A Reserve Study is one of the most important financial tools for a homeowners association (HOA). It helps your community plan ahead for major repairs and replacements, like roofing, pavement, or pool systems, by making sure your reserve funds are on track.
But how often should you update this study? The answer depends on your association’s needs, goals, and changing circumstances. Let’s explore how to decide when updates are necessary—and why they matter.
When Should You Update a Reserve Study?
Even a well-prepared Reserve Study needs regular updates to stay accurate. Here are some key times when your HOA should consider a review:
1. When You Start a Reserve Project
If your HOA is getting bids for a major repair or replacement, and the costs are different from what’s in your current Reserve Study, it’s time for an update. This is especially true if the project will include upgraded materials or improved workmanship. An updated study ensures your financial plan reflects current realities.
2. To Review Project Timing
Big projects don’t always happen as planned. Delays, fast-tracked schedules, or shifting priorities can affect when money needs to be available. Updating your Reserve Study helps align your funding plan with updated timelines.
3. When the Economy Changes
Changes in inflation, interest rates, or other financial conditions can impact your reserve fund. An updated study takes these changes into account, helping you avoid shortfalls and plan more accurately.
Cost and Timing of Reserve Study Updates
Updating a Reserve Study is typically affordable, especially when done around the time of a major project. In fact, planning ahead and bundling updates with project planning can often lower the cost of the service.
More importantly, the benefits of staying current far outweigh the cost. An up-to-date study gives you confidence in your financial strategy and protects your community from unexpected expenses.
Stay in Touch with Your Reserve Analyst
Maintaining regular communication with your Reserve Analyst is a smart move. They can alert you to industry trends, cost increases, or issues other associations are facing, giving your HOA the chance to plan and avoid surprises.
The Risks of Skipping Updates
When HOAs don’t update their Reserve Studies regularly, it can lead to bigger problems down the line. Some common risks include:
- Sudden special assessments that surprise homeowners
- Increased board or management turnover due to frustration or confusion
- Potential legal issues if owners feel misled or uninformed
Keeping your Reserve Study current helps maintain trust, transparency, and stability in your community.
What Are Other Associations Doing?
Many HOAs choose to update their Reserve Studies annually, either with an offsite financial update or a full on-site review. Others update their studies every three years to balance cost and thoroughness. However, some associations go too long without an update, which can cause serious issues.
Follow State Laws and Best Practices
State regulations may require HOAs to update their Reserve Studies within a certain timeframe—often every three years. Be sure to check your local laws and follow industry best practices. Staying compliant protects your board and ensures responsible financial management.
Final Thoughts
There’s no one-size-fits-all answer for how often an HOA should update its Reserve Study. The best schedule depends on your projects, finances, and external factors. However, regular updates—along with open communication with a Reserve Analyst—will keep your HOA on a strong financial path.
By planning, reviewing your Reserve Study regularly, and adapting to change, your association can protect its property values, reduce financial stress, and prepare confidently for the future.
