A reserve study helps owners of real estate property, particularly condominiums with assets owned in common, to establish the useful life of the commonly owned assets and their replacement value.
When it comes time to replace a commonly owned asset, a well-managed condominium will have the necessary funds so that the replacement can occur, without a special assessment to pay for it.
A portion of your monthly assessments should be held in reserves for replacement of assets owned in common.
You may have a useful life listing from the developer or declarant, but a reserve study is required for any budget crafted after June 12, 2008.
Best practices dictate that the reserve study take place, and that reserve contribution funding begin as soon as possible.
This is a link to a newsletter that explains the legal requirements for a reserve study. With thanks to the Rafel Law Group in Seattle, here is an article by David Martin, "Reserve Studies in Oregon and Washington."