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Reserve Study

Hi Dennis,
I asked our terminated management for a copy of the Reserve Study and was told one hadn’t been done. In reading our CC&Rs it states: “the Board shall obtain a reserve study at least once every five (5) years, which study shall at a minimum include…” We have no buildings, playgrounds and no irrigation to maintain. We have one cluster mailbox. Our common areas are dirt with native trees 5′ to 20′ out of the exterior cement walls. We were incorporated in 2017 and the builder turned the HOA over to us Jan 2021. Is there someone we hire to do this? Which date applies to the 5-year declaration?
Thank you.

6 Responses

  1. Dennis Legere

    Brenda,
    The CC&R’s apply from the date it was originally recorded. The declarant wrote the requirement and was responsible to comply with the requirement from the date the declaration was recorded. While there are commercial companies that will perform the reserve study for your community, you have a very simple complex. Get a committee of homeowners together and tabulate a listing of all common property and identify any long-term maintenance that may be required to maintain that property, equipment or feature for the life of the community. This would be anything other than routine maintenance like structural repair for the barrier wall or tree replacement from storm damage, the mailbox structure may have some life expectancy issues and need to be replaced at some time in the future. You as homeowners would really know what is needed and best for your community. Any homeowner with common sense and experience in maintaining a home would know what to do for your community. This does not have to be rocket science. Once you establish the long-term maintenance needs for the community you get current estimate from contractors to accomplish that maintenance. Say you have 500 linier ft of wall and say that in 20 year you may have to replace and rebuild 100 ft of that wall, get a quote per linear ft to tear it down remove the debrie and rebuild and paint the wall. Say it’s 100 per ft. since you need 100 ft, it would cost you $10,000 today to rebuild that wall. But you need it 20 years from now and price will escalate in that time. So, you make a reasonable estimate for the inflation estimate for that time period. Inflation today is at 8% but it won’t stay there forever (hopefully) so use 4%/year and escalate that cost for 20 years. and you will have a good idea of what you need to have raised in your reserve so that you have the money needed 20 years from now.

    I’ve actually built a spread sheet that can do that for you and identify the annual contributions to the reserve needed to ensure that you have enough money to accomplish all your ling term maintenance for your community when you need it. I’ll provide that spread sheet to any community that wants it.

    Dennis

  2. Brenda Simon

    Thank you, Dennis, for such a through explanation. Your common sense approach is a breath of fresh air.
    Please let me know how I can get a copy of your spread sheet.
    Thank you!

  3. Brenda Simon

    The only cement walls we have are shared walls with a Lot and any given Common Area. In reviewing our docs this is what I found: “Article III Section (vi) In the case of party fences between Common Areas and Lots the Association shall be responsible for all maintenance thereof, subject to the provisions of the Article X, sections 2 and 3, except that each Owner of a Lot shall be responsible for painting the portion of the party fence facing his Lor or the portion thereof which is not a portion of the Common area.”

    In preparing a Reserve Study does this mean the association is fully responsible for a Lot Owner’s shared wall with the Common Area? Since half if the wall is “private” use I ‘m not clear. (Nothing applied in Article X.)
    Thanks, again.

    1. Dennis Legere

      Brenda,
      The answer is yes. Provisions like this are included when the developer built the boundary wall in the first place, for consistency and included an easement on the lot to do this. You would need to check out what Article X sections say but otherwise except for painting and surface maintenance on the lot side of the wall the association is responsible for everything else. Walls seldom fall down (unless they were built improperly in the first place) but age gets to everything, but proper maintenance will extend the life of every wall.
      Dennis

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