HOA Detective™ | June 17, 2025: For nearly two decades, The HOA Detective™ has been calling for a basic, common-sense improvement in the world of reserve study regulation: VALIDATION. Not just a nod toward quality, but an actual mechanism to verify accuracy, expose errors, and correct course when a study goes awry. After twenty years of watching the same mistakes repeated with greater cost and consequence, the need has never been clearer – or more urgent.
Despite ongoing appeals to state legislators and professional organizations like Community Associations Institute (CAI), nobody has heeded the call for mandatory validation of reserve studies. No peer review. No mandatory second opinion within a reasonable timeframe. No audit or independent check. Just a professionally bound document, signed by a credentialed vendor, stamped with a smile – and too often, built on assumptions that don’t stand up to scrutiny.
Costs of Systemic Negligence are Beginning to Show: Bad reserve planning is no longer just a risk – it’s a reality. Inaccurate reports, underfunded budgets, and Boards caught off guard by ballooning costs are becoming increasingly common. And one recent Portland case perfectly illustrates how unchecked vendor entrenchment, loyalty erosion, and weak oversight can combine to produce financial fiction masquerading as fiscal strategy.
- Case in Point: A ~140-Unit Condo in Portland’s Pearl District
Constructed in 2000–2001: This case study sits in one of Portland’s most desirable urban neighborhoods. With its premium square footage prices and rising long-term costs, you’d expect an HOA of this caliber to have top-tier planning, but the Association had been using the same reserve study provider since at least 2013 –
Possibly longer.
Disclosure Confirms the Worst: The language in the 2013 reserve study confirms that the provider had previously provided other consultation services to the Association.
Translation: “We have been quenching our thirst at this Association waterhole for almost as long as the building has been standing!”
Usual Suspects Noted: Meanwhile, familiar fingerprints of usual suspects among the HOA management ecosystem were found to be politely holding the Boardroom door open for as long as anyone can remember. As regular readers of The HOA Detective™ blog know, there is a cast of characters who too often accompany such substandard transparency and conflicted relationships.
- The Numbers Don’t Lie. The Old Study Did.
The Story Begins in 2013: Our saga begins with a 2013 reserve study that estimated the 30-year reserve spending liability to be ~$8.8 million at that time. By 2019, that estimate had grown to ~$10 million. Seemingly reasonable – until a new reserve study in 2025, conducted by a different provider, revised the 30-year spending projection and estimated the 30-year spending liability as of the beginning of 2025 to be ~$26 million.
Not a Rounding Error: Yes, you read that correctly – nearly triple the 2019 figure. Admittedly the U.S. has experienced an 18-month period of hyperinflation between 2019 and 2025, but it didn’t help that the prior reserve study provider had consistently understated the impact of inflation by using an annual inflation assumption that was less than the historical annual inflation rate for any period in the last 100 years.
Good News – Bad News: The good news is that this Association has finally obtained a second opinion and is no longer relying on a legacy vendor who had transformed a client relationship into a full employment act with the help of a cooperative managing agent and a Board not experienced in the nuisances of reserve planning. The bad news is that the new study has confirmed that the HOA needs to raise its annual reserve contributions by 10% per year for the next 10 years. That’s four times the current inflation rate – an exponential cost escalation that should and could have been identified years ago if the 2013 reserve study had ever been placed under scrutiny.
Lessons Learned – Why Validation Can’t Wait: This story should be the final nail in the coffin of the “just trust us” reserve study provider model. When one vendor controls the reserve study narrative for over a decade, when financial projections are accepted without external check, and when governing boards aren’t given realistic funding roadmaps, the consequences impact the owners, not providers.
If the industry had adopted a peer review requirement – or a second-study-within-three-years rule – this problem could have been avoided. Instead, the HOA now faces years of financial catch-up funding, erosion in the Board’s credibility, and potential special assessments.
The HOA Detective™ Rests His Case: Validation is not about second-guessing the experts. It’s about raising the bar by creating a climate professionalism within the reserve study consulting field. Reserve studies are not an optional waste of time. They are not conducted for the purpose of satisfying state law. They are the financial backbone of every HOA, cooperative, and condo association. We don’t accept unaudited financials from public companies. Why do we tolerate them in the common interest housing sector?
In the meantime, the evidence keeps piling up. Unless something changes, owners across the country will keep paying the price for reserve studies that don’t deserve their trust and aren’t worth the money spent on them.
Because You’re Buying More Than a Home!
