Do Sewer Lines, Drain Lines, Gas Lines, and Plumbing Pipes Belong in a Reserve Study Calculation?
Yes. The most common errors made by reserve study providers is to negligently or intentionally omit sewer lines, drain lines, gas lines, and plumbing pipes from their reserve studies. They are commonly omitted because these components are thought to have far longer estimated useful lives than what is realistic, or they are omitted because many HOA boards want them left out because of the very high cost of replacing these components. Omitting these very significant components has the result of materially reducing the monthly reserve contributions, but also results in large special assessments. Special assessments are often unfair to those owners that have to pay them because other owners did not pay realistic monthly assessments that would have avoided any special assessments.
HOA Financial Management Services