A Reserve Study is a comprehensive report on the physical condition of the common area elements and an analysis of financial reserves. The Reserve Study provides for long-term planning and budgeting, allowing Associations to project costs and adequately fund for future projects and repairs. This aids the Association in making an informed decision regarding their annual Reserve contribution rate.
Reserve Studies have become essential for HOAs and COAs due to their informational value. Also, Washington state RCW 64.34.380 mandates that Associations conduct Reserve Study updates yearly.
A Reserve Study consists of two main parts: the physical assessment of common area components and a financial analysis of future expenses over a 30-year duration.
Physical Assessment - This section contains information about the condition, and the timing and cost of repair/replacement of the property's common area elements.
Financial Assessment - This section assesses the adequacy of current reserve fuding levels and recommends funding options based on a schedule of future repair/replacement costs for common elements included in the study.