FAQ's Barrera & Company, Reserve Study

The cost of a Reserve Study is contingent upon a variety of factors. The main contributing factors are the number of units, buildings, and amenities within an Association. For example, a Reserve Study for an Association with just two buildings, one pool and two elevators would be less expensive than a study completed for an association with four buildings, two tennis courts, and three pools. [back to the top]

How often should a Reserve Study be performed?

The reserve fund is a means of mitigating the cost of deteriorating property. Since components deteriorate at varying rates and an association’s finances can differ from year to year, maintaining a balance between the two is a continuing process. By updating the Reserve Study, an association can ensure their reserve fund requirements are being met. There are many factors an association should contemplate when considering a reserve update:

Has there been a significant departure (2% to 3%) from the anticipated rates for interest, inflation, and construction cost increases previously assumed?
Have any major elements been added or replaced since the previous study?
Have any elements sustained premature damage due to climate conditions or lack of maintenance since the previous study?
Has the association maintained the schedule of repairs and replacements laid out in the previous study?

If any of these factors are present, the association should strongly consider updating their previous study.
Generally, an association that is relatively new, and does not require major repairs, should consider having their Reserve Study updated every three years to maintain the integrity of previous estimates. If the association is older and requires constant repairs and replacements, then an update should be performed on an annual basis. Please refer to your state statute for precise regulations governing Reserve Studies and the frequency of updates. An update to a reserve study can typically be performed at a fraction of the cost and time of a full inspection and reserve analysis. [back to the top]

How long does it take to complete a Reserve Study?

The first step in completing a Reserve Study is acquiring the information necessary in completing the study. In order to provide the most accurate assessment possible, we conduct an on-site evaluation of the property and determine the current condition of all the common area components. We also contact the vendors, who have done reparation or replacement to the property. Once we compile all the required information, we create a preliminary report and send it to the Association. The preliminary review period lasts 15 days and is intended to verify the common area components of the Association and provide the Board of Directors a period, in which they can ask questions regarding the Reserve Study. After the preliminary report has been approved, the completion of the final Reserve Study will not exceed 30 days. [back to the top]

How do I convince the Board of Directors to complete a Reserve Study?

· AVOID SPECIAL ASSESSMENTS: Don't be reactive. Special assessments are generally the by-products that come from bad planning or no planning at all. The reserve study helps associations with a strategy that plans and budgets accordingly for future expenditure disbursements
· LITIGATION: The by-product of special assessments unfortunately can be association members litigating against the association and it's Board. This costly battle that wages has no winners and the members must use valuable reserve funds, otherwise used to benefit the association and its members, for attorney fees
· PROTECT YOUR INVESTMENT AND IT WILL INCREASE IN VALUE: Your property/home is an investment and the appearance of your property maintenance reflects the condition of this investment. The reserve study is the tool that helps allow this investment to grow in value through the proper replacement and maintenance of these components. [back to the top]