Reserve Study Tasks – Not to try at Home!

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Yesterday three things happened that were the result of people taking Reserve Study projects into their own hands. Weird that they all happened in one day. Unfortunate, because they each point out that some tasks are best left to a professional.

First, we received a request from a manager asking for us to indemnify her, the association, and her management company for their (state-required) California Reserve Disclosure Form. Not a problem, because this is something we do (free) as part of our Reserve Study preparation service. But the problem was on her list of requirements: that we just give her the (almost blank) form, and let her fill it out. How are we to take responsibility for something we didn’t do?

We are doing a with-site-visit update to a prior company’s Reserve Study for a Washington property. In reviewing the prior Reserve Study, prepared by their in-house management staff, there are calculation problems and conceptual mistakes (presuming A and B, but resulting in D, not C). It was their own in-house Reserve Study product, and it showed. It did not use National Reserve Study Standard terms, and it did not use National Reserve Study Standard concepts. The funding recommendation was misleading. We are going to have to do some significant and tactful explaining to the board and management to convey the differences between our product and their (inferior, misleading) product last year, without embarrassing the management company too much.

Finally, a prospect with a proposal request offered up a question that had been bugging him since last year – he had never been able to understand his (state-required) California Reserve Disclosure Form. For non-California readers, this is supposed to be a simple one-page form that summarizes, in clear terms, the status of the Reserve Fund and the implications of the Board-chosen Reserve Funding plan (which by the way, is often not the Reserve Funding plan recommended in their Reserve Study). The issue had to do with calculations. The management company had made up its own definition for 100% Funded, defining it as “when there is cash in the Reserve Fund, they’ve 100% met their objective to have cash in the Reserve Fund”. That is so wrong. Percent Funded is defined in National Reserve Study Standards (see So in preparing the disclosure form in-house, incorrectly, they’ve taken a simple disclosure process and successfully flipped it on its head – confusing and misrepresenting the situation to the homeowners!