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Summary of Reserve Study State Law

Many states have enacted legislation dealing with community association reserve and operating funds to protect owners from fiscal problems and financial hardship. More states may enact similar legislation as community associations continue to gain popularity. The most important point we like to make is that completing a reserve study just to comply with State Law is of little value to a community, as even in States that have enacted laws there is little in the way of enforcing them. The best and most advantageous use of a reserve study comes from the point of fairness and full disclosure to the community members. The reserve study is completed to first determine project expenses but also to distribute the costs as fairly as possible amongst all the community members over time so everyone pays their fair share in to the reserve account.


Even though most States have not enacted laws specifically requiring reserve studies many have enacted disclosure requirements to the community members and/or buyers of homes within the community; these disclosures can typically only be addressed adequately after a reserve study has been performed. Additionally most governing documents within common interest communities indicate that a reserve account has to be established and adequate reserves maintained. Often Boards are seeking a way to get around reserve requirements and are totally unaware that it is not State Law that they need to be concerned with but their own governing documents. Ignoring governing documents can increase the exposure of Board members to lawsuits.


Please remember that community associations are governed by state law, which can vary widely from state to state. This information is intended for general educational and informational purposes only; it may not reflect the most recent developments, and it may contain errors or omissions. The publisher does not warrant or guarantee that the information contained here complies with applicable law of any given state. It is not intended to be a substitute for advice from a lawyer, community manager, accountant, insurance agent, lender, or any other professional.


Choose the State tab below for more information. States with a   icon have enacted laws that require reserve studies to be completed. 

Alaska
Arizona
California
Colorado
Hawaii
Idaho
Nevada
New Mexico
Oregon
Utah
Washington
Alaska

Alaska Reserve Study Laws

 

There is no statutory requirement to conduct a reserve study and no statutory requirement to fund reserves in the State of Alaska.

 

The unit owners’ associations may adopt and amend budgets for revenues, expenditures, and reserves and impose and collect assessments for common expenses from unit owners. Section 34.08.320(2). A public offering statement must include assumptions concerning the calculation of the amount of reserves certified by a certified architect or engineer; the amount included in the budget as a reserve for repairs and replacement including the estimated cost of repair or replacement cost and the estimated useful life of the asset to be repaired or replaced; and a statement of any other reserves. Section 34.08.530(5).

 

For condominiums, unit owners’ associations may adopt and amend budgets for revenues, expenditures, and reserves and impose and collect assessments for common expenses from unit owners. Section 33‐1242(2). The resale disclosure statement must include the total amount of money held by the association as reserves. The purchaser must also receive a copy of the most recent reserve study of the association, if any. Section 33‐1260.

 

For planned communities, resale disclosure statement must include the total amount of money held by the association as reserves. The purchaser must also receive a copy of the most recent reserve study of the community, if any. Section 33‐1806.

 

Section 10‐3830 requires directors of nonprofit corporations to discharged duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the director reasonably believes to be in the best interests of the corporation.

 

Reserve Data Analyst Anchorage Office Link

Arizona
California
Colorado
Hawaii
Idaho
Nevada
New Mexico
Oregon
Utah
Washington