The Benefits Of A New Jersey Reserve Study

white and brown painted house
A New Jersey reserve study is a very important tool to homeowners associations. It is an analysis of the condition of a physical structure and the status of the capital reserve fund from which major capital improvements or replacements of various components will be paid.  The reserve study report is comprised of findings from an independent consultant and it gives the board members and owners a budget tool for planning what and when anticipated major expenses will be needed as well as how much and when to fund the reserve for paying for them.

A reserve study plays a very important role in properly maintaining association common areas. It directly affects property values. Having a good plan can preserve or enhance property values whereas a poor or nonexistent plan will have the opposite effect. With the budget pressures in today’s depressed property value market, many community associations are not increasing their reserve assessments annually. However, inflation affects future maintenance obligations annually, meaning that the longer you continue ignoring that adequate reserve funding, the greater will be the gap a between funds on hand compared to maintenance obligations.

Once a homeowners association conducts a New Jersey reserve study, the study can be used to create a capital replacement plan. There are quite a number of benefits of having a long term capital replacement plan, including  providing a framework for prioritizing major projects and decision making, evaluating and validating current capital reserve policies and documenting the need for common fees, assessments as well as loans if necessary. A long term capital replacement plan also protects the unit from unexpected large assessments or debt on service loans for capital improvement projects. It also serves as a guideline for future board members and management and documents responsible stewardship.

For more information on the benefits of a New Jersey reserve study, visit our website at https://www.lockatong.com/

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