While a reserve study is an excellent tool for a Homeowner’s Association board, there are a number of limitations associated with reserve studies.
One of the main limitations of a reserve study is the difficulty in predicting the useful and remaining life of an asset. If you informed me that a townhome’s vinyl siding was 5 years old, I’d believe you. If you told me that same siding was 10 years old, I’d also believe you. It’s honestly very difficult to ascertain the age of some assets. As reserve study professionals, we have to make a number of assumptions, some of which are reliable and others which are not. Obviously if a condominium community is 14 years old, it’s almost certain that the roof is 14 years old.
Frequently, it is late in the useful life that building component begins to show wear or deterioration. From that point on deterioration may accelerate. Sometimes, a material’s deterioration actually occurs in the interior, away from the surface. A reserve study is noninvasive, meaning we do not peer behind a condominium’s siding or core samples of your street’s asphalt, and we therefore must speculate to some degree about the extensiveness of unseen damage.
For all these reasons, it is important to get the actual installation dates of your condominium or townhouse’s asset.
Another limitation is associated with a community’s signage or monument. Many assets have an aesthetic component, in which case its useful life is subjective. I could look at a monument sign and say it’s fine, I can still read it, or I might say that it looks old and detracts from the community. Is the asset performing for what it was intended? My wife is from Costa Rica. You drive 1 block and you’ve hit more potholes than you do all year here. Is the asphalt still performing as intended? It depends on your perspective.
