Some states, such as Nevada, require that an individual must possess a permit to perform a reserve study. California and many other states do not specify that an individual possess any qualifications to perform reserve study. So technically a board member or property manager could perform a reserve study, but in reality it is not recommended. A reserve study should be performed by a qualified independent professional .
It can be a serious liability issue if the reserve study is performed by the board or management and puts all liability on the board and or manager. Boards and managers typically don’t have liability and errors and omissions insurance that cover the reserve study and are not qualified or able to defend it’s conclusion to homeowners, buyers, and lenders.
There are also definitely conflicts of interest if the board or manager performs the study. Boards or managers may have agendas where they want the dues to stay as low as possible or they may want certain projects done before others. We have seen many situations where managers have wanted to keep theirs clients happy so they set the numbers in the reserve study to keep dues low. This causes differed maintenance and in the long run ends up costing the association even more money and hurts property values. Boards or managers may also want certain projects completed before others because of personal preferences. In turn they manipulate the reserve study to show that certain projects need to be done before others.
Professional reserve study providers have years of experience performing reserve studies. They have worked with hundreds of associations which gives them the experience they need to predict cost and useful lives of all the components. They also have experience setting funding plans that best fit each association. In addition we recommend finding an individual with a great deal experience in building inspection and a background in engineering, construction, and building observation.
Reserve Studies must be updated over time. Boards and managers typically change from year to year. If different boards and managers continually update the study there is no consistency and current boards may not understand or agree with the past boards study. Professional reserve study providers are consistent in the way they perform studies and follow standards that are set by organization such as the community associations institute (CAI).