The Davis-Stirling Act requires that associations "as part of a study of the reserve account requirements" to "every three years" cause to be conducted a:
a reasonably competent and diligent visual inspection of the accessible areas of the major components that the association is obligated to repair, replace, restore, or maintain . . . (Civ. Code §5550(a))
"Diligent" is not defined in the statute but is clearly more than a cursory inspection. Black's Law Dictionary defines diligent to mean "attentive and persistent in doing a thing." In addition to "diligent," we must factor in what proceeds diligent, i.e., “reasonably competent" and what follows, "accessible areas."
. "Reasonably competent" does not require a particular professional
license but there are two national credentials available to reserve study professionals. One is the Professional Reserve Analyst
(PRA) administered by the Association of Professional Reserve Analysts (APRA).
The second is the Reserve Specialist
(RS) administered by the Community Associations Institute. Both organizations require a demonstrated background of training and experience in properly preparing reserve studies before they will issue designations.
. Inspection of "accessible" areas does not mean tearing off roofs and opening walls. In my opinion, it means getting onto roofs, going into elevator rooms, opening electrical panels, and opening equipment service panels (such as on boilers) to obtain equipment information. A diligent person would do all of the above.
. Finally, industry standards require that reserve professionals disclose whether a complete inspection or representative sampling was used, whether field measurements or plans/schematic take-offs were utilized, and whether destructive testing was employed.
. Boards should use experienced, certified third party reserve specialists to prepare studies for their associations.
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