Below is a helpful tip from the Davis-Stirling.com Newsletter by ADAMS | STIRLING PLC regarding the updated standards to Reserve Studies. It reads as follows . . .
The primary duty of an association is to maintain, repair, and replace the common areas. That is why they are created in the first place. Unfortunately, boards failed their duties at Champlain Towers, and 98 people died. In the wake of that tragic loss, new standards were implemented nationwide to help avoid future losses.
Fannie Mae. The first was the imposition of new lending guidelines by Fannie Mae and Freddie Mac requiring boards to answer questions about common area deferred maintenance and unsafe conditions. The new questionnaire is problematic because may of the questions are poorly worded and create potential liability depending on how they are answered.
Reserve Standards. The second development is a positive one involving reserve study standards. A task force established by the Community Associations Institute (CAI) and led by (i) Robert Browning, PCAM, RS, Browning Reserve Group, Carmichael, Calif., (ii) Peter B. Miller, AIA, RS, Miller-Dodson Associates, Annapolis, Md., (iii) Mitchell Frumkin, PE, RS, Kipcon, Inc., North Brunswick, N.J., and (iv) Robert Nordlund, PE, RS, Association Reserves, Westlake Village, Calif. updated national standards for preparing reserve studies.
Long-Life Components. Previously, components with a life of 30+ years were not included in studies. This created problems for many associations. As these components aged, they dropped below the 30-year threshold and were often left out of studies–out of sight, out of mind.
When systems started to fail, especially plumbing, costly special assessments were levied against the membership since no reserve funds had been allocated for their replacement. New reserve standards now require all major components be identified. In addition, Periodic structural inspections are now recommended for buildings. Fortunately, reserve standards allow the estimated cost of these inspections to be included in an association’s reserve funds.
Maintenance Manuals. Preventive maintenance manuals are now recommended for all associations. Although not a requirement for the study, disclosures are required whether a preventive maintenance schedule is in place and being used. That disclosure will likely be scrutinized by lenders, which could impact sales of units for those who don’t have them.
RECOMMENDATION: For a full description of the updated guidelines, see “2023 Reserve Study Standards.” To make sure new standards are followed, boards should use a reserve company that has been credentialed by CAI. The Institute issues a “Reserve Specialist” credential to qualified individuals. Meeting the new standards will save associations a lot of money in the long run, and avoid painful special assessments.
DISCLAIMER. The Davis-Stirling.com Newsletter by ADAMS | STIRLING PLC provides commentary only, not legal advice. For legal advice, you’ll need to hire legal counsel. You can hire ADAMS | STIRLING PLC; Keep in mind they are considered corporate counsel to associations only.
