Real Estate Branch

Act 62, SLH 2022, mandated that the Developer’s Public report include a “breakdown of the annual maintenance fees, which includes the annual reserve contributions based on a reserve study.” The requirement for a reserve study to be conducted to determine the annual reserve contributions has resulted in confusion by developers and their agents in if this mandates hiring a reserve specialist. Currently, as written in chapter 514B, HRS, a reserve study preparer is only required by a condominium association to review its reserve study at least once every thee years pursuant to section 514B, 148(a)(5), HRS.

Therefore, a developer during the application for a Developer’s Public report can self conduct the reserve study needed to determine the annual reserve contributions as required by Act 62, SLH 2022.

If a developer or their non-reserve study preparer agent is conducting the reserve study, they should be aware that the study should cover all components the association is responsible for, that have a limited useful life generally within thirty years, that can be reasonably predicted as to their remaining useful life, and are of significant cost to require being reserved for rather than being treated as an operating cost. Common components often include roads and driveways, water treatment and waste disposal systems, elevators, spalling, roofs, plumbing, windows, and electrical.

Please review the related FAQ: My Project Has No Common Elements, What Should My Reserve Study Look Like?

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