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COMPONENT LIST / FOUR PART TEST 

Created by Joel L Tax - Professional Reserve Analyst - 06/11/2016

RESERVE STUDY COMPONENT LIST DEVOPLED WITH FOUR PART TEST

1. Association's Responsibility

The component must be the
responsibility of the
Association. This is
determined by reviewing
the governing documents
which will outline what is
the Association's
responsibility versus Home
Owner responsibility.


2. Predictable Useful Life

Components which have no
predictable useful life
expectancy are typically not
funded for and are best paid
for from special
assessments or insurance.
Depending on the age of the
building these components
could include the plumbing
or fire sprinkler system.


3. Limited Remaining Life

A limited useful life is
needed to apply to the
component for it to be
considered and included in
the reserve study. Some
components like roofing and
paint have very limited life
expectancies but others like
foundations and electrical
systems do not.


4. Above a Threshold Amount

A dollar threshold amount is
provided by the Client when
we complete a reserve
study. A larger community
with a larger budget will
typically pay for smaller costs
from the operating account
and will typically have a
higher threshold amount
than a smaller community.

 

Additional resources: The Reserve Study Process


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