Introduced and signed into law in April of 2023, Tennessee SB863 establishes statewide reserve study requirements for unit owners’ associations that comprise of common elements with an aggregate replacement cost exceeding $10,000. The legislation is meant to provide board of directors with an understanding of the reserve funds required to minimize the need for special assessments. The legislative requirements are similar to legislation that has been passed in various other states in recent years.
Reserve components vary by association. Large expenditures are typically funded through reserves whereas smaller and recurrent expenditures are funded through the general operating fund. We recommend you review your governing documents and historical practices to determine which components are maintained through reserves. If the purchase and installation cost or replacement cost is near or below $10,000, Reserve Advisors can help you evaluate the necessity of conducting a reserve study. Contact us Today.
Tennessee Senate Bill 863 establishes qualifications for those preparing a professional reserve study. To comply, a reserve study must be prepared by an individual who meets at least one of the following criteria: 1) is a reserve specialist who is credentialed through CAI or a similarly recognized organization, or, 2) is a licensed Architect or Professional Engineer.
The purpose of Tennessee Senate Bill 863 is to inform association members and its board of directors of the amount that should be set aside into reserves for future capital repairs and replacement, that would minimize the risk of special assessments. At this time, there are no statutory funding requirements.