Unfortunately, many associations may find themselves facing the prospect of litigation concerning construction defect issues and/or questions as to the adequacy of the association’s reserves. Are the reserves properly funded? What impact will construction defect issues have on the financial position of the association?
Reserve Data Analysis, Inc. has been aiding associations and developers in resolving disputes equitably, with a level of experience and expertise unequaled in the industry. The information below outlines the services we offer to assist you should the association be faced with these critical decisions.
In some cases, the original budget prepared for the association is inadequate. Outdated costs, inaccurate specifications, or incomplete inventories can result in substantial deficiencies in the reserve account, leaving the association with inadequate funding to properly repair or replace all of the major components for which it is responsible.
As part of our Settlement Solution Services(TM), RDA will perform a retroactive reserve study to assess the association’s financial position at the time when the board was relinquished by the developer.
This will determine if the appropriate level of reserves had accumulated by the end of the last fiscal year for which the developer was in control of the financial activities of the association.
Throughout the litigation process the board must make several important decisions having a significant impact on the future financial stability of the association. RDA provides services which will empower the board to make accurate and informed decisions.
The next step in this process will be to update the association’s current reserve study, incorporating all construction defect components, repair information, and the prioritizing of those repairs. During settlement conferences, computer-generated scenarios will allow the board to assess the impact of monetary offers even as they are being made, assisting in fulfillment of its legal and fiduciary obligation to maintain the community in a good state of repair.
Generally, even the best laid plans never materialize as expected. By conferring with construction management throughout the repair process, RDA can evaluate the impact of repair modifications on the overall budget, insofar as to suggest alternate repair scenarios as needed.
DISCOVERY PHASE
1. Inventory Verification
Verify developer-provided inventory and measurements for accuracy and completeness.
2. Budget Analysis
Analyze developer-specified budget, and identify and determine the cause of any insufficient funding. This includes a thorough review of all related financial information.
3. Retroactive Reserve Study Preparation
Perform retroactive reserve study to determine the level of reserves which should have accrued at the time the developer surrendered control of the board to the association.
SETTLEMENT PHASE
1. Current Reserve Study Preparation
Perform complete reserve study for the current fiscal year for long-term budgeting.
2. Settlement Impact Analysis
Assess the impact of settlement offers through computer-generated scenarios.
3. Repair Prioritizing
Interact with experts and construction management to prioritize repairs and develop an optimal repair schedule.
IMPLEMENTATION PHASE
1. Repair Monitoring
Confer with construction management throughout the repair process to ensure optimal repair execution, and evaluate the impact of repair
modifications on the reserve budget.
2. Reserve Study Updating
Once the repairs are completed, RDA will prepare an updated reserve study to determine the currently required reserve contributions, and provide 30 year projections.
3. Ongoing Consultation
Provide ongoing consultation with the Board and manager regarding reserve and budgeting matters prior to, throughout and following the repair process.