Maintenance Reserve Study – a valuable property management tool

A Maintenance Reserve Study is a comprehensive evaluation of the expected repair and replacement costs for the common elements of a property or community over a specified period.

If you are a homeowner and aren’t part of an HOA (Homeowner’s Association), home maintenance costs are paid out of your pocket – it’s your responsibility to plan, budget, and pay for them. For example, if your 30-year roof was installed 10 years ago, to pay for the $20,000 replacement in 20 years you should plan to save $83 per month to have the money to cover the cost. If you don’t save, you’ll need to come up with the $20,000 all at once, which may be difficult.

For commercial property owners, HOAs, and condominium associations, a Maintenance Reserve Study can be a vital capital planning tool to provide an accurate forecast of related expenditures and to ensure that adequate funds are set aside for future maintenance, repair, and replacement of common elements.

Maintenance Reserve Study – Key Components

Physical Assessment

  • A thorough inspection of the property to identify all common elements and their current condition.
  • Evaluation of the remaining useful life of each component and project future improvements to them.
  • Listing and description of the component inventory.
  • Categorization of “shared components” such as walkways, parking areas, lobbies, outside lighting, and recreational facilities.
Maintenance Reserve Study ComSOP

Cost Estimation

  • Estimation of the costs associated with repairing, replacing, or maintaining each identified component.
  • Consideration of inflation and market trends in pricing.

Reserve Fund Analysis

  • Calculation of the necessary reserve fund contributions over a specified time frame (often 20-30 years).
  • Ensuring that the reserve fund is sufficient to cover future expenses without imposing undue financial burdens on the community members.

Funding Plan

  • Development of a funding plan that outlines how much money needs to be set aside regularly to meet future repair and replacement costs.
  • Recommendations on contribution levels and funding strategies.

Legal Compliance

Updates and Revisions

  • Regular updates to the reserve study to account for changes in property conditions, costs, or other relevant factors.
  • Revisions to the funding plan as needed.

Maintenance Reserve Study – Additional Value

  • Fulfill the obligations of the board of directors, helping to guarantee that board members can fulfill their legal obligation to maintain the properties for the property owners’ association members.
  • Laws in some states require reserve studies. Many states now require community associations to disclose reserves, accumulate reserves, or have professional reserve studies conducted. It’s anticipated that more states will adopt similar legislation.
  • Help enhance the property’s appearance and value by putting a process in place to keep it preserved and attractive.
  • Provide transparency and financial planning for property management.
  • Help prevent special assessments or additional charges levied on property owners to cover unexpected expenses.
  • Property managers, HOA boards, and community members can use the information from the study to make informed decisions about budgeting and financial planning.

As a CCPIA Certified Commercial Property Inspection provider, Acuity Property Inspections can apply our in-depth knowledge and industry standards to provide a detailed and thorough inspection of your property in support of a valuable comprehensive Maintenance Reserve Study. 

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