A guide to HOA reserve study companies: What your Maryland HOA should know

What are reserve studies?

In Maryland, a reserve study helps boards plan for major repairs and replacements by identifying the components the homeowners association maintains, how long they are expected to last, what future work may cost, and how much the community should set aside each year.
   

What do HOA reserve study companies do?

HOA reserve study companies evaluate the major components an association is responsible for maintaining and estimate when those components may need repair or replacement, what the work may cost, and how much the association should set aside over time.
 

Are reserve studies required for Maryland HOAs?

Yes, for many Maryland HOAs. Under Maryland’s HOA reserve study law, associations that are responsible for maintaining common areas generally must complete reserve studies when the total repair or replacement cost of covered components is $10,000 or more.

HOAs that issue bonds for capital expenses are exempt from this requirement (Md. Code, Real Property § 11B-112.3(b)). Learn more in our guide to Maryland HOA reserve requirements.
 

How often does a Maryland HOA need a reserve study?

Under Maryland’s HOA reserve study law, covered associations must update their reserve study at least every five years (Md. Code, Real Property § 11B-112.3(c)-(d)).
 

Who is qualified to prepare a reserve study in Maryland?

When comparing HOA reserve study companies, boards should confirm that the person preparing the study meets Maryland’s qualification requirements.

They must meet at least one of the following:

• Have prepared at least 30 reserve studies in the previous three calendar years.
   
• Have participated in at least 30 reserve studies during that time while working for a reserve study firm.
   
• Hold a current Maryland architect or professional engineer license.
   
• Hold a current Reserve Specialist (RS) or Professional Reserve Analyst (PRA) designation.

Check that each firm you’ll work with meets these requirements to support compliance with Maryland HOA laws (Md. Code, Real Property §§ 11B-112.3(e)(1)).
 

How should boards compare HOA reserve study companies?

When comparing HOA reserve study companies, boards should look beyond price alone. The study may influence years of budgeting and capital improvement planning, so the provider should understand both the property and Maryland's requirements.

Consider asking:

• Who will actually prepare the study, and how do they meet Maryland's qualification requirements?
   
• Will the provider conduct an on-site review of the community?
   
• What components will be included and how will replacement costs be estimated?
   
• How will the company account for recent projects and existing maintenance contracts?
   
• Does the proposal include help developing the required reserve funding plan?
   
• How are questions or corrections handled after the draft report is delivered?
   
• What is included in future five-year updates?

A clear scope makes it easier to compare proposals from HOA reserve study companies on the same basis.
 

How much do HOA reserve study companies charge?

There is no single standard price for a reserve study. Fees can vary based on the size and complexity of the property, number of components, available records, level of site inspection, location, and whether the association needs an initial study or an update.

When reviewing proposals from HOA reserve study companies, boards should compare the scope of work as carefully as the fee. A lower-cost proposal may not be the better value if it excludes site inspections, funding-plan support, HOA meetings with the board, or other work the community needs.
 

How to choose the right HOA reserve study company in Maryland

1. Do your homework.

   Any reserve study firm you may want to work with will want to know details about your community association. Be prepared with a complete description of your community that includes details such as location, number of units, description of buildings, list of amenities, assets, investments, accounts payable, etc.
    

2. Work with your property management company.

   There are lots of options for reserve study firms; your professional property management company can suggest one from their list of qualified firms. You can also check with your local chapter of the Community Associations Institute for options.
    

3. Know what you want.

   It’s important to know what you’re looking for in a firm, and having that picture in mind will help you craft the right questions to ask them. Ask questions such as number of years in business, number of studies performed per year, company background, any specific experience with communities like yours, funding methods, pricing structure, turnaround time, association involvement, and types of guarantees. Knowing the factors that matter most to your community will help you narrow the list of candidates.
    

4. Ask for information.

   Make contact with your desired firms and ask for standard informational material, such as examples of previous reserve study reports they’ve completed. When you have the opportunity, ask the questions you developed earlier, carefully recording the answers. As you interview more firms, you may find that your questions evolve as well. Don’t forget to request three references from each firm you speak to.
    

5. Contrast and compare.

   Now that the research is done, it’s time to make your comparison matrix. One easy way to do this is to make a spreadsheet that lists your hiring criteria in the left-hand column, then list your candidate firms across the top, horizontally. After that, use your research to fill in the boxes, checking off which candidates fulfill which criteria.
   
   While you’re doing this, ask your community association’s accountant to review the samples provided by the firms and to confirm that they meet federal filing needs. When the spreadsheet is complete, start by eliminating those firms that meet the fewest of your criteria, and then continue to evaluate the rest.
    

6. Check references.

   The reference check should be a brief conversation, consisting of simple questions such as how similar the association is to yours, how satisfied the association was with the firm’s work, how the final costs compared to expectations, if the study was completed on time, how many firms they considered before choosing this one, and whether or not the association would hire this particular firm again. Don’t ask more than 10 questions, and be friendly, efficient, and respectful of their time.
    

7. Choose a firm.

   You’ve gone through all the steps: chosen candidates, interviewed them, completed a matrix of their desirability, and checked their references. You have all the tools to make an informed decision, so now is the time.

How FirstService Residential can help

Reserve planning can be complex, especially when boards are balancing today’s budget with repairs and replacements that may be years away. As North America’s leading property management company, FirstService Residential can simplify that work by helping boards organize reserve priorities, build them into the annual budget, coordinate preventive maintenance, track upcoming capital projects, and stay focused on what needs attention now versus what can be planned for later.

Through our affiliate FirstService Financial, managed communities can also access financial and insurance services designed to support the long-term financial health of the association.

Contact FirstService Residential to learn how our Maryland team can support your HOA.

This information is provided for general informational purposes only and is not intended to constitute, and should not be relied upon as, legal, regulatory, financial, or operational advice, or as a representation or guarantee of any specific services, capabilities, or outcomes. Property management needs, regulatory requirements, market conditions, and available services vary by jurisdiction, property type, and community. FirstService Residential provides services through locally based affiliates and associates, and services and results may vary by community, region, contractual terms, and applicable law.