Hiring a Virginia reserve study company: What to know

What are reserve studies?

A reserve study is a financial and physical analysis that helps community associations plan for future capital repair and replacement costs. These studies evaluate the condition of major shared components, such as roofs, elevators, siding, HVAC systems, and amenities, and estimate when they will need to be repaired or replaced. The study also includes a funding plan, which outlines how much money the association should set aside each year to cover those future expenses. This helps boards avoid large special assessments and keeps long-term budgeting on track.

The Virginia Condominium Act and the Virginia Property Owners Association Act state that full reserve studies are required every five years and that reserve study updates must be reviewed annually and adjusted as necessary to keep the funding of reserves sufficient. The Condominium Act also requires that condominium resale certificates disclose a projected budget which includes provisions for reserves and capital expenditures.

This article is not intended to and does not constitute legal advice or create an attorney-client relationship. Board members should consult their association’s attorney to discuss the legal implications of their decisions or actions prior to proceeding.
 

What does a reserve study company do?

A reserve study company typically employs engineers, architects, and financial and accounting professionals to assess the physical state of a property and provide cost estimates for future capital expenses. In Virginia, a reserve study company must understand the state’s specific legal requirements, including the five-year study mandate and the need to disclose current reserve fund balances in annual budgets. An experienced firm will inspect the property, identify key assets, estimate their remaining useful life, and build a funding model that supports responsible long-term planning.

In addition to full reserve studies, many reserve study companies also offer annual updates or funding-only updates that can help associations stay aligned with their most recent reserve study recommendations.
 

Hiring a Virginia reserve study company, step by step

1. Create an association profile.

   Before you meet with a reserve study company, you should gather the right background information about your community. Any qualified firm will want a clear picture of your association before preparing a proposal. That includes where your community is located, how many units it has, and a brief description of the buildings and amenities, whether that’s shared roads, elevators, roofing systems, clubhouses, or pools.
   
   You’ll also want to share your most recent financial statement and current budget, especially the line items related to reserve contributions. That helps the firm understand how much has been set aside so far and what your ongoing funding strategy looks like. Providing a complete overview upfront can lead to a more accurate scope of work and ultimately a more helpful reserve study.
    

2. Find your firm.

   Searching for candidates is easy. Good property management companies maintain a list of qualified firms. You can also check with your local chapter of the Community Associations Institute or go to www.caidc.org for local engineering and reserve specialist information.

   "Remember to seek input from your community manager, your attorney, or your association’s audit firm. Your professionals know who the other professionals in the local market are. Take advantage of positive word-of-mouth."
   
   Mark Bailey, senior vice president for FirstService Residential

3. Ask the right questions.

   Decide what criteria you’ll be using to evaluate your candidates. You will get a clearer picture of the end product by asking questions such as number of years in business, number of studies performed per year, company background, specific experience with communities like yours, preferred funding methods, pricing methods, time it takes to complete the work, association involvement, the number and cost of on-site property visits, and types of guarantees. Identifying the most important factors when it comes to hiring a firm for your association will help you narrow down the candidates.
   
   Bailey notes that it is also important to engage a firm that will include at least one face-to-face meeting with the board of directors to explain the report and the methodology that was used to complete the study.

   "Do not consider a firm that tells you the study can be completed without a property visit."
   
   Mark Bailey, senior vice president for FirstService Residential

4. Make contact.

   Reach out to your candidate firms with a request for standard informational material, such as examples of previous reports. Then 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 be afraid to go back to firms if you come up with new questions, and don’t forget to request three references.
    

5. Compare your options.

   Once you’ve gathered all the details, it’s time to weigh your choices. A simple side-by-side comparison can help you see which reserve study companies meet your must-haves. You might create a spreadsheet listing your priorities, like cost, timeline, qualifications, and report format, then score each firm accordingly. If your board relies on a CPA for annual filings, it may be a good idea to have them review the sample reports, too. From there, narrow it down to the firms that best align with your community’s needs.
    

6. Reach out to references.

   When you’ve narrowed down your list of reserve study companies, ask each one for references. A quick conversation with a board member or manager who has worked with the firm can be incredibly helpful. You might ask when the study was completed, whether it met their expectations, and if they’d choose the same company again. Keep the conversation short, focused, and respectful of their time.
    

7. Decision time.

   You’ve identified candidates. You’ve interviewed them and eliminated the non-contenders. You’ve compared them on a candidate matrix. You’ve reached out to their references. Now you have all the tools you need to make an informed decision.

Partnering with an HOA reserve study company can have a huge impact on the future of your association. Follow these steps and you can find yourself working with a quality firm that meets your expectations. For more help, contact FirstService Residential, Virginia’s leading property management company.