Component inventories
The list your reserve study is built on, and how to tell what belongs on it.
A component inventory is the list of major assets your association is financially responsible for repairing or replacing, the foundation of a reserve study. It only includes infrequent, high-cost items like roofs or pavement, not routine maintenance. Unlike the rest of the study, the inventory itself changes little from year to year.
What belongs on the list, and what doesn't
The test is simple: does the item repeat every year, or does it show up once every decade or two with a big bill attached? Landscaping, utilities, insurance, and routine repairs are operating expenses, paid out of the everyday budget. A component inventory only holds the other kind, the infrequent, high-cost repairs and replacements the reserve fund exists to cover.
"Recurring, day-to-day expenses such as landscaping, utilities, insurance, management fees, basic maintenance, and administrative costs"
Source: HOA Operating vs. Reserve Funds: A Simple Guide, The HOA Handbook
Everything in that quote stays off the component inventory. A new roof, repaving the parking lot, or replacing a clubhouse HVAC system belongs on it instead. What actually counts as the association's responsibility, versus an individual owner's, comes from your CC&Rs: which common areas and common elements the declaration assigns to the association is what defines the inventory's boundaries, and that assignment differs from one set of governing documents to the next.
Where the inventory comes from
The inventory is the starting point of the physical side of a reserve study. A preparer walks the property, catalogs every component the association is obligated to maintain, and builds everything else on top of that list.
"The component inventory, condition assessment, and life and valuation estimates"
Source: What's Included in a Reserve Study? Key Elements Explained, Reserve Advisors
Those three pieces make up the physical analysis. The inventory answers "what do we own and maintain." The condition assessment and the life and cost estimates that follow answer "how much life is left, and what will it cost."
Why the list barely changes, even when everything else does
When your board reviews an updated reserve study, most of the numbers move: costs go up, remaining useful life goes down, the funding plan adjusts. The inventory itself usually doesn't.
"Should be relatively stable from year to year"
Source: What's Included in a Reserve Study? Key Elements Explained, Reserve Advisors
That stability is a feature, not a sign the preparer skipped a step. But it isn't frozen forever. If the association takes on a new asset (a clubhouse, a new fence, a pool the declarant just turned over), that item belongs on the inventory the next time the study updates. A board reviewing a fresh study should check that anything new the association now owns actually made it onto the list, not just assume the total looks close enough to last year's.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your reserve study preparer is deciding what goes on the component inventory. Which item belongs there?
Your reserve study's physical analysis section covers three things. Which set is correct?
Your community adds a clubhouse this year that the association now owns and maintains. What should happen to the component inventory?
Sources
- What's Included in a Reserve Study? Key Elements Explained, Reserve Advisors
- HOA Operating vs. Reserve Funds: A Simple Guide, The HOA Handbook
Related elsewhere in the Academy
Reserves
Next, see how the physical analysis turns this inventory into condition ratings and cost estimates.
What counts as a common element the association must maintain, and how much detail an inventory must include, depends on your CC&Rs and on your state's law.