All HOAs possess at least two kinds of accounts for managing their finances. The first of these is for ongoing maintenance, including services such as complex cleaning, gardening, and extermination. The second account, known as the “reserve account,” is a special savings fund. This fund is founded on the knowledge that the complex will need major project work in the future, whether for roof replacement or foundation repair.
To make sure appropriate funds are kept in the account, it is mandated that HOA owners conduct a reserve study. Civ. Code §5550 not only requires this of any type of association but also demands that this study is conducted by experts. The approximated costs must include potential repairs, as well as end-of-life replacements for all critical components.
How Often Should Reserve Studies & Inspections Be Conducted?
According to Civ. Code §5550(a), the HOA’s board of directors must arrange for a reserve study every three years at the very least. The only exception is if the expenditures for total replacement make up less than half of the association’s gross budget. Inspections, on the other hand, do not have to be conducted until nine years are up. Nevertheless, just because studies and inspections are only mandated at certain dates does not mean this is necessarily the most beneficial. If unexpected events arise, such as a roof collapsing early, it is a good idea to reassess the funds set aside in the reserve. Alternatively, if the HOA inspection checklist shows that everything is maintained well, fewer resources might need to be allocated for the fund.
Our skilled specialists at Frank Fiala Roofing, Inc. are prepared to work with HOA managers to arrange a plan that works best for their schedule and budget.
When we have any issues, which is seldom, he sends out his crew and inspects and reports back to us. Usually the issue is internal or due to an non roof component of the weather seal. If it is the roof, the repair is executed quickly and covered under warranty.John M.
Since a reserve fund encompasses all the savings required to fix, restore, maintain, or replace the larger elements of an HOA building, the study process must be quite broad. If not all aspects are accounted for, managers will not have enough money when unexpected situations occur.
During the process, professional investigators will make sure to:
- Identify the main elements of the building that need maintenance
- Predict the costs required for restoration and repairs
- Determine how long of a life each component has
- Assess how much should be set for emergencies
To learn more about the process of our Bay Area HOA inspections and reserve studies, reach out to our qualified team members today at (925) 204-2202.
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