Reserve Studies

I'm new to this forum. I am a homeowner of a condo association and we have used the same reserve study company for the past 9 years and our property is run down. How do I/we know how reputable this company is and whether there is recourse? This is a company recommended by our property management company; who has control of our association.
Linda

One of my nephews owns a property management company and he also hires engineers to do their reserve studies. What bothers me is that we have had the same "opinion" for one source for so long. I will definitely advise the board of the CAI credentials that you mentioned.
Linda

I don't appreciate the sarcasm; as your accusations are not true; not at all. I won't comment any further except to say that my nephew's in another state and the ONLY time that I have EVER contacted him regarding this matter was to get his input about reserve studies. I never mentioned the other property management company; so it's so unfair to make assumptions.
Linda

Really? I used sarcasm? And you can tell that from text only and no non-verbal clues how?

I was sincere that it was convenient for you. Not many people have a resource like that.

It is -- and it doesn't hurt, regardless of what state he's in, for there to be a bit of professional bias.

But, I will say that I'm beginning to sense a double standard, which, granted, may be off base, but it seems to be bubbling up just the same.

You are quick to imply certain things about your board or the management company (i.e., they only hire their "friends," they don't run to attorneys so they must be ignorant or foolish, or both), which may or may not be true for either case.

Then again, their "friendship" may have evolved out of a history of a good working relationship.

And they may not feel the need to have an attorney on speed dial.

You might have a much better idea were you to have a seat at the table. So perhaps you can find a way to smooze some of the board members and throw your hat in the ring next election period.

Either the smoozing or the seat on the board will help give you a broader perspective.

I will agree with you that homeowner apathy is a bane to some HOAs.

Unfortunately, it's a bonus to others.

Those are the ones that probably need the most help, too.

Ah. I see. And yes, the underlined above. . .

Linda whether you like MC's or not it is ultimately the BOD's responsibility to see that things are done properly. The Board of Trustees is the principal policy making body, setting policies, standards and procedures. The board may delegate its authority, not its responsibility, to the Management Company, to implement its decisions.

If the homeowners don't like the decisions the BOD is making towards the MC or other vendors it is their responsibility to let them know and ultimately replace them if they don't like the job the BOD is doing.

Linda:

You are concerned about using the same reserve company for 9 years. How often are you having reserve studies conducted? I can't imagine they would be a yearly thing unless your community is undergoing rapid transformation, but perhaps I'm wrong there.

If your common areas are not changing greatly, you should be able to review the study and see if it accurately accounts for all of your common areas and ascribes a reasonable replacement cost/life span. Especially if your community is small, there might be some significant economy in reusing the same company ... the cost might be less due to the ability to reuse some of the boilerplate material.

We had a poorly done reserve study once that had us saving for many items that were actually not the responsibility of the association ... but it took someone reviewing the old study, rather than blindly accepting it, to bring that to light. What I'm saying is that there are, indeed, bad studies out there, but they should be fairly obvious upon examination.

The fact that the property is starting to get run down is not necessarily a result of the reserve study, but more likely a poor management/use of the actual reserve funds. Someone has to steer the ship and actually implement the repairs that the reserves have been allocated for.

While I don't want to minimize the importance of the reserve study or the work that goes into them, personally, I feel the largest area for error is in accurately identifying the common elements. This is essentially the wild card from community-to-community and where I would think most reserve study companies fall down ... each community is unique and identifying these elements requires review of the CCRs and inspection of the community.

Most of the rest of the data is simply based on published industry standards for replacement costs and life span.

The other area is understanding that common elements often also need regular routine maintenance to meet the life span identified in the reserve study. If this is not being done, the common element will fail sooner than expected and your reserves will not be adequately funded to handle the replacement.

We have a reserve study done each year (as required by OR law). It has been done by two different companies, but they essentially looked the same. The Board is responsible for initiating spending from the reserve to replace items, paint buildings, etc.

If things are run down it could be that the reserve study was not done correctly or that the Board has not scheduled work to be done, you can only find out by talking with the Board to find out how your reserves are funded, where they are at, whether work should be done and when.

I've been told, although I have not personally verified, that in Michigan at least, HOAs for platted subs, etc are not REQUIRED to fund reserves, but anything zoned Condo or Site Condo is.

In Michigan, the Michigan Condo Act stipulates that the reserve must meet at least 10% of the operating budget on a non-cumulative basis -- this is a minimum, but not necessarily the recommended amount. You need a reserve study to help you determine what amount should be in the reserves.

In MI, many of the new neighborhoods are being zoned site condo, but appear like normal homes in a sub. My experience is that several of these Associations are not aware of this requirement ...