Condominium Reserve Studies

Ownership of a unit in a well-managed condominium complex is a good way to share in a property's maintenance responsibilities and costs. A key management tool for this process is a quality, up-to-date reserve study. Such a study should be based upon a detailed inspection and analysis of the property and a budgeting tool that anticipates future maintenance and repair work. Many states have adopted laws that require reserve studies. Washington State adopted such a law in 2008 (SB 6215). The litany of major condominium repair expenses has been one the main reasons for the passage of these laws. But all reserve studies are not created equal and many are of the GIGO variety (garbage in garbage out). In order for a reserve study to be of value, future expenses must be estimated upon thorough analysis, inspection and realistic prices.


  • The responsibilities of the Home Owners' Association (HOA) depend upon the by-laws of the complex. The variation in these responsibilities is great. For example, in a complex with detached single family residences the HOA's responsibilities might be limited to the maintenance of the private streets and sidewalks, while in other's private decks might also be an HOA responsibility.

    As such, a good reserve study must start with a thorough understanding of HOA vs. individual owner responsibilities. In my opinion, it should also include some planing for maintenance and replacement work related to individual responsibility items that may have a common impact. If for example the trees are private but the roofs are common then tree limbs can harm the roofing. And if the decks are private (not classified as limited use common areas) but the deck structure is part of the framing then wood rot at the decks can damage the structures.

  • A thorough inspection is the only reliable way to collect the data required for a reserve study. This is particularly true when one considers the many condominium complexes that have been plagued by siding problems and other exterior envelope issues. All too often these types of issues are identified too late and only after the damage to the structure has been extensive and easily visible. Finding early signs of exterior envelope failure often required extensive training and experience, i.e. an inspection by a qualified expert. In new construction such an inspection is required in order to determine if the exterior envelope was designed and installed in a reliable manner. And in existing buildings the inspection must also determine if the building has been properly maintained or if there are any signs of problems.

    Such an inspection must include:

    • The exterior envelope of the building,
    • All common areas,
    • All "limited use" common areas such as decks, and
    • The interiors of the units.

    The inspection of the interiors of the units must be inspected for signs of problems that originate at the exterior envelope, e.g. windows or which may be the causes of damage to the buidling, e.g. interior moisture sources.