Reserve Study Refresh Season: A Board's Pre-Loan Checklist

Reserve study refresh season for HOAs starts every February. Reserve professionals get slammed between February and June because most associations tie the study update to the fiscal year and the spring budget cycle. If your board is refreshing this year, the update will become part of your next loan package whether you plan to borrow or not.

Before you sign off on the study, run through this six-item checklist. Each item is something lenders commonly ask about.

1. Is the inflation assumption current?

The single most common defect in reserve studies is a stale inflation assumption. An inflation assumption carried forward from an earlier study cycle can understate today's construction costs by a wide margin. If your refresh in February 2027 still carries the number from the last study, your funding plan is understating future costs.

Many underwriters read the assumption first, and a study whose inflation figure lags the market tends to be discounted. Your loan proposal comes in tighter or gets fewer favorable comparisons in the funding plan section.

Ask your reserve professional what inflation assumption they are using and why. If the answer is not a two-sentence justification tied to recent data, push.

2. Are all major components listed?

Component list omissions are the second most common defect. The pattern is usually a component that was replaced recently and got dropped from the list, or a system that was never included because it did not exist at the study's original creation.

Walk the property with the reserve professional if you can. Not every board can, but at least the treasurer should. The usual ghosts are the components nobody drew in: a boiler in a basement mechanical room, utility laterals from the building to the street, retaining walls behind landscaping, playground equipment, garage membrane systems and elevator machine-room parts. Reserve analysts often inherit the last report's list, so a component missing five studies ago is still missing today. Every major system should appear on the list.

• Roofing systems, by section if the property has different roof ages
• Elevators and elevator mechanicals
• Building envelope: siding, windows, sealants
• Common area interiors: hallway carpet, lighting, paint
• Mechanical: boilers, HVAC, water heaters
• Plumbing risers and main lines
• Electrical: main panels, generators, EV chargers if present
• Exterior: pavement, sidewalks, retaining walls, drainage
• Amenities: pool, gym equipment, playground
• Security: cameras, access control, gates

If any of these is on the property and not on the list, get it added before the study is signed.

3. Are condition ratings photo-backed?

Reserve studies rate each component's condition on a scale, usually 1 to 5 or similar. A rating without a photo is a rating that cannot be defended in an underwriting conversation. Ask your reserve professional for a photo appendix that shows the current condition of every major component.

This matters most when a component gets rated better than it looks. An underwriter who sees a "good" rating on a roof that appears in the appendix as clearly aged is likely to discount the study. A photo appendix protects the credibility of the whole document.

4. Does the funding plan match the actual reserve balance?

Reserve studies show a current reserve balance at the top of the funding plan. That number should match the association's actual reserve fund bank balance on a specific date, usually fiscal year end. If it does not, ask why.

Common causes for mismatches include an interfund transfer that was not recorded, a study drafted from mid-year data without a year-end update, or a receivable from operating that was assumed collected. All are fixable. None should survive into the final study.

5. Is the special assessment history disclosed?

Every special assessment in the last 10 years should be disclosed in the study, ideally with amounts and purposes. Boards sometimes ask reserve professionals to leave these out because they look bad. Do not.

Underwriters find the special assessments in the meeting minutes and financials anyway. Finding them in the study looks like normal disclosure. Finding them elsewhere after seeing a clean study looks like concealment. The second one can cost you basis points.

6. Does the 5-year projection include 2 bad scenarios?

Most funding plans show a base case projection. That is fine as far as it goes. A good study also shows what happens if things go worse.

Two scenarios worth including:

• Elevated cost scenario. What if inflation runs 100 basis points higher than base for 3 years?
• Deferred contribution scenario. What if the board misses one full year of the recommended reserve contribution?

Studies that include these scenarios read as more sophisticated to underwriters. They also give the board a real planning tool. The base case is not going to happen exactly. The band of outcomes is what matters.

Why this matters even if you are not borrowing this year

Every reserve study becomes a loan document eventually. The study you refresh in 2027 is the study a lender will read in 2029 when your next project needs financing. Boards that treat the current-year study as future collateral get better outcomes when they eventually apply.

The six-item checklist takes a little extra time with your reserve professional. That is time well spent against a decade of downstream underwriting reviews.

Ready to talk?

If your board is weighing a loan alongside the refresh, book a free consultation. We'll tell you what a lender is likely to flag and how much the association might reasonably borrow. Our free capital planning tool lets you list the work ahead and what it's likely to cost. If the loan doesn't close, there is no fee.