Is it Time for a New Reserve Study?
New Jersey homeowner associations must protect, maintain, and enhance the major common areas in a neighborhood as efficiently as possible. To achieve such a feat, HOAs can use a New Jersey reserve study to analyze the structures’ condition and the capital reserve fund’s status from where the improvements on various components will be paid.
The reserve study is necessary to determine if the homeowner association has enough funds to support the safety and functionality of the common areas in the neighborhood. It is vital to renew the reserve study since outdated studies can result in special assessments or mismanagement claims. Updated studies also allow HOAs to benefit from new technologies and money-saving opportunities when maintaining the neighborhood’s properties.
Among the properties that require regular maintenance are condominium buildings, townhomes, and clubhouses, as their roofs, floors, and paint suffer from regular wear and tear. Neglected properties will have a lower resale value, especially when the basketball courts and the parks are unusable because of neglect. A reserve study can provide detailed information on the property’s condition, mostly when done by a licensed NJ structural engineer.
New Jersey has yet to adopt any laws regarding reserve studies, but the standard industry practice is to conduct it every three years. Reserve studies must also be updated since mortgage lenders will not lend money to someone if they are likely to pay hefty, unexpected fees that can interfere with the mortgage payment. A homeowner’s association is required to act as a fiduciary, and the HOA needs to have an accurate and updated reserve study to fulfill this obligation. Updated reserve studies are essential to ensure that a neighborhood’s properties are in sound condition. This infographic by Lockatong Engineering can provide more information on what reserve study a homeowners’ association needs.