For many community associations in New Jersey, maintenance of the common areas is among the largest single costs of the association. It is considered as such because it is broken down into various cost categories within the budget of the association, such as landscape maintenance, pool maintenance, painting, paving, roofing repairs, fencing, among other categories. A New Jersey reserve study is among the important factors that helps identify, quantify and help control these costs.
A reserve study is a great tool to project reserve item quantity sizes as well as future costs. It contains detailed information about the long-lasting capital reserve items of the association, such as roofing, painting, paving, clubhouses, recreation areas, just to mention a few. It projects how long an item will last (useful life), how long the item has before it before replaced (remaining useful life), the current cost of the item, as well as the future cost of that item. This information is very helpful when it comes to the preparation of the association’s annual budget.
Among the people who a New Jersey reserve study can benefit is the board of directors. This is the case because the board of directors is directly involved in establishing next year’s budget, and reserve items are a component of that budget. In case the board of directors was just to make wild guesses on reserves, it could lead to underfunding as well as a big special assessment in the short term or long term.
A reserve study is also beneficial to other homeowners in the association. These homeowners can benefit from the reserve study since it puts them on a more sound long term track. With this tool, special assessments can be eliminated or at least minimized. It is the most fair as well as equitable way to fund long-lasting items.