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.



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State of Alaska

The state of Alaska has adopted specific statutes related to reserve studies, which are set forth in sections 34.08.320 of the state’s civil statutes.

Those statutes generally provide that the association may adopt and amend budgets for reserves and assess and impose funds for common expenses.  No other specific criteria are mentioned

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.

AS 34.08.320. Powers of Unit Owners' Association.

(a) Except as provided in (b) of this section and subject to the provisions of the declaration, the association may
(1) adopt and amend bylaws and rules and regulations;
(2) adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from unit owners;
(3) hire and discharge managing agents and other employees, agents, and independent contractors;
(4) institute, defend, or intervene in litigation or administrative proceedings or seek injunctive relief for violations of its declaration, bylaws, or rules in its own name on behalf of itself or two or more unit owners on matters affecting the common interest community;
(5) make contracts and incur liabilities;
(6) regulate the use, maintenance, repair, replacement, and modification of common elements;
(7) cause additional improvements to be made as a part of the common elements;
(8) acquire, hold, encumber, and convey in its own name any right, title, or interest to real estate or personal property, except that
(A) common elements in a condominium or planned community may be conveyed or subjected to a security interest only under AS 34.08.430 ; and
(B) part of a cooperative may be conveyed or all or part of a cooperative may be subjected to a security interest only under AS 34.08.430;
(9) grant easements, leases, licenses, and concessions through or over the common elements;
(10) impose and receive a payment, fee, or charge for the use, rental, or operation of the common elements, other than limited common elements described in AS 34.08.100 (2) and (4), and for services provided to unit owners;
(11) impose a reasonable charge for late payment of assessments and, after notice and an opportunity to be heard, levy a reasonable fine for a violation of the declaration, bylaws, rules, and regulations of the association;
(12) impose a reasonable charge for the preparation and recording of an amendment to the declaration, the filing and recording of a plat or plan that accompanies an amendment, resale certificate required by AS 34.08.590, or a statement of unpaid assessments;
(13) provide for the indemnification of its officers and executive board and maintain directors' and officers' liability insurance;
(14) assign its right to future income, including the right to receive common expense assessments, but only to the extent the declaration expressly permits the assignment;
(15) exercise any other powers conferred by the declaration or bylaws;
(16) exercise any other power that may be exercised in the state by a legal entity of the same type as the association; and
(17) exercise any other power necessary and proper for the governance and operation of the association.
(b) The declaration may not impose limitations on the power of the association to deal with the declarant that are more restrictive than the limitations imposed on the power of the association to deal with other persons.

Additional State Reserve Study Laws