Reserve Replacement Plan
A reserve study provides a current estimate of the costs of repairing and replacing major common area components including pavement, roofing, easements, pools and recreational facilities as well as interior common elements. Ideally, all major repair and replacement costs will be covered by funds previously set aside by the association as reserves. This requires management to pay attention to the associations repair and replacement obligations as well as the costs associated and the timing of these projects.
The Board of Directors of any Common Interest Development (CID) or Home Owners Association, Community Association, Condominium Association has a fiduciary duty to manage association funds and property, a replacement reserve budget is very important. Not only does this information supplement the annual pro forma operating budget in providing owners with financial information; the reserve study is also an important management information tool as the association strives to balance and optimize long term property values and costs for owners.
Putting It To Work For You
A comprehensive reserve study functions as a maintenance planning tool for the Association and their management company. Allocating funds and setting up competative bids and construction schedules for annual as well as periodic projects helps to maintain timelines and increase the efficiency with which projects are completed and decrease the negative impact to the areas involved.
A sample reserve plan for a small community association.
Detailed information from onsite measurements and take offs paired with maintenance and project history data provide the foundation for these types of reserve replacement plans.