Can you (still) Revise our Reserve Study?

Share on

Sometimes, the answer is no. Yesterday a former client asked about their Reserve Study which we completed back for their 2010 Fiscal Year. They recently found out that the short maintenance road to the adjacent water tower is their responsibility to maintain, not the local water utility district. So they asked if we could update their Reserve Study to add this quantity of asphalt, and make the Reserve Study “right”.

Every Reserve Study should be prepared with the best information and assumptions available at the time it was prepared. Every property exists on a moving continuum of time, where physical conditions and the financial standing of the association (and its Reserve Fund) are in a continual state of change. That’s why even though Reserve Studies contain a 20 or 30-yr plan, they by nature are prepared and applicable for (only) one fiscal year. Then they “expire”. The Reserve Study provides timely budget guidance to the board, and in it homeowners learn important disclosures about their Reserve component conditions, plans for repair/replacement, and the Reserve Fund’s level of preparedness. Then the Reserve Study needs to be updated for the following year, and the process repeats. Reserve Studies always become out of date. They become “past documents”, not subject to revision.

This is an excellent example of the reason to prepare a Reserve Study update: not only have the physical assets changed and the financial resources changed, in the case of this association the Reserve Component List needs to be adjusted. This is the type of information that would be, and should be, included in the next Reserve Study update. Not a revision!