Reserve Studies - The Complete Guide is 436 pages explaining the concepts and process for making a reserve study. For more information and to order, click here.

 

 

Facilities Advisors, Inc.

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Arizona Reserve Studies

About Us - Arizona Facilities Advisors Inc.

 

Facilities Advisors inc. Arizona office is located at:

Facilities Advisors, Inc.

60 E. Rio Salado Parkway, Suite 900

Tempe, Arizona  85282

 

Telephone  (480) 478-0511

National office telephone (877) 304-6700

National fax (805) 715-0586

 


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Facilities Advisors, Inc. offers excellent services at competitive, fixed fees.  Our fixed fees are inclusive of a one year software license, and we never charge extra for travel.

Reserve Study Reports

Our reserve study reports are unique.  Our reports are easier to read than those of our competitors.  In addition, they are designed to meet your statutory requirements and to document your maintenance plan.  Our reports are designed to save you time.  You save time in budget preparation because we prepare the reserve disclosures for you.  Our unique reserve study comparison exhibit also saves you time by showing you where our current report differs from the previous report, no matter who prepared the prior report.  It helps report users understand and evaluate what has changed since the prior report was issued.

 

Arizona Reserve Study Law

Arizona Condominium Act

The Arizona Condominium Act (A.R.S. 33-1201, et. seq.) generally state the distribution policy of annual assessments for common expenses.  Common expenses are defined as including any allocations to reserves. There is no provision in the Condominium Act that requires that a reserve study to be prepared by the association, and contains no requirements as to how the reserves are to be calculated.
Arizona has no statutory provisions requiring a planned community association to prepare a reserve study or to fund reserves.
Arizona does have a statutory requirement for both condominiums and planned communities that requires certain disclosures upon the resale of a unit /lot within an association.  Specifically, the purchaser must receive a statement regarding the total amount of money held by the association as reserves. The purchaser must also be given a copy of the most recent reserve study of the association, if one exists.

The Arizona Condominium Act (A.R.S. 33-1201 through 33-1270) generally states the distribution policy of annual assessments for common expenses. Common expenses are defined as including any allocations to reserves (A.R.S. 33-1255-c-1). There is no provision in the Condominium Act that requires that a reserve study to be prepared by the association, and contains no requirements as to how the reserves are to be calculated.

Arizona has no statutory provisions requiring a planned community association to prepare a reserve study or to fund reserves.

Arizona does have a statutory requirement for both condominiums and planned communities that requires certain disclosures upon the resale of a unit / lot within an association (A.R.S. 33-1260).  Specifically, the purchaser must be provided with a statement regarding the total amount of money held by the association as reserves. The purchaser must also be provided with a copy of the most recent reserve study of the association, if one exists.

Common industry practice is that homeowners associations should perform periodic reserve studies as a prudent business practice. Directors of associations are generally held to a “prudent businessman” rule in determining whether or not they have met the fiduciary duty of their position for the association. A prudent businessman would establish a capital replacement budget (reserve study) to make sure he is generating enough revenues (reserve assessments) to provide for major repairs and replacements.

There is little discussion about whether an association should perform a reserve study. The only significant areas of discussion revolve around how frequently a reserve study should be performed, and if there should be any minimum funding requirements. Most states that have reserve study statutes require physical site inspections on 3 or 5 year cycles. We believe that 5 years is too long. 3 years may be too long if significant reserve expenditures are being made during the subject time period. However, the association should perform an update without site inspection every year as part of the annual budget process.