Reserve study basics for Georgia boards

Under the Property Owners' Association Act, § 44-3-221(8) defines common expenses to include lawful expenditures and reserves provided for in the instrument. That is the operative sentence. Reserves are a common expense where the instrument establishes them, and the association's authority to collect for them flows from that.

Georgia does not impose a reserve-study mandate of the kind Florida applies to residential condominiums of three or more habitable stories. There is no statutory component scope, no statutory cadence, and no statutory bar on the membership reducing the contribution.

So the first task is documentary. Does the declaration or the bylaws require a reserve fund? Authorize one without specifying an amount? Say nothing at all? Those are three different starting positions, and confusing them is how a board ends up collecting for a reserve the instrument does not establish, or failing to collect for one it does.

A reserve study has a physical half and a financial half. The physical analysis inventories the components the association is obligated to repair or replace, each with an estimated useful life, a remaining useful life, and a current replacement cost. The financial analysis converts that inventory into a funding plan: the annual contribution required so the money is in place before each component reaches the end of its life.

The component inventory determines whether the study is worth its fee. Check it against what the association actually maintains: roofs by section, painting by elevation, paving by area, pool shell and pool equipment separately, gates, pumps, fencing, amenity buildings, playground equipment, and shared utility infrastructure. A thin inventory produces a comfortable contribution and an uncomfortable decade.

Remaining useful life is an estimate with wide error bars. Where the board knows something a walk-through cannot reveal, such as a roof repaired repeatedly in recent years, say so during the engagement rather than after the report is bound.

Percent funded compares the reserve balance the association holds against the balance it would hold if contributions had exactly kept pace with the deterioration that has already occurred. It measures position, not performance. A hundred percent funded does not mean everything can be replaced tomorrow, and thirty percent does not mean the association is failing.

In a state where reserves are set by the instrument rather than by statute, percent funded is the figure that does the persuading: with lenders, with buyers, and with owners who would rather the contribution stayed flat.

Present the trajectory alongside the level. A board that inherits a low figure and can show three years of improvement is telling a much better story than one whose figure has been flat while replacement costs rose.

For a Georgia condominium, the first bona fide sale of a residential unit for residential occupancy triggers the § 44-3-111 disclosure package, which includes the operating budget and the unit's expense schedule among its ten required documents. The contract is voidable until at least seven days after the seller furnishes them, and the right may not be waived.

In resales the pressure comes through the payoff statement instead. Under § 44-3-109(d) for condominiums and § 44-3-232(d) for POAA developments, a statement of amounts due requested in writing must be furnished within five business days or the lien is extinguished as to that transaction, and the statement is binding on the association and every owner.

None of that requires a reserve study, but all of it puts the association's financial position in front of buyers and lenders on a short clock. A community that cannot produce a clear picture of its capital position quickly is a community where transactions get harder.

Full funding targets a hundred percent funded and produces the highest, steadiest contribution. Threshold funding holds the balance above a chosen floor. Baseline funding keeps it above zero and no more, which gives the lowest contribution and the highest likelihood of a special assessment. These are professional practice conventions rather than Georgia statutory categories, and a study will normally model more than one.

Pick one, record the choice and the reasoning in the detailed minutes § 44-3-231(d) already requires, and revisit it when the study is updated. Boards that never choose default to baseline by accident.

Then model the alternative and show both. In Georgia this matters more than usual: if the instrument does not expressly authorize special assessments, the cheaper funding method is not actually cheaper. It is an unfunded liability with no obvious way to pay for it.