A homeowner association is responsible for protecting, enhancing, and maintaining the major common areas in an effective and cost-efficient way possible. New Jersey homeowner associations need to conduct reserve studies to analyze the structure’s condition and the capital reserve fund’s status for the necessary expenses on the properties to meet such an obligation. By completing a reserve study, homeowner associations can ensure that they have enough funds to support the common areas’ functionality and safety and keep the value of the properties within the community as attractive as possible for potential home sellers.
A New Jersey reserve study must be updated to avoid claims of mismanagement or special assessments. An up-to-date reserve study could become a useful tool for associations to benefit from money-saving opportunities and new technologies that would have been unavailable if associations relied on outdated studies.
Many properties suffer from constant wear and tear, and amenities suffer from more damage since many people regularly using them. Among the amenities that must be routinely maintained are swimming pools, basketball courts, tennis courts, and parks. The reserve study must be updated to ensure that the properties can be maintained affordably. The standard industry practice is to perform a reserve study every three years.
Homeowner associations must also conduct the reserve study since mortgage lenders will not lend money to a person who will likely be hit with hefty fees that can keep them from paying the mortgage. An updated reserve study can provide accurate information about the assets’ condition and the capital reserve fund, allowing mortgage lenders to determine whether or not an HOA’s fees will interfere with a homeowner’s ability to pay the mortgage.
When updating a reserve study, HOAs must rely on a reputable NJ structural engineer to inspect the area. Lockatong Engineering’s infographic here provides more information regarding new reserve studies.
