 Frequently Asked QuestionsWhat is a Reserve Study?Who benefits from a Reserve Study?What qualifications do Reserve Study providers possess?What is a Transition Study?What is a Property Condition Assessment (PCA)?
What is a Reserve Study?A Reserve Study is an inventory and valuation of the capital Assets of the Association that determines the contributions that will be required annually in order to build up a reserve sufficient to fund the maintenance and replacement of each Asset in the occurrence year estimated in the Study.
The maintenance or replacement of capital assets is a major expense that occurs other than annually, that aggregates to varying amounts and that therefore requires advance planning. Examples of such Common Assets are roof replacements, pavement sealing and overlaying, pool re-plastering, exterior painting, and Clubhouse interior furnishings and HVAC equipment replacement.
Who benefits from a Reserve Study?
- The Board and Association Management Company – possess
a professionally prepared budget for the preservation of the
Association’s common assets and amenities
- The
Association - when applying for loans the lender will require a
Reserve Study
- The Association - when applying for
insurance the carrier generally requires a Study.
- Association members – a valuable marketing tool available for
prospective buyers and their lenders.
- Association
members – knowing the Common Assets will be maintained protects the investment of the current and future owners
What qualifications do Reserve Study providers possess?A qualified company will have professionals with education, background, licenses and certifications in engineering, construction management, construction materials, building inspections, association management, accounting principles and extensive experience in Reserve Study preparations and presentations. What is a Transition Study?Prior to the Association assuming ownership of the Common Assets, The Board hires a qualified 3rd party to do a walk-thru of the property noting any defects and preparing a Report that includes a list of the defects noted, photos of the defects and an estimate of the cost to repair the defects. The Developer or Declarant then has a “punch list” of items to repair prior to Transition. A professionally qualified third party preparing the Transition Study frees the Board and Declarant from unreasonable bias by the other party. What is a Property Condition Assessment (PCA)?A PCA consists of a walk thru survey of the improvements on a parcel of built upon real estate with the goal of identifying and communicating physical deficiencies to the user. The PCA includes a report that outlines the consultant’s observation, opinions as to the property’s condition and opinions of probable cost to remedy any material physical deficiencies observed. A PCA and Transition Study are one and the same.
PCA’s are used by Associations, buyers of commercial and industrial properties and lenders.
CID Reserve Studies conducts it’s PCA’s in accordance with ASTM’s Standard Guide for Property Condition Assessments, Designation E2018-01. A PCA can include a 7 year Reserve Study if required by the client.
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