An inspector visits the HOA, noting inventory, condition, and measurements of all common-area components as mentioned above. Using this information - as well as information provided by vendors and from the HOA itself - the normal service life, estimated remaining life, and replacement, repair, or refurbishment costs for each component is placed in the report and extended out to 20 or 30 years (based upon requirements) in order to help the association adequately budget for future expenditures.

The HOA Board is responsible for obtaining a study, as well as creating and implementing its budget. At the board's request, the responsibility for obtaining a reserve study provider to complete the study may be passed on to the property management company.

The study needs to take inventory of all of the assets that will need to be replaced, repaired or refurbished at a future date. This does not include assets that are cycled on annual basis, and are thus maintained and paid for out of the operating budget. Generally, the components that require a replacement, repair, or refurbishment cost of at least $1,000 and have a remaining life of less than 30 years are included in the reserve fund. These parameters may vary from HOA depending on board discretion, size of HOA, type of components and on-site personnel (i.e. staff that can replace as needed and maintain at a high level).

There are a number of different sources from which a replacement value can be determined. The best source is from the component vendor itself or actual contracts/bids in order to give an accurate, up-to-date cost. Other sources include a Reserve Professional Inspector, or a general source, such as the National Construction Estimator by Craftsman, may be sufficient.

Requirements vary by state, so check with your local Reserve Professional. For example, in California, legislators require "At least once every three years the board of directors shall cause to be conducted a reasonably competent and diligent visual inspection..." and every year "The board shall review... and shall consider and implement necessary adjustments to the board's analysis of the reserve account requirements as a result of that review."

A review of the study is recommended every year to examine the financial health of the HOA reserves and make applicable adjustments. It requires a financial update, wherein the projected costs and remaining lives of components in a reserve study are adjusted without an actual physical inspection. For example, if you have experienced dramatic weather conditions over the past year it is highly recommend to inspect the components for wear and tear.

SmartProperty allows users to access its system to create dynamic and fluid reports. This allows an HOA to budget-on-the-go and adjust component life for current or future costs as they see fit. This gives an accurate analysis of current reserve funding levels. For example if the Board is considering painting a year earlier than expected they can adjust the remaining life and see the impact it will have on there reserves. Or looking to change roofing materials, whatever adjustment is under consideration you can see the direct impact it will have on your reserve budget and what adjustment will be required to meet all future needs. SmartProperty customizes different funding options to help you meet disbursement requirements as they occur.

SmartProperty does not contract out work or qualify vendors at this time. But please contact info@smartproperty.com or 1-888-HOA-6007 for more information.

If you are interested in financing for an HOA improvement loan, please contact info@smartproperty.com or 1-888-HOA-6007 for more information.

If you are interested in preferred pricing, please contact info@smartproperty.com or 1-888-HOA-6007 for more information.

Government regulations exist in order to protect both homeowners and the HOA itself. This type of community living environment is classified as non-profit mutual corporations with a board of directors required to demonstrate fiduciary responsibility. Some manage millions of budgeting dollars, effecting thousands of people. Thus financial transparency through reporting is a must to deter and prevent theft, fraud, or misappropriation of homeowner funds. When a disclosure is made homeowners can be well-informed of budgeting decisions that effect the financial standing of the HOA.

The Assessment and Reserve Summary Disclosure became effective July 1, 2005 and was sponsored by the California Association of Realtors. California has once again demonstrated itself as a leader in HOA legislation which began with the Davis-Stirling Act of 1985. Much like the lemon laws of 1980's and consumer advocacy efforts to protect consumers with proper disclosures when buying used cars, its intent is to protect consumers with proper financial disclosures when buying used houses. The disclosure requires an HOA to provide a user-friendly summary statement which will clarify current and future assessments, the current amount of reserve funds and future assessments that would be required for repairs and replacements that are the financial responsibility of the HOA. It also requires a homeowners association to provide the documents outlined during transfer of title in electronic form. This disclosure needs to be updated annually with distribution of the pro-forma financial statements. SmartProperty provides this disclosure in a report that can be created easily and distributed electronically. To download entire law click here.

An HOA management company will do just that - manage your HOA in any number of different aspects, from budgeting to administrative. Services may include but are not limited to: organizing the association and incorporating the association if not incorporated; provide training for the Board of Directors; evaluate, and as required, improve your association's governing documents and Rules and Regulations with the help of an attorney; develop budgets and prepare financial reports according to generally accepted accounting principles; prepare appropriate information for board meetings and annual association meetings including minutes of meetings, all legal documents and disclosures required by law. A management company can also contact and hire vendors such as landscapers or roofers, and can, with the help of a reserve study, assist in planning savings and expenditures in order to ensure a sound financial future for the association.

If you are interested in online payment processing for monthly assessments, please contact info@smartproperty.com or 1-888-HOA-6007 for more information