Overview
Introduced and officially enacted in April 2023, Tennessee SB863 has instituted statewide reserve study requirements for unit owners' associations’ common elements. The primary aim of this legislation is to equip the board of directors with insights into the necessary reserve funds, thereby minimizing the likelihood of resorting to special assessments. These legislative obligations closely align with similar laws enacted in various states in recent years.
Compliance/Deadline
Any board of directors representing a unit owners' association must adhere to the new legislation if the combined replacement cost of the association's common components surpasses $10,000. The deadlines for complying with the reserve study requirements hinge on whether the association has an existing reserve study. Associations that completed a reserve study on or after January 1, 2020, must update their study within five years of the most recent completion date. Associations without a prior reserve study or those whose last study predates January 1, 2020, are obligated to conduct a reserve study by January 1, 2025.
Frequency of Reserve Studies
Per SB 863, associations must conduct a Reserve Study every five years. However, our profession recommends at least every three years.
Scope of Work
The work done must be conducted by a reserve specialist, Licensed Professional Engineer, or Architect. The reserve study must also align with the latest edition of the Reserve Study Standards published by the Community Associations Institute (CAI) or equivalent standards from another nationally recognized organization.
If you are an association looking to get a Reserve Study done before this deadline, please feel free to contact us with any questions or request a free proposal below!
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