Reserve glossary
Every term a board member meets in a reserve study, defined in one or two sentences. No jargon used to define jargon.
Reserves sufficient to fund every component's replacement when it comes due, without a special assessment or a loan. Many statutes use the phrase without defining a numeric threshold.
A funding method that treats reserves as one pool and tests whether the balance stays above zero in every year of the projection. Most modern studies use it.
Any physical asset the association must repair or replace with reserve funds — roofs, elevators, asphalt, boilers. A study typically lists 30 to 80 of them.
A funding method that saves for each component separately, so every item has its own notional account. Simple to audit, but usually requires higher contributions than the cash-flow method.
The amount moved from operating income into the reserve account each month or year. The study recommends it; the board sets it.
Repairs postponed past their recommended date. In a study it shows up as a component with zero remaining useful life that has not been replaced.
A funding goal of keeping the reserve balance at or near 100 percent of the fully funded balance. The most conservative target, and the one most reserve specialists recommend aiming toward.
The amount your reserve account should hold today if every component had been saved for evenly since the day it was installed. The denominator in percent funded.
The multi-year schedule of recommended contributions that keeps the reserve balance above the study's chosen threshold, usually projected over 30 years.
The three service levels defined by the Community Associations Institute: a full study with a site visit (Level I), an update with a site visit (Level II), and an update without one (Level III). Many statutes specify which level is required and how often.
Your current reserve balance divided by the fully funded balance, expressed as a percentage. Below 30 percent is widely treated as critical; 70 percent and above as healthy.
How many years a component is expected to last before replacement, as of the study date. The number that drives project sequencing.
A budget-planning document that inventories the components an association must maintain, estimates their life and replacement cost, and recommends a funding plan.
A one-time charge to owners on top of regular dues, used to cover a shortfall. The outcome a funding plan is designed to avoid.
A funding goal that keeps the reserve balance above a chosen minimum — often a dollar amount or a percent funded — rather than at 100 percent.
The total expected lifespan of a component from installation to replacement, typically drawn from manufacturer data and industry tables.