Reserve Study for HOA & Condos
Washington State Reserve Study Regulations
Unit owners associations may adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from unit owners and establish and administer a reserve account and prepare a reserve study. Section 64.34.304 and 64.38.020.
The decisions relating to the preparation and updating of a reserve study must be made by the board of directors of the association in the exercise of the reasonable discretion of the board. Such decisions must include whether a reserve study will be prepared or updated, and whether the assistance of a reserve study professional will be utilized. Section 64.34.388.
Associations are 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 30 years. Unless doing so would impose an unreasonable hardship, an association with significant assets shall prepare and update a reserve study. The initial reserve study must be based upon a visual site inspection conducted by a reserve study professional. Unless doing so would impose an unreasonable hardship, the association shall update the reserve study annually. At least every three years, an updated reserve study must be prepared and based upon a visual site inspection conducted by a reserve study professional. Section 64.34.380 and 64.38.065.
The public offering statement shall include copies of the association's current reserve study, if any. If the association does not have a reserve study, the public offering statement shall contain the following disclosure: “This association does not have a current reserve study. The lack of a current reserve study poses certain risks to you, the purchaser. Insufficient reserves may, under some circumstances, require you to pay on demand as a special assessment your share of common expenses for the cost of major maintenance, repair, or replacement of a common element." Section 64.34.410.
Any association created after 2018, must prepare and update a reserve study in accordance with this chapter. An initial reserve study must be prepared by a reserve study professional and based upon either a reserve study professional's visual site inspection of completed improvements or a review of plans and specifications of or for unbuilt improvements, or both when construction of some but not all the improvements is complete. An updated reserve study must be prepared annually. An updated reserve study must be prepared at least every third year by a reserve study professional and based upon a visual site inspection conducted by the reserve study professional. Section 64.90.545.
An association required to obtain a reserve study pursuant to RCW 64.90.545 must establish one or more accounts for the deposit of funds, if any, for the replacement costs of reserve components. Any reserve account must be an income-earning account maintained under the direct control of the board, and the board is responsible for administering the reserve account. Section 64.90.535.
Our Reserve Study report comply with USPAP (Uniform Standards of Professional Appraisal Practice) and the Professional Code of Ethics of the American Society of Appraisers (ASA) that our principal Reserve Study Professional is a Washington State Certified General Real Estate Appraiser and a Certified Commercial Investment Member (CCIM) with a WA State Designated Broker licensed.
We utilize National Reserve Study Standards published in 1998 by the Community Associations Institute as a guide to creating a reserve study that is standardized to the industry with respects to terminology, concepts and funding models.
Reserve Study for Common Interest Developments - HOA & Condos
A Reserve Study is a long term budgeting tool utilized by common interest communities which provides a long term timeline of costs and dates for replacement of common area components. Common areas such as roofing, fencing, paint, asphalt and siding all have limited useful life experiences and a Reserve Study provides a community the necessary information to adequately save for the expected replacement of these items over time.
A Reserve Study is completed in several steps:
1. Physical Component Analysis - Common area components are inventoried, assigned a condition assessment and researched for cost & useful life expectancy. The reserve specialist will conduct interviews of the vendors, research historical replacement/repair data and utilize cost manuals during this process.
The Reserve Analyst will determine component condition assessments and research associated cost for the common area assets to be included in the study based on a limited scope visual inspection (Level I). The reader of this report will find current condition levels, anticipated remaining useful life and projected repair and/or replacement costs for common area assets.
Reserve Component: A reserve component is a commonly owned asset which will require a reserve balance for maintenance and replacement. A reserve study estimates the needed cash reserves to repair and replace association’s reserve components over their useful life expectancies. Examples can include roofing, siding, fencing and swimming pools.
2. The Financial Analysis - The amount being allocated to the reserve account is then reviewed and compared to an ideal allocation rate which, with an understanding of the concepts, provides a "percent funded" figure which is the most reliable indicator of the financial health of an Association with respects to reserve account balance at a particular point in time. The reserve Analyst with then utilize all the information obtained and analyzed to develop one or more financial strategies for an Association which is in line with National Reserve Study Standards, Statutory Requirements and the long term goals of the Association.
The Reserve Study Professional will provide recommendations for current and future reserve contribution rates to the reserve account based on current and expected financial data provided by the Client as well as take into account the timeline of expected expenditures over the 30 years covered in this study.
The Reserve Analyst’s recommended financial strategy will guide the association on a path to becoming “Fully Funded” in a manner which is predictable, fair to the membership and in line with statutory requirements.
Fully Funded: When the actual or projected Reserve Balance is equal to the Fully Funded Balance. This occurs when the funds in the reserve account are equal to the depreciated amount of the components after taking into inflation of costs and interest earned in any given year.
3. Long Term Budgeting Plan - The Reserve Analyst will then compile all of this information into a Reserve Study for review and incorporation by the Association into their long term budgeting plan.
Scope of Reserve Study Levels
Reserve Study For Other Community Clubs & Associations
Reserve Study For Other Community Clubs & Associations
With your choice of reserve budget consultants we aim to remain a step ahead of the others. Our services are catered to those customers seeking a comprehensive and catered study which provide long term strategic funding goals that are flexible and in line with our customer's long term goals.
Full Study Level 1
Our Full Level 1 Studies are excellent for Clients that have very dated or non-existant reserve studies, have had significant changes from past professionally completed studies (e.g., remodels, buildings/site additions) or would like a fresh look at things from a different perspective.
Full Update Study Level 2
Level 2 Studies are updates to prior studies and are for Clients who have had a professional study completed within the last five years, which we can utilize for the component list, and measurements, but who would like us to complete a site inspection to determine if component are deteriorating at a rate that was projected in the past.
Update Study Level 3
Level 3 Studies are updates to prior studies and are for Clients who have had a professional study completed within the last five years, which we can utilize for the component list, measurements, useful lives and remaining useful lives. Project costs and the financials are updated and there is no site inspection completed.
Reserve Study For Other Community Clubs & Associations
Reserve Study For Other Community Clubs & Associations
Reserve Study For Other Community Clubs & Associations
Common Interest
Common interest communities:
- Homeowner's Associations
- Condominium Reserve Study
- Retirement Communities, Senior, Co-ops
- Mid & High-Rise Building
- Water & Sewer Systems
Replacement Plans
Non-profit organizations can utilize our reserve capital replacement plans to save on project costs, raise funds and project management. Commonly prepared for:
- Athletic Club
- Swim Club
- Community Center
- Churches and other Religious Buildings
- Private Schools
- Government Properties
- Non-profit Organization
- Non-profits
- Museums
- Camps & Retreat Facilities
Resort Communities
After years of experience working with resort communities our reserve & replacement study professionals are the best in the business. Common resorts include:
- Country Club
- Golf Courses
- Ski Resorts
- Waterfront Resorts
- Timeshare Resorts
Commercial
Owners of investment properties utilize our studies for their long term financial goals related to their investments. These can include:
- Commercial Buildings
- Apartments/ Hotels
- Medical Complexes, Skilled Nursing, Assisted Living
- Marinas
- Commercial Office Retail Condominiums