One of the most common sources of confusion for condo boards and owners is what a reserve study actually is. Get this right and everything else — funding, fees, planning — falls into place.
What a reserve study IS
At its core, a reserve study is a budget for the next 30 years. It outlines the expected costs of maintaining and replacing commonly owned property and provides a funding plan for the condo. It rests on three things:
- A capital replacement budget — the expected costs of maintaining and replacing commonly owned property over 30 years, with a funding plan.
- A complete inventory of commonly owned property — each component's type and material, quantity, design life, age, and expected date of replacement.
- Funding and fee requirements — a recommendation for annual reserve contributions today and increasing in future years, expressed as a total and per unit.
What a reserve study is NOT
Just as important is understanding what a reserve study is not — because misreading it leads boards to the wrong decisions.
- It is not an engineering document. A reserve study is a budget. It is often prepared by an engineer, but it does not contain design work or a technical assessment.
- It is not a condition assessment. The condition observation is a basic visual assessment used, along with age, to estimate the remaining life of each component.
- It is not a mandatory replacement schedule. Replacement years are estimated to prepare the budget and funding plan — components are not required to be replaced on those dates; they're replaced when they fail or approach failure.
This distinction is also why Reserve Plus can deliver engineer-authored studies at a cost comparable to certified reserve planners or appraisers: a reserve study is a budgeting exercise, and our process and systems are built to do it accurately and efficiently.