A reserve study minimizes uncertainty. It does this by providing a timeline for future expenses and establishes if the homeowner’s association has saved enough money AND is still saving enough.
As townhouse or condominium communities get older, they tend to put less into reserves because their annual expenses continue to rise; HOA boards are reluctant to raise dues. The sooner a reserve study is performed the less likely an assessment will be required. Assessments are almost always an unfair solution to current residents. Why should current homeowners shoulder the expense that earlier homeowners should have been saving for? This is a common cause for lawsuits against the homeowners association and current and past board members.
Family friends of ours own a unit in an older condo tower in Florida. Their association just had a reserve study performed. It turns out that they are a million dollars underfunded! That will keep you up at night.
