. IF a RS writes, "these 23 year old pool deck tiles are reportedly slippery..." and a Board refuses to replace it,* and someone slips and is injured, the Board and entire HOA could be sued AND lose.
In your case with so many reserve components, I'd never recommend you do it yourself. Do you know how to contact manufacturers to see how long that pool pump should last? Or how long your condo roof should last in your climate?
*as almost just happend in my HOA
CarlaC1 (Tennessee)
Posts: 1
Posts: 1
Posted:
I was assn president when we had major renovations required (Condo Assn in TX). Our reserve study was outdated, so it was going to deplete our reserves because we had also done other major work the previous year, and the previous board didn't want to go up on dues so only 10% was going to reserves, which is NEVER enough for a condo assn! That was twenty years ago; ten years ago I went to work for a company that did reserve studies for a specific industry. We never had a single client say it wasn't worth every penny. Our #1 response to inquiries was, "We're going to tell you the truth, not what you WANT to hear."
PatriiciaR (Texas)
Posts: 32
Posts: 32
Posted:
We have hired a engineer to conduct a reserve study. , thanks for all your responses. Have a great day!
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