State of Washington
2012
Condominium Reserve Study Statute
RCW 64.34.380 Reserve account — Reserve study — Annual
update.
(1) 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. A reserve account shall be established in the name of the
association. The board of directors is responsible for administering the
reserve account.
(2) Unless doing
so would impose an unreasonable hardship, an association shall prepare and
update a reserve study, in accordance with the association's governing
documents and RCW 64.34.224(1). The initial reserve study must be based upon a
visual site inspection conducted by a reserve study professional.
(3) 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.
(4) This section
and RCW 64.34.382 through 64.34.390 apply to condominiums governed by chapter
64.32 RCW or this chapter and intended in whole or in part for residential
purposes. These sections do not apply to condominiums consisting solely of
units that are restricted in the declaration to nonresidential use. An
association's governing documents may contain stricter requirements.
RCW 64.34.382 Reserve study — Contents.
(1) A reserve
study as described in RCW 64.34.380 is supplemental to the association's
operating and maintenance budget. In preparing a reserve study, the association
shall estimate the anticipated major maintenance, repair, and replacement
costs, whose infrequent and significant nature make them impractical to be
included in an annual budget.
(2) A reserve
study shall include:
(a) A reserve
component list, including quantities and estimates for useful life of each
reserve component, remaining useful life of each reserve component, and current
repair and replacement cost for each component;
(b) The date of
the study and a statement that the study meets the requirements of this
section;
(c) The level of
reserve study performed:
(i) Level I: Full reserve study funding
analysis and plan;
(ii) Level II: Update with visual site
inspection;
(iii) Level III: Update with no visual site
inspection;
(d) The
association's reserve account balance;
(e) The
percentage of the fully funded balance that the reserve account is funded;
(f) Special
assessments already implemented or planned;
(g) Interest and
inflation assumptions;
(h) Current
reserve account contribution rate;
(i) Recommended
reserve account contribution rate;
(j) Projected
reserve account balance for thirty years and a funding plan to pay for
projected costs from those reserves without reliance on future unplanned
special assessments; and
(k) Whether the
reserve study was prepared with the assistance of a reserve study professional.
(3) A reserve
study shall include the following disclosure:
"This
reserve study should be reviewed carefully. It may not include all common and
limited common element components that will require major maintenance, repair,
or replacement in future years, and may not include regular contributions to a
reserve account for the cost of such maintenance, repair, or replacement. The
failure to include a component in a reserve study, or to provide contributions
to a reserve account for a component, 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 reserve
component."
RCW 64.34.384 Reserve account — Withdrawals.
An association may
withdraw funds from its reserve account to pay for unforeseen or unbudgeted
costs. The board of directors shall record any such withdrawal in the minute
books of the association, cause notice of any such withdrawal to be hand
delivered or sent prepaid by first-class United States mail to the mailing
address of each unit or to any other mailing address designated in writing by
the unit owner, and adopt a repayment schedule not to exceed twenty-four months
unless it determines that repayment within twenty-four months would impose an
unreasonable burden on the unit owners.
RCW 64.34.386 Reserve study — Demand by owners — Study not
timely prepared.
(1) Where more
than three years have passed since the date of the last reserve study prepared
by a reserve study professional, the owners of the units to which at least
twenty percent of the votes are allocated may demand, in writing, to the
association that the cost of a reserve study be included in the next budget and
that the study be obtained by the end of that budget year. The written demand
must refer to this section. The board of directors shall, upon receipt of the
written demand, provide unit owners making the demand reasonable assurance that
the board of directors will include a reserve study in the next budget and, if
the budget is not rejected by the owners, will arrange for the completion of a
reserve study.
(2) In the event
a written demand is made and a reserve study is not timely prepared, a court
may order specific performance and award reasonable attorneys' fees to the
prevailing party in any legal action brought to enforce this section. An
association may assert unreasonable hardship as an affirmative defense in any
action brought against it under this section. Without limiting this affirmative
defense, an unreasonable hardship exists where the cost of preparing a reserve
study would exceed ten percent of the association's annual budget.
(3) A unit
owner's duty to pay for common expenses shall not be excused because of the
association's failure to comply with this section or RCW 64.34.382 through
64.34.390. A budget ratified by the unit owners under RCW 64.34.308(3) may not
be invalidated because of the association's failure to comply with this section
or RCW 64.34.382 through 64.34.390.
RCW 64.34.388 Reserve study — Decision making.
Subject to RCW
64.34.386, 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.
RCW 64.34.390 Reserve study — Reserve account — Immunity
from liability.
Monetary damages
or any other liability may not be awarded against or imposed upon the
association, the officers or board of directors of the association, or those
persons who may have provided advice or assistance to the association or its
officers or directors, for failure to: Establish a reserve account; have a
current reserve study prepared or updated in accordance with RCW 64.34.380
through 64.34.388; or make the reserve disclosures in accordance with RCW
64.34.382 and 64.34.410(1)(oo) and 64.34.425(1)(s).
RCW 64.34.392 Reserve account and study — Exemption —
Disclosure.
(1) A
condominium association with ten or fewer unit owners is not required to follow
the requirements under RCW 64.34.380 through 64.34.390 if two-thirds of the
owners agree to exempt the association from the requirements.
(2) The unit
owners must agree to maintain an exemption under subsection (1) of this section
by a two-thirds vote every three years.
(3) Notwithstanding subsections (1) and (2) of this section, a disclosure that the condominium association does not have a reserve study must be included in a unit's public offering statement as required under RCW 64.34.410 or resale certificate as required under RCW 64.34.425.
For
information on reserve studies, see www.Regenesis.net Reserve Study Service