Certified Manager of Community Associations (CMCA) Practice Exam 2025 – All-in-One Guide to Achieve Exam Success!

Having a reserve study is essential for effective financial planning and management in community associations. A reserve study assesses the long-term needs of the community and helps determine the appropriate amount of funds that should be set aside for future repairs and replacements of common elements.

When a community does not conduct a reserve study, it can lead to significant financial consequences. Overfunding occurs when the community allocates more money than necessary towards reserves, which could restrict available funds for other community needs. Conversely, underfunding happens when insufficient money is set aside, leading to inadequate resources for necessary repairs, ultimately risking the community's financial stability.

Furthermore, inadequate funding can expose board members to liability issues, as they have a fiduciary responsibility to manage the association's finances prudently. If a community faces significant repair costs without sufficient reserves, this can result in special assessments or increased fees, potentially causing dissatisfaction among community members and harming the community's overall financial health.

The other options, such as increased community satisfaction, enhanced property values, and decreased management fees, do not reflect the direct consequences of lacking a reserve study. In fact, the opposite can often be true when financial mismanagement occurs due to the absence of proper planning through a reserve study.