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Following the Governing Documents or the Board’s Interpretation of the Governing Documents

This is a tricky and grey area in the reserve study industry. There are some reserve study companies that will follow the governing documents per their own interpretation, some that will follow the Boards interpretation and still others that don’t even want to look at a community’s governing documents. Why the dramatic difference?


Well it really comes down to liability and what the reserve study provider feels comfortable with. It has been our experience that many communities have interpreted their governing documents differently than we or other communities have. A great example is windows which some communities consider part of the exterior of the building while other communities do not; some even find some kind of middle ground and actually split the window itself into sections (glass, frame, casing, etc.)


So how are we supposed to provide a reliable long term study which helps a community? Well the short and easy answer is that most communities are in a poor funding position so even a study which has some areas of grayness to them is still far superior to no study at all. Over time a Board and the Membership will need to come to some kinds of terms with respects to how these governing documents are interpreted. We always suggest obtaining the advice of an attorney for large expense items that are in question so that they can provide case law which indicates one way or another.


With our reserve studies the final component list is essentially determined by the Board so if they interpret the governing documents one way, even though it may be different than what we have seen prior, we will follow their guidance to include funding for or not. Components in questions will be left in the study but be unfunded for per the Boards request. As laws and regulations become stricter this policy may change. It’s important to remember that this is expected of an industry that is evolving and being shaped by laws, regulations and trends in common interest communities.


Over the years we have seen interpretations by attorney and courts exactly opposite of what we would have guessed would have been the outcome so following a communities historical position appears to usually be the best bet as the community Membership and Board already have an expectation of how to interpret their documents. If at a later date views change or legal advice dictates otherwise we recommend updating updates to the reserve study.