What is a Reserve Study?

"Reserve Study" means a study which projects the expenses of an Association for the repair, replacement and restoration of the major components of the common elements and which establishes the reserves required to cover such expenses. (Ref: NAC116.450) Required pursuant to (Ref NRS116.31152)

A reserve study is an examination of two facets of the association.

1. The first examination is of the associations common element improvements, referred to as components, for the purpose of determining how much money the association will need to replace common element components at the time they will need to be replaced.
2. The second examination is of the association’s financial condition such as bank accounts, financial reports and investments instruments.

The Reserve Study boils down to an estimated calculation, taking into consideration the amount of money the Association has in the bank that is dedicated to the Reserve Fund and how much will be spent each year over a 30 year period. Once we know that, we can estimate how much money must be deposited into the Reserve Fund Account(s) each year. The State of Nevada requires that the Reserve Fund be "adequately" and "sufficiently" funded.