CCS CCS Reserve Studies & Capital Planning 1

Question 1

What is the primary purpose of a reserve study for a condominium association?

Accepted Answer

To project long-term repair and replacement costs for major common components and ensure adequate funding

Answer

To determine the market value of each unit

Answer

To set rental rates for common area leases

Answer

To calculate the association's annual tax liability

Question 2

Which funding method for reserves calculates a single contribution rate that keeps the reserve fund solvent over a long period without dramatic fluctuations?

Accepted Answer

Percent-funded method

Answer

Component method (straight-line)

Answer

Threshold funding

Answer

Full funding

Question 3

A reserve study's 'component inventory' section identifies all major components by listing their:

Accepted Answer

Current condition, estimated remaining useful life, and current replacement cost

Answer

Purchase price and depreciation schedule only

Answer

Manufacturer warranties and insurance values

Answer

Tax basis and salvage values

Question 4

What does the term 'percent funded' indicate in a reserve study?

Accepted Answer

The ratio of actual reserve fund balance to the fully funded balance, expressed as a percentage

Answer

The percentage of units whose owners have paid their assessments

Answer

The portion of the annual budget allocated to reserves

Answer

The percentage of components that have been recently replaced

Question 5

According to best practices, a reserve study should be updated at minimum:

Accepted Answer

Every five years with a site visit, and reviewed annually without a site visit

Answer

Every ten years regardless of conditions

Answer

Only when a major component fails

Answer

Whenever the board requests a new budget

Question 6

Which professional designation is most commonly associated with conducting a credible reserve study for a condominium association?

Accepted Answer

Reserve Specialist (RS) from CAI or Professional Reserve Analyst (PRA)

Answer

Certified Public Accountant (CPA)

Answer

Licensed General Contractor

Answer

Certified Property Manager (CPM)