Preparers of Reserve Study: Professional Engineer Vs. Reserve Specialist
Many associations struggle with managing their property maintenance and replacement of common elements due to limited funds and administrative challenges. While delayed repairs and replacements are often unavoidable, leaving them unaddressed for a prolonged period can lead to costly reconstructions or, worse, life-threatening accidents.
The aftermath of the Champlain Towers South collapse still haunts communities years after the incident. It now serves as a reminder of the importance of proper planning for asset repairs and maintenance – aspects addressed in a NJ reserve study.
When taking on this critical task, who should associations trust to guide and carry out the reserve study: professional engineer or reserve specialist?
Why Undertake a Reserve Study in New Jersey?
A reserve study is a tool that forecasts how much money an association needs to support the timely improvements and replacements of their capital assets. It is primarily a budgeting tool, but it can also help in making decisions about major capital projects and investments.
A reserve study generally involves the following:
- Assessing the physical condition of common elements and infrastructure
- Determining and anticipating the property’s repair and replacement needs
- Budgeting and scheduling for the repairs and replacements
A reserve study is now a requirement for the construction or renovation of certain residential multi-family and cooperative buildings in New Jersey. This rule is provided in the newly ratified NJ law S2760, which aims to establish the structural integrity of buildings in the state.
Under NJ S2760, cooperatives and homeowners’ associations (HOAs) must conduct a reserve study New Jersey every five years. The goal is to set a sufficient reserve fund for the maintenance of their real estate.
If not adhered to, municipal offices can revoke their Certificate of Occupancy. Operating without this certification is an infringement of the law, which is subject to fines and revocation of the entitlements and protection granted to cooperatives and HOAs.
Who Are Qualified Preparers of Reserve Studies
Although association boards often have a professional manager or volunteers with engineering, construction, or accounting skills, this does not mean they are qualified to do a reserve study. Even if it is for a small community, a New Jersey reserve study requires a professional.
A reserve study requires specialized expertise in building inspection and evaluation and reserve budgeting. It can only be done by a qualified professional sanctioned by the state to conduct reserve studies: a reserve specialist and a professional engineer.
Credentialed Reserve Specialist
The title of reserve specialist (RS) is designated to someone who has committed years of specialized experience in conducting reserve studies. Certified by the Community Associations Institute (CAI), an RS is a qualified preparer of reserve studies.
At a minimum, an RS has the following qualifications:
- Holds a degree in engineering, architecture, or construction management
- Has completed at least 30 reserve studies within three years
- Consistently complies with the Professional Reserve Specialist Code of Ethics
The output of reserve specialists is generally more financially driven. They evaluate when major repairs and replacements are necessary and plan the association’s reserve fund to complete activities on time. Because they cover these aspects, many RSs also have competency in financial modeling.
Licensed Professional Engineer
A Professional Engineer (PE) is someone who:
- Is licensed by the state in which they practice
- Has completed a degree from an accredited engineering program
- Has four years of work under the direction of a licensed professional engineer
- Has passed the PE examination requirements
- Adheres to state laws and professional code of ethics
Professional engineers provide a more in-depth technical evaluation of the property’s condition and components. They may be a NJ structural engineer with additional experience and expertise specializing in building inspection, condition assessment, and valuation estimates.
A PE’s approach to a reserve study is more technical. They conduct thorough inspections of the property’s physical components, such as building envelope, roofs, HVAC systems, electrical and plumbing, and site. Their analysis consists of a detailed narrative report which includes a description of components, their current condition, and often includes recommendations for repairs or replacements based on engineering principles.
Which Reserve Study Preparer Should You Hire?
Although both are qualified to conduct a reserve study, the choice between a professional engineer and a reserve specialist depends on the property’s specific needs.
Reserve Specialist: Standard Reserve Study
Reserve specialists are hired for routine reserve studies and assessment of properties with no significant structural concerns, have simple building envelopes, limited MEP system, or just site to evaluate. An RS is less skilled at evaluating the condition and estimating the remaining useful life of various components to establish the timelines of replacements. Often their reports are more financially focused and are very limited on building component condition and evaluation.
Professional Engineer: In-depth Reserve Study
A professional engineer would be ideal when a more in-depth assessment is needed. This level of intricacy is usually recommended for aging properties, and condominiums or ones with mechanical, HVAC, fire protection, and other complex systems like elevators.
Suppose the association is worried about cracks in their condominium’s underground parking garage. Hiring a professional engineer would be ideal to assess the structure’s foundation, load-bearing walls, and the severity of the cracks. They can also identify hidden defects in the building envelope, HVAC, fire safety systems, and other components. After the inspection, the PE would be well prepared to recommend and design solutions to address replacements, and upgrades identified in the reserve study.
Hiring a professional engineer can also satisfy the New Jersey updated Reserve Study Standards, which now require planning for structural inspections for types of condominium construction. Professional engineers provide a high level of quality in their reserve study. With their expertise, HOAs can have a reliable tool on which to base their financial planning and long-term budgeting strategies and will have a good evaluation of the condition of their common elements.
Hire Licensed Professional Engineers in New Jersey
The reality with some associations is that they only levy assessments when repairs are necessary and maintain a minimal reserve fund. Their goal is to avoid big expenses and keep association fees as low as possible. This practice has been discouraged and is now prohibited.
The newly ratified NJ S2760 now prohibits this practice by requiring a regular reserve study. HOAs and condominiums must plan for future repairs and replacements to maintain their New Jersey properties.
With the help of professional engineers, associations can conduct a reliable reserve study that
✓ Assesses the property’s current condition
✓ Projects future maintenance and replacement needs
✓ Provides a comprehensive financial plan for capital improvements
Engage with a professional engineer in New Jersey to comply with regulatory requirements and keep your properties safe. At Lockatong Engineering, our professional engineers have the skill set, knowledge, tools, and experience necessary to provide comprehensive inspection and reserve study services.
Contact Lockatong Engineering today to get in touch with a professional engineer.
