A reserve study is a report on a structure’s physical condition and the capital reserve fund’s status. It serves as a tool to help homeowners associations (HOAs) in New Jersey plan what and when significant expenditures will be needed for the common areas under their jurisdiction. With a reserve study NJ, HOAs can also ensure that they have enough financial resources to support construction projects in the neighborhood.
Even though there are no specific laws related to reserve studies in the state, they are typically conducted every few years to keep the information accurate and updated. But because of the COVID-19 pandemic, HOAs might need to revisit their current reserve study and hire a structural engineer to conduct a new one.
The global health crisis caused turmoil in the supply chain of many industries, including the construction and engineering sectors. Apart from delays in production processes and the scarcity of goods and raw materials, the current supply chain disruption also led to a record-breaking inflation rate.
With the high prices of commodities, it can signify that the current financial reserves of HOAs might already be outdated. The reserve fund is essential for paying the expenses of future repairs or replacements of common assets in the neighborhood. It is opposite to the operating fund used to cover regular operations or maintenance of the community.
By hiring a structural engineer New Jersey, HOAs can adjust their reserve budget accordingly and even factor in unforeseen events in the future to increase their reserve fund’s margin. The association can also prevent prolonging the completion of projects and ensure that other important future activities in the neighborhood will be done as planned.
The current supply chain mess and inflation issues are not temporary. Moreover, experts anticipate that the construction industry’s inflation rate might peak in the first half of this year.
While HOAs can look for other sources to finance their reserves, proper planning can help reduce the burden in this endeavor. Furthermore, conducting a timely reserve study is necessary for HOAs to keep themselves prepared even during unprecedented times.
See this infographic provided by Lockatong Engineering to learn more about the effects of inflation and supply chain disturbances on reserve studies.