What is a reserve study?
A reserve study a long term Major Repair and Replacement (MRR) budget. The end product is the reserve study report, which is supported by a site observation and component condition assessment.
The purpose of the report is to create a budget in the form of a long-term financial projection - a funding plan for the association that estimates the timing and cost of future major repairs and replacements to the association's common area components. The homeowner association industry has coined the term reserve study, which is simillar to capital budgets outside of this industry. The association uses this reserve study report to determine the annual member assessments necessary to provide funding for the estimated future expenditures.
The site visit is a limited scope visual observation of the association's common area components. It generally does not include invasive or destructive testing. The purpose of the site visit is to identify common area components, evaluate their condition, determine useful life and remaining useful life, and estimate the major repair or replacement cost.