A reserve study estimates when an association's major shared components, such as roofs, siding, elevators and paving, will need repair or replacement, what that may cost, and how much the association should set aside. For a buyer, it is one of the best tools for spotting future dues increases or special assessments. It is also easy to misread.
Reserve study, annual budget and cash balance
The annual budget covers this year's operating costs and planned reserve contribution. The reserve balance is the money actually set aside today. The reserve study looks forward over many years, compares expected costs with that balance, and proposes a funding plan. You need all three.
Identify when the community was formed and which law applies
Washington has more than one statute governing common interest communities. The Washington Uniform Common Interest Ownership Act (WUCIOA, RCW 64.90) applies to communities created on or after July 1, 2018, and to older communities that amend their declaration to elect into it. Before January 1, 2028, it does not apply as a whole to other older communities (RCW 64.90.360).
The reserve study section already reaches older communities. RCW 64.90.365(1)(h) lists RCW 64.90.545, the reserve study section, among the provisions that apply to communities created before July 1, 2018, for events and circumstances on or after July 1, 2018. Excluded from that list are certain plat or miscellaneous communities described in RCW 64.90.360(4) and nonresidential or mixed-use communities described in RCW 64.90.100. So an older condominium should not assume its reserve study obligations wait until 2028.
RCW 64.90.365(2) adds a limit in the other direction: for governing documents already in effect before July 1, 2018, it preserves certain existing provisions subject to the conditions written into that subsection, so the listed sections do not automatically override every older declaration or bylaw term. Whether a particular provision in your community's documents is preserved is a question for the association's attorney.
Older condominiums may also have provisions in the Condominium Act; read RCW 64.34.380 together with its own exceptions. Under the reviser's note, that chapter is repealed effective January 1, 2028. Where an older statute is inconsistent with the sections listed in RCW 64.90.365(1), the listed sections control. Which rules apply to a given building is a question for the association's documents and counsel.
Under RCW 64.90.545, an association must prepare a reserve study, update it annually, and have a reserve study professional prepare an update based on a visual site inspection at least every third year. Unless the governing documents require otherwise, that duty does not apply to:
- communities whose units are restricted in the declaration to nonresidential use;
- communities with only nominal reserve costs;
- certain communities made up only of middle housing that do not require on-site wastewater reserve components; or
- situations where the cost of the study or update exceeds 10 percent of the association's annual budget.
Governing documents may impose greater requirements. Statute checked October 19, 2026 (as amended in 2026). Ask the association which category it is in, and have counsel confirm when it matters.
Components, remaining life, costs and the funding plan
- Component list: what the association is responsible for.
- Useful life / remaining life: when each item is expected to need work.
- Estimated cost: in today's dollars, often with an inflation assumption.
- Funding plan: the contribution schedule the study recommends, and whether the board adopted it.
Note the study's date and whether it was a full study with a site visit or an update without one. Then compare the study with the budget the board actually adopted:
| Major component | Expected timing | Study's recommended annual contribution | Contribution in the adopted budget | Gap |
|---|---|---|---|---|
| $ | $ | $ | ||
| $ | $ | $ | ||
| $ | $ | $ |
Fill this in from the study and the budget. A study that exists, or a good percent-funded figure, does not mean every project is funded.
Percent funded is not a loan approval line
Percent funded compares the actual reserve balance with the amount the study says should exist given components' ages. It is a helpful indicator, not a pass/fail test. Lender condo reviews use their own questionnaires and criteria, which can look at budgets, reserves, litigation, insurance and other items. Ask your lender what their review requires instead of assuming a percentage threshold.
Cross-check special assessments, engineering reports and minutes
Read the reserve study alongside recent board and owner meeting minutes, any engineering or building-envelope reports, insurance documents and the resale certificate. Look for projects discussed but not yet funded, assessments already approved, and differences between the study's recommendations and the adopted budget.
Buyer document list and a hypothetical assessment calculation
- Most recent reserve study and any updates
- Current budget and latest financial statements
- Minutes from the last 12–24 months
- Engineering or envelope reports
- Resale certificate and disclosure of pending assessments
- Insurance summary and deductibles
| Hypothetical example | Amount |
|---|---|
| Project cost not covered by reserves | $1,200,000 |
| Number of units (equal shares assumed) | 80 |
| Possible assessment per unit | $15,000 |
Hypothetical figures only. Actual allocation follows the declaration, which may use unequal percentages.
For a broader comparison, see our condo vs single-family home guide.
Frequently asked questions
What percent funded is good?
There is no single legal standard in this context. Use it with the funding plan, minutes and reports to judge risk.
How often must a reserve study be updated?
Under RCW 64.90.545, annually, with an update based on a professional's visual site inspection at least every third year. Exceptions include nonresidential communities, communities with only nominal reserve costs, certain middle-housing communities, and cases where the study would cost more than 10% of the annual budget. Through RCW 64.90.365, this section also applies to many communities created before July 1, 2018.
Can a low reserve affect my loan?
It can be part of a lender's condo review. Ask your lender about their specific criteria.
Sources
- RCW 64.90.545: Reserve study
- RCW 64.90.365: Provisions applying to communities created before July 1, 2018
- RCW 64.90.360: Applicability and 2028 transition
- RCW 64.34.380: Condominium reserve study
This article is general information, not legal, tax or lending advice. Rules and program terms change; confirm details with the relevant professional and the current official source.
