Association Studies

Reserve Study

The Capital Reserve Study is developed for the purpose of directing the association Board of Trustees in the development of a maintenance and reserve fund which is of sufficient size to cover anticipated repairs/replacements of various system components within the facility in question during the next twenty years. The study is designed to satisfy the requirements of the audit guidelines for Common Interest Realty Associations developed by the American Institute of Certified Public Accountants, May, 1992.

The Capital Reserve Study is based on an on-site review of the systems in the building(s), a review of plans provided by the Trustees, and discussions with members/owners. A budget preparation package is included with the report.

A table that lists anticipated replacement/repair items complete with estimated remaining life expectancies, projected repair/replacement costs, frequency (in years) when these items require repair/replacement, and a projection, based on this frequency, of the year in which these items will require attention.

A table that shows the annual expense listing per year with subtotals of anticipated repair/replacement costs for each of the twenty years. The table also presents these costs as adjusted for an assumed rate of inflation.

A table and graph that represents end of year fund balance vs. capital expenditures based on the currently funded program and reserve balances. Any special assessments planned and/or received to date are included.

Three alternatives that will fund a reserve account based on anticipated capital expenditure projections, presented in graphic and tabular form for review. These alternatives include:

  • Level funding for twenty-year period with the option of special assessments as necessary.
  • Escalating funding over twenty years by constant percentage per year; no special assessments.
  • Escalating funding over twenty years by constant percentage; with special assessments.

A table and graph representing the three alternatives in comparison with each other. The table shows the anticipated capital expenditures vs. the annual ending reserve fund balance for each alternative.

Transition Study

The process of the control going from the Developer to the Association is one of the most crucial periods in the life of a Community Association. This is the time when the governing body of the community must determine not only the physical and financial strengths of the development, but, also set the procedures in place for future maintenance and financial stability. For new Associations, it is extremely beneficial to have both a Reserve Study and Transition Study completed. The Scope of Work includes the preparation of a Full Reserve Study as described above and Transition Study as described below.

A Transition Study is intended to review the as-built development for general conformance with the provided design drawings and association documents, and to confirm that no defects exist. These observations are visual in nature and include a site and building exterior analysis as well as a percentage of the interior units.

A Transition Study includes the following Scope of Work:

  • A review of all provided engineering drawings, architectural drawings and public offering statement.
  • One visit to the appropriate municipal offices to review the public documents and resolutions concerning the development.
  • On-site visual observations performed to determine any areas which have not been built in general conformance with the design documents or acceptable workmanship.
  • The inspection of five percent of the unit interiors.
  • A Narrative Report of Transition includes details of each observed deficiency; possible cause(s) of the problems; recommendations for corrective action and a reference to any performance standard (i.e.: deviation from design drawings, workmanship, etc.), where applicable.
  • A Punchlist Summary, which includes a description of each deficiency along with the specific locations where each deficiency was noted and the appropriate, recommended correction.
  • The optional preparation of a questionnaire for distribution to all residents. Thus, any concerns with regards to the unit interiors, as they relate to the common elements can be identified.