2020-06-11
What is a reserve study? A reserve study is a budgeting and planning tool used by associations to determine the expected and remaining useful life of common elements. Common elements typically consist of items accessible to or used by a majority of Homeowners. The study also outlines the projected replacement cost of the elements as well as reserve (savings) recommendations and strategies.
Why are reserve studies important? For most associations, the money saved into a reserve account makes up a large portion of the annual budget. While communities must budget for planned and anticipated expenses for the upcoming fiscal year, they often budget for future expenses as well. Rather than paying for large projects at once, associations will often save toward the larger expenses by budgeting to put funds into the reserve account(s) each month over a period of several years. This strategy can help to reduce the individual owner burden at the time of a large scale project.
Who prepares a reserve study? Oftentimes, a reserve study is prepared by an independent group of trained reserve specialists and updated on an annual basis. Afterward, the draft study is typically provided to a community's Board or Committee Members for review. If no changes are requested, the study is finalized to be used by the community for the upcoming fiscal year. To view the most recent reserve study update for your community, please visit Trestle’s My-Community Web Portal.
