Reserve Studies 101

Regardless of where you are in terms of your reserve study, here is a set of notes you can use as talking points among committee members advising the board, or among board members as you address this critical task.


On a regular basis, the board is required to conduct, update and report based on the association's reserve study. 


What's absolutely true about condominiums and other common interest associations is this: The buildings will outlast us all. Imagine the value of being able to own useful space in buildings that are well-maintained and in good repair, because the board consistently pays attention to reserve study guidelines.


Please print these notes as a way to begin your conversation.

• What is the age of your building(s)?
• How many separate buildings do you own?
• Do you have active repairs or PM planned for the coming construction season?
• Who performed your last reserve study?
• How many reserve studies have been completed for your community/ how long has your association been commissioning reserve studies?
• What is the impression of your current reserve studies? 
• Are they sufficient?
• Are they reasonable -- consider our weather/ geography?
• Any feedback?
• Where are you in the construction defect repair process? (You may be well past it, or haven't started it yet.)
• What do you currently use as an annual preventative maintenance PM repair plan?
• Where did you get your budget number to pay for your reserve study this year? 
• How much flexibility do you have in your budget to spend more?
• What association assets are listed in your current study?
• Do you want to add assets?
• Do you want to remove assets?
• Are you aware of the January 1, 2012 effect of the Reserve Study Law and its reporting requirements? (These dictate your actions this year in preparation for your 2013 budget, assuming your association was formed after 1991.)
• http://www.condolawgroup.com/2011/10/31/reserve-study-law-changes/
• How do you currently address the funding levels for your reserves?
• Are you adequately funded/ underfunded? What descriptor would you use?

People involved in the reserve study conversation may want to take the time to read the following sections of the Washington State Law, below, regarding reserve studies and funding, as a way of basic education if you don't already have it: 

These are all online under Chapter 64.34, RCW -- Revised Code of Washington -- Condominium Act. These links make the law available online.

64.34.380	Reserve account -- Reserve study -- Annual update.
64.34.382	Reserve study -- Contents.
64.34.384	Reserve account -- Withdrawals.
64.34.386	Reserve study -- Demand by owners -- Study not timely prepared.
64.34.388	Reserve study -- Decision making.
64.34.390	Reserve study -- Reserve account -- Immunity from liability.
64.34.392	Reserve account and study -- Exemption -- Disclosure.

NB: Your governing documents may have a tighter control over reserve studies than the state law, or if they are silent, the state law is your guide.

Empowered Owners: The Barking Dog Story

This is a short story about an owner whose neighbor rents out the unit next door, barking dogs, pro-active and appropriate action to minimize noise and a happy ending for all.

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The owners M&M, work from their unit, and enjoy the convenience of this work/ live arrangement.

Their neighbor, RM, owns the condominium only as an investment. It is the most expensive unit in the building, and the rent tops US$5,000 per month. The unit is never empty long.

Two tenants ago, M&M were distressed to discover a consistently barking dog, who called for its owners about every 30 seconds or so when the dog was alone, and who had taken up occupancy of the elegant unit next door. M&M spoke to the tenant-neighbor, who promised to 'get a bark' collar for the dog. The peace lasted about a week, then started up again.

In a chance encounter, the tenant-neighbor explained to M that 'the dog became so depressed, we had to take the collar off.'

M&M worked with their board to devise an appropriate and civil process to eliminate the unwanted and disruptive noise. They developed a personal note for M&M to use, that advised the tenant-neighbor about the barking dog and how the noise disrupted both their work and their lives. (Personal attempts to remedy the differences.)

After the first day of slipping the note under the neighbor's door with no response, they slipped another note under the door, labeling it '#2'. Again, no response and continued barking. Thereafter and daily, M&M slipped notes #3 and #4 under the door, again with no response.

The next step was for M&M to document their personal efforts to mitigate the noise with their neighbor, with no resolution, and to request that the board notify the owner in writing, and include the fine schedule in place for noise violations. (Official board action taken after personal attempts fail.)

The letter to the owner produced zero results in barking reduction, but it did serve to begin building the fine amounts for the noise violation. After a period, the owner contacted the tenants and attempted to extract payment from them for the fines, which had accumulated. The tenants refused and moved out.

Before long, another small-barking-dog-loving tenant moved in, and on the first day as the barking began, M&M greeted the new tenants and spoke up about their concerns regarding the barking noise. The tenant agreed that it was unacceptable, and that their dog would calm down soon.

The next day, after the new tenant-neighbors left the dog alone, it began to bark. M&M went to work immediately, and notified the neighbor using note #1. Daily for the next three days -- with no reduction in the noise or response from them -- notes #2, ... and so forth were slipped under the neighbor's door.

A board letter went out again to the owner, who contacted the tenants immediately and asked them to pay the fine and silence the dog.

Wind-up: The second dog has been adopted by the owner and taken out of the unit; the new tenant-neighbors have visitation rights with the dog; M&M enjoy the peace and quiet of their unit.

Empowered owners who understand their governing documents and work pro-actively and cooperatively with the board to guard their private enjoyment, provide us a great example for how to maintain civility and quiet harmony in a condominium community.

How to Read Your Governing Documents

Governing documents? What in the world are they?

Oh, ya. Part of that stack of documents -- about six inches high -- that I signed at closing.

And?

And so, too many buyers sign for their governing documents at closing and then never revisit them. This leads to questions like:

• Why are my assessments so high?
• Who picks up the garbage out on the lawn?
• What happens if I don't pay my assessments?
• Can I add a window where there isn't one?
• My roof leaks -- where do I go for help?
• Who pays to clean up my flooded unit?

Your condominium is your home. It's also part of a business: the business of running the association. As an owner, you are a member of the [business] association. You vote. You pay assessments to cover common expenses. When you buy your first condominium, your experience will be filled with these kinds of questions. When you buy subsequent condominiums, you know exactly what to look for in governing documents, based on your first condominium living experience.

If you're new at condominium ownership, be aware that your governing documents are filled with answers to these and other kinds of questions, too.

It will be easier to read your governing documents if you have a background in business, or acknowledge that the association is a business.