What is a community association reserve study?

A community association reserve study is a financial planning tool used by community associations, such as homeowners associations (HOAs), condominium associations, property owners associations, civic associations, and cooperatives, to help them plan for the long-term financial needs of the community.

A community association reserve study aims to help the association have adequate funds to cover future repair and replacement costs and avoid unexpected special assessments or deferred maintenance issues that could negatively impact the community's property values or resident satisfaction.

A professional reserve study company or a qualified individual specializing in reserve studies typically conducts the examination. The study evaluates the association's joint property, equipment, and amenities, such as roads, swimming pools, clubhouses, gazebos, and landscaping, to determine their expected useful lives and replacement costs.

Based on this evaluation, the reserve study produces a report outlining the association's current and future financial obligations, including the amount of money the association should set aside in reserves to cover expected expenses.

The report further suggests plans for the association's reserve funding, such as the annual contribution to the reserve fund and when to schedule essential replacements or repairs.