An important law regarding all condominium owners’ associations in Tennessee was recently signed into law by Governor Bill Lee. By Jan. 1, 2024, all COAs must adhere to the ruling known as SB 863/HB 750 – Real Property. The act requires any board of directors who have not done a reserve study by Jan. 1, 2023 to have one done by the next year.
A Little Background
The Community Associations Institute’s Legislative Action Committee led the Tennessee legislature to introduce and pass this new law in response to the June 2021 partial collapse of the Champlain Towers South Condominium Association in Surfside, Florida. The new legislation requires reserve studies to be updated statewide every five years. This is a massive win for safety in condominiums all over Tennessee.
The Purpose of Reserve Studies
A reserve study is an analysis by one or more independent engineering, architectural or construction contractors, or another qualified person, performed or updated within the last five years of the remaining useful life. It includes the estimated cost to replace each separate system and component of common elements. The purpose of which is to inform association members and the board of the amount that should be maintained from year to year in a fully funded repair and replacement reserve to minimize the need for a special assessment. In short, experts need to inspect the property and inform the COA of the estimated cost so the board can set aside funds for future repairs.
What This Means for Your COA
The bill requires a study to be done every five years. If your association still needs to complete one, now is the time to start since it is required of all associations after Jan. 1, 2024. The tragic condominium collapse in Florida demonstrated the severity of unprotected properties, so completing these studies will protect your property and residents. The study will also help you budget for future renovations and other projects. If you aren’t sure where to start, contact a property management company like EZR. We can walk you through the study process and provide you with expert insight.