Reserve Studies
Our project management department performs reserve studies and reserve updates for condominiums and homeowner associations. As of June 12, 2008, a new Washington State law requires condominium associations to report money set aside for long-term replacement and repairs. Washington is one of a half-dozen states requiring condo associations to obtain professional reserve studies.
Reserve funds are maintained by condominium associations to pay for major repairs or replacement of the community's common elements. Common elements may include items such as lobbies, roofs, parking lots, exterior siding, decks, or recreational areas. Reserve studies are used to determine when common elements will need to be replaced or repaired along with the associated costs. Reserve studies must include detailed information on projected expenditures and current reserve account information. An adequate amount of reserve funding may be determined through a reserve study.
Public offering statements and condominium resale certificates must include either: (1) a copy of the association's current reserve study; or (2) a disclosure informing the buyer that there is no current reserve study and the possible risks that the buyer faces because of the lack of a current study.
Condominium resale certificates are required to contain a statement of the amount of any reserves for repair and replacement and the portion of those reserves currently designated for any specific project. An association may withdraw funds from the reserve account for unforeseen expenses, as long as notice is given to unit owners and a repayment schedule is set up. Associations must conduct and update reserve studies annually. The initial study and the study done every third-year thereafter must be conducted by a reserve study professional.
The requirement that condominium associations conduct reserve studies passed the Washington State Legislature as Senate Bill 6215.