What is a Reserve Study?

A Reserve Study is a comprehensive report used as a financial planning tool to assess the current financial health of an Association as well as create a capital expense budget.

In order to preserve property values within a community it is necessary to repair or replace major common-area components such as roofs, boilers, elevators, balconies, seawalls, asphalt surfaces and more.

This requires an organization to put aside or “reserve” funds for these future expenses. A properly developed Reserve Study offers a funding plan to be used in the annual budgeting process. The time frame for projections made in the Reserve Study is called the “Study Period” and is typically 30 years.

What are the different types of reserve studies?

Level 1 is a Full Reserve Study, the reserve provider conducts a component inventory, a condition assessment (based upon on-site visual observations), and life valuation estimates to determine the optimal funding plan for the community.

Level 2 is an update to a study with a site visit completed in the last 2-5 years.

Level 3 is an update to a study without a site visit completed in the last 2-5 years with minor changes to the original study.

What is a Transition Study?

Often performed in conjunction with an initial Reserve Study, a Transition Study is a comprehensive inspection of a new community association’s common elements, to document any construction, design or condition defects before the developer releases the community to the association. The purpose is to provide an objective record of the condition of the common areas. The PTS report (including photographs) will also document the current condition as it compares to the represented offering documentation provided by the developer.