Sometimes we are asked the question “which type or reserve study report do I need”? The answer to this question can range from easy to more complicated. The National Reserve Study Standards endorses three different types of reserve study reports. All reports, at a minimum, include life and valuation estimates, fund status, and a funding plan. This short article will discuss the three types of reserve study reports, what they contain, and when the most appropriate time is to have each type of report performed.
Full Reserve Study – Level 1
The first one we look at is the full reserve study with a site inspection. This is the most exhaustive type of reserve study report. This type of report consists of the following tasks:
- Component Inventory
- Condition Assessment (based upon on-site visual observations)
- Life and Valuation Estimates
- Fund Status
- Funding Plan
The most likely time that you would need this type of report is when you are having a reserve study performed for the community for the first time or when you are having a reserve study performed by a different company for the first time on your community.
Reserve Study Update with Site Inspection – Level 2
The second type of reserve study report is an updated reserve study. This is an updated report with a site visit or on-site review. This type of reserve study consists of the following tasks:
- Component Inventory (verification only, not quantification)
- Condition Assessment (based on on-site visual observations)
- Life and Valuation Estimates
- Fund Status
- Funding Plan
The most likely time that this report would be performed is when you have an existing report and you are hiring the same company to update their previous study. This is usually a site inspection to verify that the same reserve study components are there and evaluate their condition.
Reserve Study Update without Site Inspection – Level 3
The third type of reserve study report is an updated reserve study. However, this report is updated with no site visit and an off-site review. This type of reserve study consists of the following tasks:
- Life and Valuation Estimates
- Fund Status
- Funding Plan
This type of report is a just a desk review where the reserve analyst will update the reserve study from a previous year or two and it is assumed everything is in a similar condition to the last time the site was visited.
As a general rule, we recommend that after the initial reserve study, you update your reserve study approximately every three years with a site visit. However, some associations feel more comfortable with the desk review updated reserve study for annual budgeting considerations.