The Washington State Legislature has recently passed new legislation affecting reserve requirements both Condominium and traditional single family residence Homeowners Associations.
The new legislation will require Association Boards in their annual budget summaries to provide all owners with additional information regarding reserves for future maintenance, repairs and replacement of common elements. For example, the summary will now need to include:
– The current amount of regular assessments budgeted for contribution to the reserve account.
– The “Funding Plan” upon which such contribution rate is based.
– Whether currently projected reserve account balances will be sufficient at the end of the year to meet the Association’s obligation for major maintenance, repair or replacement of reserve components during the next 30 years.
– 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 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 5 budget years, the projected reserve account cash balance in each of those years, and the projected percent funded for each those years.
There are other important provisions in the new laws including the required elements of a mandated reserve study and the manner in which it is to be updated on an annual basis (subject to very limited exemptions for Condominium Owner Associations and somewhat broader exemptions for Homeowner Associations).
These laws do not become effective until January 1, 2012. If you have questions regarding these new laws or wish to receive a copy of them, please do not hesitate to contact our firm. It is important for Association Board members and residents alike to be well-informed on these legal requirements.