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Mananging Your HOA's Finances

Earlier this month, I compared RCW64.38 that governs HOAs in Washington created prior to July1, 2018 to RCW64.90 that governs HOAs Washington as of July 1, 2018. I am drawing a conclusion here that the easiest way to ensure that an HOA's funds will be spent to preserve and increase the value of every member's property is to adopt RCW64.90 that is an available alternative to continuing to be governed by RCW64.38. My conclusion may apply to any HOA in other States as well because it really comes down to how many loopholes exist the State laws that allow Boards to avoid the disclosure of financial information to members during the year as disbursements are made from an HOA's Reserve Funds or Special Assessments, both of which differ from an HOA's annual Budget's disbursements.

The last thing members should do is vote for Directors on their Boards who do not know the difference between a Budget, a Reserve Fund and a Special Assessment. In the State of Oregon, the Developer is required to prepare the HOA's initial Reserve Study that describes the HOA's Reserve Components. Reserve Components refer to all of the infrastructure, utilities, and buildings owned by the HOA. A Developer in the State of Oregon is also required to prepare a 30-year forward Maintenance Plan for the repair or replacement of Reserve Components in their original condition.The projected cost and scheduled year of repair for each Reserve Component should be listed in this Plan. However, in the State of WA, the Developers are not required to prepare these documents. Moreover, the member elected Board governed by RCW64.38 can decide that these initial documents are unnecessary; and most of the financial disclosure requirements that are stated in certain sections of RCW64.38 are waived in other sections of RCW64.38