Is it Time for a New Reserve Study?
A New Jersey reserve study is necessary to analyze the status of a structure and the capital reserve fund that will be used for significant capital improvements or replacing various system components. The reserve study provides NJ homeowner associations with a budget tool to plan for any anticipated expenses.
Homeowner associations need to conduct a reserve study to determine if they have enough funds to support the common areas’ functionality and safety. It is essential to renew or update the reserve study to ensure that a homeowner’s association can benefit from newer technologies and money-saving opportunities when improving the properties.
Properties like condominium buildings, townhomes, and clubhouses require regular maintenance on the roofs, floors, and paint since they suffer from regular wear and tear. Amenities like basketball courts, swimming pools, and parks also require regular maintenance since many people use these facilities and are subject to more wear and tear and other damage.
A reserve study must be conducted to determine a property’s current status, but New Jersey has yet to adopt any laws mandating reserve studies. Even without any laws, the standard industry practice is to perform the reserve study every three years.
HOAs must also update their reserve studies to have an updated report on their assets’ condition and determine if homeowners will have to shoulder significant fees to pay for the necessary repairs and maintenance of their properties. Mortgage lenders will not lend to anyone who might have to pay fees that could result in them being incapable of paying for their loan. Homeowner associations will need the help of a reputable and licensed NJ structural engineer for the reserve study to ensure that the report is accurate and that they can fulfill their responsibility as a fiduciary.
For more information, see this infographic by Lockatong Engineering.
