Many associations want to know if they receive a settlement from construction defect litigation how will the affect their reserve study. This all depends on what components are included in the construction defect settlement. If the components are common area components that are included in their reserve study this could affect their reserve study and [...]
The cost of a reserve study is typically very small when you consider the annual budget of an association and the cost of maintaining their reserve components. An average townhouse condo association of 100 units could have an annual budget of $500,000 and reserve components who’s repair and replacement cost are between $750,000 and $1,500,000. [...]
AB 968 changes California Civil Code Section 4775 beginning January 1st, 2017. This bill basically states that if an associations CC&R’s and Governing Documents are not clear on who is responsible for exclusive use common areas that the responsibility will fall on the association. An example of an exclusive use common area could be a [...]
When you enter escrow to purchase a condo you receive hundreds of pages of HOA documents. These documents contain things like, CC & R’s, Bylaws, and HOA Budget. One of the most important documents to review is the reserve study. The reserve study tells the prospective buyer if the association has saved enough money to [...]
Reserve funds can only be used to pay for repair and replacement of common area components. Reserve funds can never be used to add a new component to the common area. So for example, you cannot use reserve funds to add a new playground to your HOA. But if you are replacing an old playground [...]
Many HOA clients often ask if plumbing and piping should be included in a reserve study. Some may say no because CAI national reserve study standards state that a component must have a predictable remaining life to be included in a reserve study. It’s true that trying to predict exactly when plumbing will need to [...]
There are no official standards for how hoa’s must invest reserve funds. California Civil Code does state “The board shall exercise prudent fiscal management in maintaining the integrity of the reserve account…” It is the boards fiduciary duty to act in good faith and in the best interest of the association when investing reserve funds. [...]
Many clients often ask me if the board and/or property manger input should be used in preparing a reserve study. My answer is absolutely. The board/manager are very valuable sources of information for any reserve study provider. The best way to get an accurate reserve study is to combine the knowledge and experience of a [...]
The Davis-Stirling Act has been completely reorganized effective January 1st, 2014. The majority of the changes are simply just renumbering of the sections. There are essentially no changes to the reserve study requirements. The Civil Code section numbers have changed. Most of the former reserve study requirements that were formerly located in section 1365 are [...]
