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

A reserve study analyzes the condition and remaining useful life of major common components to determine how much money the association must save to fund future replacements.

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

The percent-funded (or baseline/threshold) method sets contribution levels to maintain the fund above a target minimum balance rather than fully funding every component individually.

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

The component inventory documents each major item's physical condition, how many years of useful life remain, and the estimated cost to replace it when the time comes.

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

Percent funded compares the association's current reserve balance to what it would need to be fully funded for all components at their current age, expressed as a percentage.

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

Best practices recommend a full reserve study update with a physical site inspection every three to five years, with annual reviews to adjust for inflation and spending variances.

(CCS) Certified Condominium Specialist Practice Test

(CCS) Certified Condominium Specialist Practice Test

CCS CCS Reserve Studies & Capital Planning 1