How often should we do a reserve study?

• • Full study with site visit: every 3 years

• • Financial update: every year

 Many communities schedule the full study in year one, the updates in years two and three, then repeat. This schedule keeps your data current and your budget accurate. It also ensures the HOA meets California Civil Code requirements.

Who does the work?

• • Reserve Specialist: A certified individual or firm will inspect major components, estimate useful life, and set cost ranges. They will also evaluate current savings and provide a recommended funding plan to avoid special assessments in future years. The reserve specialist provides the final report and annual disclosure documents.

• • Board of Directors: The board reviews the reserve study and adopts the funding plan. The study can be used for not only the current fiscal year but also for multi-year project planning.

• • Management Company: The management company will assist with obtaining proposals from reserve specialists; managing the calendar, inspections and any deadlines; providing records and information to the reserve specialist; coordinating with HOA vendors; and communicating with owners.

How the process works in 6 simple steps

1. 1. Kickoff: Gather past studies, maintenance records, financial data and any recent bids. Engage the reserve specialist early in the year to ensure the study is completed well before budget season.

1. 1. Site visit: The specialist walks the property, takes notes, and checks conditions. They often invite board members, management and/or specific vendors to walk the property with them.

1. 1. Draft report: Includes a list of components, timelines, and cost estimates. Review the report and provide any relevant information or corrections before it is finalized. Management can assist with this step.
   2. Funding options: The report provides different savings paths, from conservative to aggressive. These paths will include a thirty-year outlook on major expenses and potential special assessments.
   3. Board review: The board selects the funding plan that fits its goals for annual dues and long-term financial planning.
   4. Owner communication: Share the highlights in plain language with a simple next-year budget and required disclosures.

Funding plans made easy

You will usually see three styles:

• • Baseline plan. Aims to keep reserves above zero. This is the minimum target.

• • Threshold plan. Keeps a healthy cushion so you can handle price jumps or delays.

• • Full funding plan. Aims to match total future costs over time. This often means higher savings now and fewer risks later.

A good rule of thumb: choose the most stable plan your community can handle without causing hardship. Consider the impact of your current funding selection on future years. For example, increasing funding now can help avoid a major special assessment in the near future.

What does it cost?

The price of a reserve study depends on property size and complexity. A small community with few components will pay less than a large community with pools, elevators, or garages. Ask for a clear proposal that lists the site visit, number of components, and delivery timeline. Also ask about update pricing so you know the total cost over three years. The on-site inspection will cost more than the financial update, so having the three-year cost estimate can help with budgeting.

How much should we have in reserves?

There is no single number that fits every HOA. What matters is whether your chosen plan will cover scheduled projects without special assessments. The board can assess its financial position by reviewing the percent-funded figures and the thirty-year outlook. Your reserve specialist can also assist the board in reviewing the study and evaluating its financial health.

Common myths about reserve studies

• • “We can skip it this year.”
    Skipping updates makes your numbers stale and may be in violation of California Civil Code. Prices change, building requirements and codes are regularly updated, and maintenance timelines move.
  • “We will rely on special assessments.”
    Special assessments often require a vote of the members and can be a costly process. They are not guaranteed. Further, special assessments can be difficult for owners to pay and have a significant impact on their personal budget as opposed to small increases in dues overtime. Steady saving is kinder and safer

• • “We are too small to need one.”
    Even small communities may have roofs, paint, pavement, lighting and landscape infrastructure. Planning still helps.

Tips for California and Bay Area boards

• • Watch local costs. Bay Area labor and materials can change fast. Select a reserve Specialist familiar with the area and ask them to use regional pricing.

• • Include construction management expenses. Major projects require the support of a construction manager, additional oversight and administrative costs. Ask the Reserve specialist to include these costs in the overall planning.
  • Plan for access and permits. Cities may have unique permit steps. Build permit fees and city inspection into your project planning.
  • Coordinate with reserve vendors early. Roofing, paving, and painting teams book up during dry seasons. Plan for reserve projects early to lock dates and rates.

How Common Interest Management Services can help

• • Support legal requirements. We are familiar with California law and legal requirements associated with reserve studies and owner disclosures. We will support you in ensuring these requirements are met.

• • Accurate, local data. We coordinate with trusted Bay Area vendors to keep costs current.
  • On-time updates. We track the calendar, set reminders, and keep your community on schedule to ensure there is sufficient time to review drafts and complete budget planning each year.
  • Clear owner communication. We turn technical reports into simple summaries that reduce confusion.
  • Budget alignment. We can provide guidance for the board with budget planning and connect your reserve plan to your operating budget, so you can make educated decisions about assessments and long-term planning.

• • Project planning. We will support the board with forward planning and organizing projects to increase efficiency, reduce costs and minimize the inconvenience and disruption to residents.

Feel free to reach out for help! We can review your last reserve study, provide a general analysis and recommendations, and outline next steps for the board and community.

FAQ

What is the difference between reserves and the operating budget?

The operating budget covers day-to-day costs like landscaping, utilities, and cleaning. Reserves are savings for big, future projects that do not occur annually.

Do we need a study if our buildings are new?

Yes. New items still age. It is important to set aside funds for repair and replacement now. Starting early keeps savings smooth and fair across owners and avoids special assessments later.

What if bids come in higher than the study?

This can occur as pricing changes over time. There may also be hidden expenses and updated building codes driving the overall project cost. It is important to update your study when you have accurate numbers. This will allow the HOA to adjust its saving plan for future expenditures.

Can we use reserves for something else?

Reserves should be used for reserve components only. This is guided by both your governing documents and California law.

How long does a study take?

Most studies take a few weeks from site visit to final report, depending on size and access. Scheduling the site visit can take time depending upon the time of year and demand on the reserve specialists. We recommend the HOA start early to reduce stress and strain on budget discussions later in the year.