How to Choose a Reserve Study Company

A note about us. A board may prefer or be required to use a credentialed provider. Runway Reserves holds no RS, PRA or PE credential and is a new firm. If that’s a requirement for you, we aren’t the right choice today, and you should look for a provider who holds what you need.

What the credentials mean

“Level I” and similar terms are industry labels for types of service. Ask what a firm means by them and whether its report follows that standard.

When a credential is required

Rules vary, and these are examples from the laws we read. Confirm yours with an attorney.

• New Jersey: “performed or overseen by a reserve specialist who is credentialed through the Community Associations Institute or an engineer or architect who is licensed by the State.”
• Maryland: prepared by a person who has prepared or participated in 30 studies under the statute’s terms, holds a state architect or engineer license, or has a listed reserve designation.
• Florida: a structural integrity reserve study must be “performed or verified by” a licensed engineer or architect, or a person with a listed reserve credential. This doesn’t apply to every Florida study.
• Nevada: a person must register with the state to act as a reserve study specialist, with insurance or a bond of $1,000,000.
• Washington: a study professional must be “an independent person who is suitably qualified by knowledge, skill, experience, training, or education.”

Lenders and governing documents can also set requirements. Fannie Mae, for example, lists types of expertise for studies its lenders rely on.

Questions to ask

California’s real estate regulator says a board “is accountable for the quality of the study itself” and should review consultants for “previous experience, price, and recommendations from other associations.” Its 2010 guide has an interview list, and these questions build on it.

People

• What credential does the named person hold, and can we check it?
• Who visits the property, who writes the report, and who reviews it?
• Do you use subcontractors?

Experience

• How many studies have you completed, and of what type?
• Can we speak to references?

Method

• Will you measure the components or use drawings?
• How much of the property will you physically see?
• Where do your cost estimates come from?

Independence

• Do you have ties to our manager, a developer, contractors, insurers or lawyers? The regulator’s guide notes that a tie “does not necessarily indicate a conflict of interest, but should be disclosed and considered.”
• Do you take payments from vendors, or bid on repairs?

The report and terms

• Can we see a sample report?
• Is there one recommended funding plan, and why?
• Do you have liability insurance, and do you cap your liability?
• Who pays for corrections and updates?

What a proposal should include

This list is our own judgment, drawn from the sources above:

• Named people and their qualifications
• Type of service, in plain terms
• Whether there’s a site visit, by whom, and how much will be seen
• How components are chosen, and how association and owner items are separated
• Cost sources, and inflation and interest assumptions
• Funding plan method
• What’s excluded
• Delivery dates, price, and charges for updates or revisions
• Liability and insurance terms, and any conflict disclosures

Red flags

These are also our judgment:

• A credential you can’t check, or a “license” for reserve studies in a state that has none
• A promise of lender acceptance, or a target number before anyone has seen the property
• Undisclosed vendor ties, or an offer to bid on the repairs
• No written scope or exclusions
• Remote photos described as a site visit
• A sample report full of placeholder text
• A structural or safety conclusion from a firm with no licensed professional

How we answer these

We’re a new firm with no completed studies to reference and no credential. Our prices are published, our sample report uses a fictional community, and we explain how we work and what we don’t do. We can’t yet state our insurance terms, so ask us. Weigh that against firms with a longer record.