An Overview of the HOA Reserve Study Process
State statutes and association governing documents require homeowners’ associations, regardless of size, to perform reserve studies
and maintain appropriate levels of reserve funds
. The purpose of such a rule requiring an HOA reserve study is to enable associations to have sufficient funds available as they are needed to repair, replace, restore, or maintain the major common area components that make up the association’s common area. It is inevitable that sooner or later common area components are going to require repairs, replacement or restoration and if the funds that are necessary are not available when they are needed, the association is destined for future problems.
To facilitate having funds available in a reserve account when they are required, associations must conduct reserve studies and adopt a reserve funding plan
. The process of conducting an HOA reserve study and adopting a reserve funding plan requires the following multiple steps: