Reserve Fund Study in Simple Terms

Reserve Fund Study

A reserve fund study is prepared to assist owners of a building in determining the appropriate amount for the annual contribution to the contingency fund of a building which estimates the repair and replacement cost of assets located within the common areas such as:

• Exterior building envelope (cladding, epoxy paint, render).
• Windows and frames
• Roofs
• HVAC systems & Plant and Machinery
• Common electrical systems

Our professionally qualified surveyors offer an accurate and detailed reserve fund study service to property owners for various reasons including:
·  Developing a stable and reasonable funding plan that meets their needs and future owners;
·  Identifying the multi-year contributions required to cover future replacement costs and
·  Providing knowledge of the service life and projected replacement cost of the assets.

Our reserve fund study will include the following:

·  Cash flow balance sheet
·  Expenditure and Contributions
·  Forecast of sinking fund costs upto a period of 20 Years
·  Proposed contribution

Who needs it?
• Auditors
• Developers/ Property Management companies
• Building owners
• Owners associations

Questions: When should an owners association or community management request for a reserve fund study? Is it too early to request for a reserve fund study for newly constructed building recently handed over to the owners by the developer?

I am looking forward to a live debate or responses from connections in owners associations, community managements, asset management, other real estate industry and the public.

By: Ruka Jesinawu

Ruka Jesinawu works at Land Sterling with the Building Surveying department and together undertook numerous reserve fund studies for various owners associations and master community managements.