Bill 6215 and HB 1309 are recently introduced laws regarding reserve studies for condominiums. House Bill 1309 becomes effective in 2012:
- Requires a condominium association, unless doing so, would impose an unreasonable hardship, to (1) prepare an initial reserve study based upon a visual site inspection conducted by a reserve study professional; (2) update the study annually; and (3) arrange for a visual site inspection every three years by a reserve study professional such as Pacific Crest Reserves.
- Reserve studies must include detailed information on projected expenditures and current reserve account information and must be conducted by a reserve study professional.
- Encourages, but does not require, a condominium association to establish a reserve account, supplemental to the association’s annual operating budget, to fund major maintenance, repair, and replacement of common elements.
- Requires a condominium Public Offering Statement or Resale Certificate to include a copy of the current reserve study; or (2) a disclosure to the potential buyer stating that the association does not have a reserve study.
The Condominium Association’s Board of Directors has a fiduciary responsibility to maintain the community in a good state of repair, and protect owners from financial hardship. In many cases a reserve study will be requested as part of the real estate transactions and an increasing number of banks are requesting a copy of the association’s reserve study for first and second mortgage applications of individual homeowners. A proper Reserve Study will:
- Protect the Board of Directors from personal liability concerning adequate reserve funding
- Eliminate uncertainty of over-funding or under-funding reserves
- Maintain the community in a good state repair
- Establish a fair & stable contribution for current and future owners
- Comply with the American Institute of CPA’s (AICPA) annual audit requirements
- Maintain higher individual resale values
- Reduce the risk of special assessments or borrowing
Pacific Crest will consult with the board and assess the needs of the association and determine what the best process will be to create or update an existing study.The Reserve Standards establish both requirements for the various levels of investigation necessary to prepare Reserve Studies and minimum content of Reserve Reports.
Levels of Service Selection Guide
A Reserve Study by Pacific Crest Reservess will provide you with the critical information you need to satisfy your primary responsibility as a Board member or Manager – protecting the assets of the association! With a Reserve Study by Pacific Crest Reservess you can have the peace of mind that comes from choosing an experienced and reputable company.
Pacific Crest Reservess provides a full range of Reserve Study and hourly consultation services. Three Reserve Study “Levels of Service” are offered:
Level I: “Full” Reserve Study.
This is our most comprehensive product, designed for associations performing a Reserve Study for the first time or for associations with concerns about the accuracy of their Reserve Component List and measurements. A thorough site inspection is performed to develop the Reserve Component List (Component Description, Useful Life, Remaining Useful Life, and Replacement Cost), summarized with a printed color photographic inventory. From this Physical Analysis we perform a Financial Analysis (an evaluation of your current Reserve Fund Strength and a recommended ongoing Reserve Funding Plan), compiled all together into an easy-to-understand Report.
Level II: “Update With Site Visit” Reserve Study.
This product is for associations confident their Reserve Components and measurements are accurately listed. It is a good choice if you have large or complicated Reserve Components, are approaching or just finishing major projects, or if you have not had a reliable on-site inspection within the last three years. An on-site inspection is performed to update existing life and cost figures but not to re-quantify all components, and is summarized with a printed color photographic inventory. From this updated Physical Analysis information we prepare the Financial Analysis and assemble this useful planning document.
Level III: “Update No Site Visit” Reserve Study.
This product also is for associations confident their Reserve Components and measurements are accurately listed, but who due to mild weather, minimal Reserve projects, or a simple set of Reserve Components do not feel an on-site inspection is necessary to accurately update existing life and cost factors. In this product we update the Reserve Component List based on interviews and a review of association information, not an on-site inspection. From this updated Physical Analysis information we prepare a Financial Analysis which cost-effectively gives useful budget guidance.