The Benefits of the PRA System

The Economics and Control of having a Reserve Management System

Common interest development owners’ associations (HOAs and POAs) have a fiduciary responsibility to the individual owners that their property will be maintained and refurbished as needed. This includes daily operational tasks and long-term maintenance and refurbishment. This is accomplished through assessments to the owners. The long-term portion of the assessment is set aside in a reserve fund. A reserve management plan must be prepared to determine the amount of the long-term assessment.

Each State has guidelines and requirements of what is required in a reserve management plan and how often it should be done. If the owners’ associations Covenants, Conditions & Restrictions (C,C&Rs) require an annual audit, then reporting requirements of the AICPA must be followed. Regardless of State requirements and AICPA audits, the fiduciary responsibility should over ride them that owners are not under or over accessed and that reserve funds will be available when needed.

Owners’ associations can obtain a reserve management plan or reserve study from a third party or can prepare it themselves. While engaging a third party might be the easiest approach, it might not be the most economical or accommodating solution. The cost of a third party reserve study might cost annually three to five times as a much as a one-time license fee for a reserve management system. Once the reserve data is collected (i.e. reserve item description, estimated life, current cost and when maintenance and refurbishment are required) it is entered into the system and the system produces a financial plan calculating long-term portion of the assessment. If the owners’ association does not have the expertise to produce the reserve data, then a third party should be engaged for just those services.

A Reserve Management System provides owners’ associations:

  • Fiduciary responsibility requirements
  • Customized “what if” scenario financial planning
  • Produces updates when needed
  • Decreased or eliminated dependents on third party services
  • Overall monetary savings
  • Real time control of the association's future

25 Years: The leading reserve management system since 1989.THE LEADING RESERVE MANAGEMENT SOLUTION SINCE 1989
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