Navigate New Reserve Requirements:
Your Guide to SIRS and Traditional Studies

An HOA reserve study specifically refers to the reserve study conducted for Homeowners Associations. It focuses on common areas and shared amenities to plan for future maintenance and replacement costs. The concept of accounting for asset management through budgeting is the same for all HOAs, condominiums, and cooperatives.

A condo and co-op reserve study is tailored for condominium associations and cooperatives. It assesses the financial needs for maintaining, repairing, and replacing shared property elements like roofing, painting, and structural components.

The cost varies based on the level of service, from complete studies with site visits to updates without site visits. The specific costs for your association or coop will vary based on the building height, the number of standard area components, the time involved in gathering the required information, and the time it takes to prepare the financial budget. Updates are typically less expensive since most data collection was completed on the initial on-site visit.

Reserve studies should be updated annually, and a complete physical inspection should be conducted every three years or sooner if significant changes occur to adjust for inflation and current reserve balances.

In Florida, the state requires the bare minimum of roofing, painting, and paving and any item or system that costs more than $10,000.

Reserve studies are used to guide financial planning, ensuring that funds are regularly set aside for future expenditures related to maintaining and replacing capital improvements. This thereby maintains property value, the association’s financial stability, and the safety of the buildings.

A Reserve Study Update with a Site Visit occurs every three years after the initial Full Reserve Study. During this update, a reserve analyst revisits the site to evaluate the association's assets and gather information on any completed work since the last study. The analyst will also observe how the association’s assets are currently depreciating compared to the last visit.

A Reserve Study Update without a Site Visit is conducted annually for the two years following the last on-site reserve study. No site visit is undertaken during this update, but the reserve analyst requests contracts and proposals for completed or planned work.

A Structural Integrity Reserve Study (SIRS) is required for residential buildings three stories or higher in height. It identifies and maintains reserves for structural items specifically required by the State of Florida.  Roofing, painting/water-proofing, structural/concrete, fire protection systems, plumbing, electrical, doors/windows, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such item negatively affects the items listed.

A Reserve Study consists of two main parts: the Physical Reserve Analysis and the Funding Financial Analysis. The Physical Reserve Analysis identifies and quantifies components to be reserved for, while the Funding Financial Analysis determines future funding requirements based on current reserve fund balances.

Property and Flood Valuation aims to determine the correct amount of insurance needed to comply with association documents and fiduciary responsibilities. It focuses on the reconstruction costs of the insurable property in case of fire or storm-related damages.

Yes, associations with residential buildings three stories or higher in height must complete a Structural Integrity Reserve Study by December 31, 2024. Failure to comply may result in a breach of fiduciary responsibility. All budgets adopted on or after December 31^st, 2024, and require a SIRS report, must be annually fully funding their reserves on that adopted budget. For most associations whose fiscal year ends December 31st, the total funding requirement for the SIRS report will start January 1^st, 2026.

Condo associations and cooperatives must include in their reserve study but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000. In a budget adopted by an association that is required to obtain a structural integrity reserve study, reserves must be maintained for the following items: roofing, painting/water-proofing, structural/concrete, fire protection systems, plumbing, electrical, doors/windows, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such item negatively affects the items listed above.

Fully funding reserves means annually contributing to the reserve fund based on past depreciation, future projects, and uses a calculation based on the current reserve balance to determine future funding needs. Fully funded reserves refer to the total amount that should be in the reserve account (in a perfect world) as of the date of the report. The State of Florida does not require condos and coops to be fully funded, but the law does require associations and coops to be fully funding their reserve account annually.

Existing associations and cooperatives must complete a SIRS by December 31, 2024. It is our professional opinion based on our experience and communication with other reserve companies and attorneys, that close to 50% of the condominiums in the State of Florida will not have a SIRS completed by December 31st, 2024. For our clients who cannot have a SIRS completed by December 31st, 2024, we are planning on working towards having ALL condos and coops fully funding their reserves by budget year 2026.

Yes, but only for items not required in the SIRS report. It's not recommended as it can misrepresent future financial obligations of the association and the cooperative. All associations must obtain a majority vote of the membership to waive the traditional reserves—voting to waive reserves using a quorum is no longer allowed.

Roofing, painting/water-proofing, structural/concrete, fire protection systems, plumbing, electrical, doors/windows, and any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such item negatively affects the items listed.

It must be updated once every ten years, but depending on the association's size and needs, it is advisable to update it more frequently.  Our professional opinion is to have the reserve study updated at a minimum of every 3 years and more often depending upon inflation and major changes that might be occurring in your association. A major cost item such as the replacement of a roofing system can greatly impact future annual reserve contribution amounts.

Engineers, licensed architects, certified reserve specialists (RS), and Professional Reserve Analysts (PRA).

An association must complete a milestone inspection by s. 553.899 on or before December 31, 2026, and may complete the structural integrity reserve study simultaneously with the milestone inspection. However, the structural integrity reserve study may not be completed after December 31, 2026.

Yes, the Pooled method of accounting for reserves can be used instead of the Straight-line/Restricted method of accounting. But there cannot be a comingling of funds between the SIRS reserve funds and the Traditional reserve funds – they must be kept separate.  The balance sheet must keep the SIRS and non-SIRS categories separate. It is advisable, but not required, to have two separate reserve bank accounts for the SIRS items and the Traditional Reserve Items.

Traditional Reserve studies should be updated annually with a detailed physical field inspection of all the components every third year to keep pace with inflation and reserve expenditures that have taken place.​​

J. R. Frazer Inc. specializes in providing quality reserve studies and property/flood valuation reports for condominiums and HOA communities in south and central Florida.