Property Management
What is 'reserve study' for Hawaii condominium associations and what does it determine?
AA. A study of how much financial reserves the managing agent needs to operate the association
BB. A professional analysis of the remaining useful life and replacement cost of major common element components, determining appropriate annual reserve contributions to fund future major repairs and replacements✓ Correct
CC. A government inspection determining whether reserves meet minimum legal requirements
DD. A financial audit of the association's existing reserve account balance only
Explanation
A reserve study analyzes major common elements (roofs, elevators, pools, exterior, parking structures) assessing their current condition, remaining useful life, and replacement cost. It calculates the annual contribution needed to maintain adequate reserves.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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