Having a reserve study enables New Jersey Homeowners Associations (HOA) to have adequate funds to cover expenditures for the maintenance and enhancement of common areas. It is their responsibility to safeguard and ensure the structural soundness of facilities like community pools, parks, athletic courts, and many more to keep residents away from potential risks. As these structures age, some materials might deteriorate and require necessary repairs or replacements.
A reserve study is conducted by having a structural engineer in New Jersey conduct an extensive engineering inspection and evaluation of the facilities’ building materials. It is a part of due diligence to perform a property condition assessment in NJ to obtain vital information about the commercial real estate’s present state. Afterward, the engineer will write a comprehensive description of the property to determine the funds that the HOA should set aside periodically to cover the costs within the study’s duration.
Even though New Jersey has not adopted specific regulations on reserve studies, the industry’s standard practice is to do it at least every three years. It is also critical for HOAs to keep their reserve studies updated regularly to avoid the need for special assessments.
These special assessments arise when current funds are inadequate to pay for the immediate repairs or replacements of common areas. Residents often feel inconvenienced when asked to pay these fees because they are often indicative of poor budgeting or management from the HOA board.
If New Jersey HOAs do not have a reserve study yet, it is practical to get one as soon as possible. To know more about the importance of having a reserve study, Lockatong Engineering provides the following infographic.