RESERVE FUNDING
4. Request clarification or additional documentation whenever the data appears incomplete, inaccurate, or contradictory. 5. Encourage association participation during the site inspection to answer questions in real time. REVIEW AND FINALIZATION OF THE PHYSICAL EVALUATION Associations should review the reserve study to evaluate the accuracy of the information presented. Associations should periodically review the reserve study and update as needed to ensure it remains accurate.
During this process, it’s important to consider:
1. Does the component inventory accurately reflect ownership/maintenance responsibilities? 2. Does the reserve component inventory align with the association’s operations? • If an association funds sidewalk repairs from the reserve account, ensure that sidewalks are included as a reserve expense. If an association funds sidewalk repairs from the operating budget annually, ensure that sidewalks are not included as a reserve expense. 3. Does the reserve study consider the association’s preventative maintenance practices? • If an association is performing preventative maintenance on its clubhouse HVAC unit, you can anticipate a longer useful life than an association that isn’t performing preventative mainte- nance. 4. If you perform periodic inspections or repair projects that satisfy the three-part test, does the reserve study include these projects as a reserve expenditure? • Examples include structural inspections, pond surveys, tree surveys, electrical thermoscans, and pipe studies. 5. Does the reserve study disclose all reserve components regardless of age? • If a condominium was built five years ago, you likely don’t need to begin funding for pipe replacements. However, the useful life and cost should be listed for awareness as a long-life component. 6. Is the starting reserve balance accurate? 7. Are current year reserve contributions accurate? 8. Is the history of the components accurate? • If the pipes were replaced 10 years ago, ensure it is reflected in the study. KEY CONSIDERATIONS: 1. The inspection is limited to a visual, noninvasive inspection. Preventive maintenance evalu- ations, periodic structural inspections and more invasive inspections and testing should be updated prior to the reserve study so they may be incorporated into the reserve study update. 2. The replacement costs are estimates that incorporate inflation projections. If you are aware of unique pricing circumstances such as rare equipment, difficult access, utilization of interi- or designers, or construction observation for your projects, make sure to inform the reserve specialist. 3. Freeze–thaw cycles, coastal conditions, high UV exposure, and humidity all influence deterio- ration and will affect the components’ useful lives. 4. Capital improvement vs. reserve expense. • The initial construction cost of a new capital addition that did not previously exist should not be
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