Homeowners’ associations are responsible for maintaining, enhancing, and protecting the major common areas in their neighborhood as efficiently and affordably as possible. New Jersey HOAs use a New Jersey reserve study to analyze the properties’ condition, and the capital reserve fund’s status used to pay for the properties’ maintenance and repair costs.
A reserve study can only be useful if it is updated since an outdated study can lead to either claims of mismanagement or special assessments. Updated reserve studies will ensure that HOAs can benefit from both money-saving opportunities and newer technologies to ensure that the properties’ maintenance can be affordable. Homeowners’ associations that rely on outdated studies will not have a useful tool to determine their properties’ status and may well have surprises and costlier repairs.
Condominium buildings, townhouses, and other properties and their respective amenities require routine maintenance to be kept in top condition. A reserve study conducted by a Structural Engineer in New Jersey can provide an accurate report of the properties since they will inspect the site. A reserve study done by a professional will allow a homeowners association to have enough funds to ensure that their neighborhood’s properties will have the highest resale value possible.
New Jersey still has no laws regarding reserve studies, but the standard industry practice is to have the study updated at least every three years. HOAs also update their reserve studies since they are required to act as fiduciaries, and mortgage lenders will not lend money to anyone who might have to pay significant fees that could interfere with their ability to pay for the mortgage. Without an updated reserve study, homeowners’ associations cannot fulfill their obligations because they do not have an accurate report on the property’s condition and the reserve fund’s status.
For more information, see Lockatong Engineering’s infographic on new reserve studies.