House Bill 1309 recently passed by Washington State relates to reserve accounts and
studies for homeowners' associations (HOA's). The bill went into
effect January 1, 2012 and is now RCW 64.38 also known as the HOA Act. Three main changes impact HOA's with ten (10) or more homes and significant assets. The HOA Act:
- Requires homeowners' associations with significant assets to prepare an initial reserve study and update the study annually.
- Requires
the board of directors of homeowners' associations to disclose certain
information to owners on reserve studies along with the annual budget
summary.
- Encourages
homeowners' associations to establish reserve accounts to fund major
maintenance, repair, and replacement of common elements.
The
purpose of the HOA Act is to ensure homeowners are kept informed of
potential costs for the maintenance and upkeep of common areas over
their life span, It directs homeowners and homeowner associations to
better plan in order to avoid special assessments and unplanned
financial burdens on homeowners.
The HOA Act specifies that the annual budget report should include the current assessment for the
reserve fund, the recommended rate from the reserve study, the funding
plan upon which the recommended contribution rate is based, whether the
current fund balance is sufficient to meet the association's obligations
for major maintenance repair or replacement components during the next
30 years, and if the reserve funds are not sufficient what additional
assessments may be necessary to ensure sufficient funds are available
each year for the next 30 years. Additionally, homeowners' associations
with significant assets are required to prepare an initial reserve
study based upon a visual site inspection conducted by a "reserve study professional." The study must be updated annually and must include a
visual site inspection every three years by a reserve study professional.
Note:
"Reserve study professional" means an independent person who is
suitably qualified by knowledge, skill, experience, training, or education to prepare a reserve study in accordance with RCW 64.34.380 and 64.34.382. Our structural engineers that perform annual bridge inspections are considered "suitably qualified professionals".
At this time, the law does not require collections in order to fund a reserve account. However, disclosure is
required. The new reserve law makes it
clear that the RIIA board has as much fiscal responsibility to future
owners as to present ones. The HOA Act must be considered when planning for
the life of our bridge.
|