Reserve Component

A reserve component is an individual item of shared property that the association must maintain, repair or replace, and that is included in the reserve study.

Typical components are roofs, paving, exterior paint, pool equipment, elevators, fences and mechanical systems. The full list is called the component inventory.

The National Reserve Study Standards use a test to decide what belongs on the list. In plain terms, a component is something that is the association's responsibility, has a limited useful life, has a remaining useful life that can be reasonably predicted, and costs more than a minimum threshold the association sets. Items required by law can also be included.

Things that fail the test are handled elsewhere. Routine upkeep such as landscaping contracts belongs in the operating budget. Items with no predictable life are usually left out of the reserve schedule and noted in the report.

Each component carries a quantity, a unit cost, a useful life and a remaining useful life. Those four figures drive every number in the funding plan, so an accurate inventory matters more than any formula applied to it.

Source: this definition follows the National Reserve Study Standards, published by Community Associations Institute (CAI), explained in our own words. State law can define the term differently for its own purposes.