Reserve Study Update

A reserve study update is a revision of an existing reserve study that refreshes component conditions, costs, the reserve balance and the funding plan without rebuilding the inventory from scratch.

There are two kinds. An update with a site visit (Level II) includes an on-site review of condition. An update without a site visit (Level III) is done from records.

Updates exist because a study goes out of date quickly. Construction costs move every year. Projects get done early, late or not at all. Interest earned and contributions made rarely match the old plan exactly. An update resets the starting point so the next budget is based on current facts.

A typical update carries forward each component with its remaining life reduced by the years that have passed, applies current costs, enters the actual reserve balance, and recalculates the projection and percent funded.

How often to update depends on state law and on how much has changed. An annual desk update with a site visit every three years or so is a common pattern, but your state may require something different.

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.