Homeowners’ associations (HOAs) and cooperatives are accountable for making strategic decisions about the management of their properties. However, the scarcity of funds and the occurrence of administrative challenges often restrict their capabilities and lead to delayed repairs and replacements.
As a solution, associations should conduct a NJ reserve study, a primary tool for planning expenses for future property improvements. A reserve study is a form of assessment that aims to help associations develop long-term financial plans for the maintenance of their capital assets. It involves inspecting a building’s physical condition and allocating a sufficient reserve budget for needed repairs and replacements.
As per the newly ratified NJ Law S2760, a reserve study is now mandatory for particular residential and cooperative buildings in New Jersey. Under this law, associations are required to conduct a reserve study every five years. Failure to comply may result in the revocation of their certificate of occupancy and payment of fines.
Although managers and volunteers with experience in engineering, construction, and accounting are available, they are not eligible to conduct a New Jersey reserve study. Implementing this assessment requires specialized expertise in building inspection and reserve budgeting. Thus, only professional engineers (PEs) and reserve specialists (RSs) are qualified preparers of reserve studies.
If an association is searching for an expert in technical assessment, employing a state-licensed PE is the solution. They can perform valuation estimates and in-depth property inspections to evaluate the building’s components. Engineers can also provide a comprehensive narrative report regarding the building’s existing condition and offer strategic suggestions to address the needed repairs, deficiencies, and replacements.
To be considered a qualified PE, one should have a completed degree from an accredited engineering program and pass the examination requirements. Additionally, one should have worked for at least four years under the direction of a licensed PE.
Meanwhile, hiring a credentialed RS is essential when there is a need to create financial planning for property management. While they do not delve into technical points of structural integrity, they excel in delivering a clear financial roadmap for an asset. RSs also have competency in financial modeling to plan timely restorations and replacements.
A qualified RS is certified by the Community Associations Institute (CAI) and has a degree in engineering, architecture, or construction management. They should have completed at least 30 reserve studies in three years and are complying with their code of ethics.
The deciding factor in choosing between a PE and an RS depends on the property’s needs. Both professionals play an essential role in providing a clear roadmap for keeping NJ properties secure and well-maintained. These are only some of the crucial differences between RS and PE. To learn more insights, read this infographic from Lockatong Engineering