WPHOA Reserve study 6-9-2021

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• Reserve studies are a vital aspect of HOA management. They are used to gauge the condition of the association’s reserve fund to better plan a long-term budget. The complexity of an HOA reserve study can often be intimidating, but with a little more understanding and a few helping hands, one will soon realize that it’s an indispensable part of running an HOA. 

• The Significance of an HOA Reserve Study Reserve studies are especially important for homeowners associations. Many projects that impact common areas — whether new roofs or a new swimming pool — are very large and costly and require years of planning.  HOA reserve fund studies help the board get a more accurate picture of the finances. They cover the funds available now and in the future, so they can plan for big expenditures. Obviously, it’s a critical tool for HOA boards. The question is: how are they done and how often should they be done?

• What is a Reserve Study? An HOA reserve study or condo reserve study is an in-depth analysis and on-site inspection of an association’s assets. Usually provided as a service of a management company, the study projects a financial road map for the association going into the future.  These studies for homeowners associations play a pivotal role in assisting the board make the best financial decisions regarding the organization’s future. Generally, an HOA reserve study consists of two parts:  Physical Analysis. This portion of the study assesses the physical condition of community areas that an HOA is responsible for maintaining and repairing. It also includes an analysis of the cost of repair or replacement. Financial Analysis. This portion of the study assesses the association’s financial health, such as its revenues, expenses, and reserve fund balance.

• The structure with which an HOA functions, and the bylaws and regulations that each HOA has been constructed around, is extremely important to residents and board members alike. However, finding your HOA’s bylaws, understanding how they function and impact your HOA, and how ultimately they can be amended or changed if necessary, can sometimes be hard to comprehend without guidance.
• Luckily, everything necessary to understand what HOA bylaws are and how they actually work can be found in this comprehensive guide, so that no matter if you’re governing or residing in an HOA, a lack of information will no longer be an obstacle..

Bylaws mostly revolve around operational issues, mainly pertaining to the board of directors of an HOA, and establish various rules and regulations that keep the structure of the HOA governing body in order. 

Like any governing entity, corporation, or institution’s bylaws, HOA bylaws:

• articulate and regulate board members’ powers
• dictate how the operations of the Board of Directors affect residents
• and establish the parameters for how board members and residents can interact with each other on a variety of issues 

The purpose of bylaws is to provide communities with clear communication on how exactly the board members that preside over them are held accountable while in their positions. 

To fully understand the purpose of bylaws, however, it’s also important to understand how they become established in the first place. 

Once a community development is completed, the developer of that community officially formulates the HOA by composing an Articles of Incorporation and submitting those documents to their state’s Secretary of State; these Articles of Incorporation officially establish that HOA as a nonprofit mutual-benefit corporation. 

Subsequently, formulating these articles recognizes the newly established HOA legally.

Once the legal status of an HOA is in place, establishing bylaws becomes one of the crucial steps in creating a fully-realized governing body for the community. These rules mostly concern issues such as: 

• board member powers, duties, and term limits
• meeting requirements for board members
• what might happen in the event of non-compliance of bylaws by either a board member or resident
• community finances
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As mentioned before, the Articles of Incorporation establish more than just bylaws as governing documents; they also introduce some of the most important rules and regulations for residents formally known as Covenants, Conditions and Restrictions (CC&Rs). 

CC&Rs are not only arguably the most important governing documents for an HOA, but the most extensive as well. They also contain the power to supersede almost any other governing provisions put in place by the HOA.  The function of these regulations is to establish and articulate the rights and responsibilities of the homeowners and the specific rules that pertain to the land itself that the HOA is developed on. This is one of the key areas where CC&Rs differentiate from bylaws.

Whereas bylaws are primarily focused on the operational aspects of the HOA and how it functions, CC&Rs are much more focused on the rights provided to both the homeowners and the land itself, and how those rights coincide with each other. 

One of the best ways to break down these distinctions is to provide examples that highlight why and how bylaws and CC&Rs differ from each other and what each of them primarily focuses on:

Bylaws:

• Board member term limits and election frequency
• HOA election requirements and location
• Officer duties and board powers

CC&Rs:

• Lot and property restrictions
• Insurance requirements for homeowners
• Rules and requirements regarding disputes between residents and the board
• Maintenance Requirements

Another key difference is the mandated pronouncement of CC&Rs and their requirement to be made public record, whereas bylaws are only included publicly if the HOA chooses to do so. This means that while bylaws are important intercommunal documents between residents and board members, CC&Rs typically expandthat scope beyond just the community, and must adequately support the rights of the residents, the land, and the state all at the same time. 

It is typically the job of the bylaws to support the voting and amending requirements needed to vote on regulations like CC&Rs if and when those delegations arise.