Published December 12, 2023

Different Levels of a Reserve Study

Written by Kristina Loper

Different Levels of a Reserve Study header image.

Hey Homebuyer, Let's chat about the Reserve Study

Reserve Studies are usually updated annually, and there are three levels of updates that can be done. The most comprehensive option is a Level I Study. A Level III study offers updated information but because there is no site visit, it could possibly miss changes to various components. Multiple Level III over time could allow problems to build up which is why Washington state law requires a Level 1 study at least every three years for most condominium associations.

Aspect	Full Reserve Study (Level I)	Update With-Site Visit (Level II)	Update No-Site Visit (Level III)
Description	Comprehensive analysis and documentation of the association's reserve balance, including a site visit to evaluate the current condition of all components.	An update to the Full Reserve Study that includes a visual site visit but not an in-depth analysis of components.	An update to the Full Reserve Study without a site visit, relying on the previous study's data and any provided updates.
Site Visit	Yes	Yes	No
Component Inventory	Complete inventory is conducted, and new components might be added.	Review of existing inventory with minor adjustments as observed during the site visit.	Relies on the existing component inventory from the previous study.
Condition Assessment	Detailed assessment of each component's current condition.	Visual assessment without in-depth analysis.	No new assessment; relies on previous condition assessments.
Life and Valuation Estimates	Estimates the remaining useful life and replacement cost of each component.	Updates life and valuation estimates based on visual assessment and market changes.	Updates valuation estimates based on inflation or provided data, without reassessing useful life.
Funding Plan	Develops a new funding plan based on the updated component analysis and financial status.	Updates the funding plan based on the revised component and financial data.	Updates the funding plan using the existing component data and updated financial status.
Frequency of Preparation	Typically every 3-5 years or as required by state law.	Annually or biannually between Full Reserve Studies.	Annually or as needed to update financials without a site visit.
Purpose	To provide a comprehensive understanding of the association's reserve fund status and future needs.	To keep the Full Reserve Study current by accounting for minor changes and observations.	To provide a quick, annual update on the association's financial status without re-evaluating component conditions.
Cost	Higher due to the level of detail and analysis involved.	Moderate cost due to the inclusion of a site visit but less detailed analysis.	Lower cost since it doesn't involve a site visit or detailed component analysis.

The above are generally true. As always, buyer beware and check to see if the particular HOA/COA has specific requirements to be addressed in the report. Have questions or concerns about going through the Reserve Study? Reach out and ask us questions!