HOA Reserve Study Requirements: Washington, Oregon, and California Compared

Reserve studies are the foundation of long-term HOA financial planning. They identify what the association owns, how long each component will last, what it will cost to replace, and how much money must be set aside annually to pay for it.

But reserve study requirements vary significantly by state. What is mandatory in California may be optional in Oregon. What Washington requires under WUCIOA may exceed what older Washington statutes demanded.

This guide compares the reserve study frameworks for Washington, Oregon, and California — the three states where the regulatory landscape is most active for community associations on the West Coast.

Side-by-Side Comparison

Washington: WUCIOA Reserve Requirements

Statutory Framework

RCW 64.90.545 establishes reserve requirements for all WUCIOA communities:

• The association must conduct a reserve study to determine the appropriate level of reserves
• The study must be updated at least every three years
• The board must review the reserve study annually and adjust contributions if necessary
• Reserve fund balances must be disclosed in resale certificates (RCW 64.90.640)
• Reserve funds must be maintained in segregated accounts — commingling with operating funds is prohibited

What WUCIOA Specifically Requires

1. Component inventory — Identification of all major components that the association is responsible for maintaining or replacing
2. Useful life estimates — Remaining useful life for each component
3. Replacement cost estimates — Current cost to repair or replace each component
4. Funding plan — Annual contribution amount needed to fund anticipated replacements
5. Percent-funded calculation — Current reserve balance compared to the fully funded balance

Practical Notes for Washington Boards

• WUCIOA does not mandate that a professional reserve study firm conduct the study, but boards that self-prepare studies face scrutiny if the estimates prove inadequate
• The 3-year update requirement means studies conducted before 2023 are overdue for update
• Reserve study findings must be reflected in the annual budget — the contribution amount should align with the study's recommendations

Oregon: The Lighter Framework

Statutory Framework

Oregon does not have a single comprehensive reserve study statute comparable to WUCIOA or the Davis-Stirling Act. Requirements are fragmented:

• ORS 94.595 (planned communities) — Requires the association to maintain adequate reserves, but does not mandate a formal reserve study
• ORS 100.175 (condominiums) — Requires disclosure of reserve status but does not mandate a study methodology
• ORS 94.670 — Requires the association to provide financial information (including reserve information, if a study exists) upon request

What This Means in Practice

Oregon associations are not required to: - Conduct a professional reserve study at any specific interval - Use a specific methodology for calculating reserves - Maintain a specific percent-funded level - Disclose percent-funded calculations in a standardized format

However, Oregon associations are required to: - Maintain adequate reserves for the repair and replacement of common elements - Provide reserve information to owners and prospective purchasers upon request - Disclose deferred maintenance information (ORS 94.670)

Practical Notes for Oregon Boards

The absence of a statutory mandate does not mean reserve studies are unnecessary. In practice: - Lenders and insurers increasingly require reserve studies for HOA certification (Fannie Mae, FHA) - Buyers and title companies expect reserve information as part of the transaction process - Boards face fiduciary liability if they fail to plan for foreseeable capital expenses

Oregon boards should conduct reserve studies on a 3-5 year cycle as a best practice, even without a statutory requirement.

California: The Most Prescriptive Framework

Statutory Framework

California has the most detailed reserve study requirements in the country:

• Civil Code 5550 — Requires a reserve study at least every 3 years, with specific content requirements
• Civil Code 5300 — Requires the annual budget report to include a reserve study summary
• SB 770 (effective 2024) — Requires reserve studies to include EEE (exterior elevated element) components identified through SB 326 inspections

What California Specifically Requires

1. Component inventory — All major components with a remaining useful life of less than 30 years and a replacement cost exceeding one percent of the annual budget
2. Condition assessment — Physical inspection (not just desk review) with each update
3. Useful life and remaining useful life — For each component
4. Replacement cost — At current costs, including inflation projections
5. Funding plan — "Full funding" method or "threshold funding" method (with specific statutory definitions)
6. Percent-funded calculation — Required in the annual budget report sent to all members
7. 30-year cash flow projection — Showing expected expenditures and income for the reserve fund over the next 30 years

SB 770 Addition (2024)

Reserve studies must now include: - EEE components identified through SB 326 inspections - Cost estimates for EEE repair or replacement based on inspection findings - A summary of the association's SB 326 compliance status

Percent Funded = Current Reserve Balance / Fully Funded Balance x 100

For each component:
  Funded Amount = (Age / Useful Life) x Replacement Cost

Fully Funded Balance = Sum of Funded Amounts for all components

Percent Funded = $100,000 / $200,000 x 100 = 50%

Common Board Mistakes Across All Three States

Regardless of jurisdiction, boards make the same reserve planning errors:

1. Deferring the reserve study

"We'll do it next year" compounds into a decade without a study. When the roof fails, there are no reserves to pay for it.

2. Underfunding contributions

Boards that set reserve contributions below the study's recommendation — to keep assessments low — are creating a future special assessment.

3. Borrowing from reserves for operations

Using reserve funds for operating expenses (even temporarily) violates fund segregation requirements in Washington and California, and creates accounting complexity everywhere.

4. Not updating after major events

An insurance claim, a major repair, or a change in component inventory all require a reserve study update. Boards that wait for the 3-year cycle miss critical changes.

5. Ignoring the study's recommendations

A reserve study is only useful if the board follows its funding recommendations. A study that sits on a shelf does not prevent special assessments.

How CommunityPay Supports Reserve Planning

CommunityPay generates Reserve Funding Status Reports (RSR) from live ledger data:

• Component register with per-component useful life, replacement cost, and funding status
• 30-year cash flow projection showing expected expenditures and reserve fund balance over time
• Percent-funded calculation based on current reserve balance vs. fully funded balance
• Funding adequacy analysis comparing current annual contribution to the recommended level
• Risk flags for underfunding, critical components, and negative cash flow projections

The RSR is not a substitute for a professional reserve study with site inspection — but it provides continuous reserve monitoring between professional studies, ensuring the board always has current data.

Explore CommunityPay's reserve management capabilities | Request a demo

For state-specific compliance detail: - WUCIOA 2026 Compliance Checklist — Washington's full WUCIOA compliance reference including reserve requirements - California SB 326: Balcony Inspections and Reserve Planning — How EEE inspections drive California reserve study updates - Oregon HOA Disclosure Requirements — Oregon's lighter framework and the reserve study gap - California HOA Disclosure Requirements 2026 — SB 770's expansion of reserve study requirements

This guide compares reserve study requirements across Washington, Oregon, and California as of 2026. For legal advice specific to your community, consult an attorney licensed in your state. For a walkthrough of CommunityPay's reserve planning tools, contact us.