WASHINGTON STATE RESERVE STUDY REQUIREMENTS
Senate Bill 6215 and Senate Bill 5223 have brought about major changes for associations (Condominium and HOA) throughout Washington State. With the passing of each piece of legislation, greater importance has been placed upon the need for regular and ongoing reserve study preparation.
Senate Bill 5223 (House Bill 1309) extended the 2008 requirements for condominiums to homeowners associations. The new Washington State reserve study law impresses upon homeowner associations to undertake and update a reserve study annually.
Reporting and disclosure requirements were also introduced for both condominium (condo) and homeowner (HOA) associations. An association’s board of directors must annually disclosure a reserve fund summary (RCW 64.34.308, RCW 64.38.025). The ‘seven part’ information summary should be disclosed to association unit owners as part of the summary of the budget:
- The current amount of regular assessments budgeted for contribution to the reserve account, the recommended contribution rate from the reserve study, and the funding plan upon which the recommended contribution rate is based;
- If additional regular or special assessments are scheduled to be imposed, the date the assessments are due, the amount of the assessments per each unit per month or year, and the purpose of the assessments;
- Based upon the most recent reserve study and other information, whether currently projected reserve account balances will be sufficient at the end of each year to meet the association’s obligation for major maintenance, repair, or replacement of reserve components during the next thirty years;
- If reserve account balances are not projected to be sufficient, what additional assessments may be necessary to ensure that sufficient reserve account funds will be available each year during the next thirty years, the approximate dates assessments may be due, and the amount of the assessments per unit per month or year;
- The estimated amount recommended in the reserve account at the end of the current fiscal year based on the most recent reserve study, the projected reserve account cash balance at the end of the current fiscal year, and the percent funded at the date of the latest reserve study;
- The estimated amount recommended in the reserve account based upon the most recent reserve study at the end of each of the next five budget years, the projected reserve account cash balance in each of those years, and the projected percent funded for each of those years; and
- If the funding plan approved by the association is implemented, the projected reserve account cash balance in each of the next five budget years and the percent funded for each of those years.
Senate Bill 6215 introduced the requirement that condominium associations complete and update a reserve study annually (Washington State Condominium Reserve Study Law). As stated with RCW 64.34, an association is ‘encouraged to establish a reserve account to fund major maintenance, repair, and replacement of common elements, including limited common elements that will require major maintenance, repair, or replacement within thirty years’ (RCW 64.34.380). In cases where a reserve study is not prepared in accordance with the act, an association must disclose that they do not have a current reserve study.
Reserve Study Legislation
Condominium Act | Chapter 64.34 RCW
Homeowners' Associations | Chapter 64.38 RCW
The materials provided on this web site are for informational purposes only and are not for the purpose of providing legal advice. We recommend you consult a lawyer to obtain advice and professional assurance with respect to your own specific circumstances.
RESERVE STUDY WASHINGTON STATE
Based in Seattle, our team of Washington State reserve study professionals work with associations throughout the Northwest. Having worked with associations from Spokane to Vancouver and Bellingham, we cover the state and will travel where needed.
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