I have had the opportunity to talk to many HOA’s in the DFW Metroplex. I have noticed a disturbing trend; Many HOA’s have never heard of a reserve study or contracted to have one created. You simply cannot formulate an accurate annual budget without the information a reserve study provides.
As a result of the lack of a reserve study, I often come across condo associations that do not have the reserves to handle the maintenance requirements older buildings need. The reserve study is an essential tool, created by an expert, that tells you what your future maintenance needs will be (based on the useful life of siding, roofs, water-supply pipes, pool plaster, etc.) so that the HOA can determine if the current assessments are sufficient to fund the ongoing operational expenses and properly fund reserves.
Many HOA’s without a reserve study find themselves in a position where they are forced to collect a special assessment to make up the short-fall in reserves. I have not met one owner that likes getting an “extra” assessment from their HOA. The other issues is the special assessment usually covers one maintenance need, and because the board is reacting, instead of proactively planning, they must often collect another special assessment the next time a large repair is needed.
If you are on the Board of your HOA find out when the last reserve study was performed. If it’s been a few years it is a good idea to have it reviewed. If you haven’t had one done it would be a good idea to make it happen. CAI (Community Associations Institute) is a good resource for specialists in your area that can help create one for your HOA.