Washington HOA Reserve Account Rules: RCW 64.90.535 and .540

Quick answer: Under RCW 64.90.535 and 64.90.540, a Washington association that must have a reserve study has to keep reserve money in its own, separate account titled solely in the association's name, with signers added or removed only by the board. Reserves can sit in an interest-bearing account, cash, money market funds, CDs or U.S. Treasuries; investing in securities is allowed only within strict limits. Every disbursement needs two officer or director signatures and supporting documentation. The board can borrow from reserves for unforeseen costs unrelated to reserve components, but it must record the withdrawal in the minutes, notify owners and adopt a repayment schedule of no more than 24 months unless that would be an unreasonable burden.

Reserve funds are the largest pool of money most associations hold, and these two sections set the guardrails. The investment rules were rewritten in 2025, so older policies may be out of date.

Where reserve money must be held

(1) An association required to obtain a reserve study pursuant to RCW 64.90.545 must establish one or more accounts for the deposit of funds, if any, for the replacement costs of reserve components. Reserve accounts must be maintained such that reserve funds are not commingled with other funds of the association.

The default is a regulated U.S. institution, in the association's name only:

The reserve account must be maintained by the board and titled solely in the name of the association, with authorized signatories for the account added or removed only at the direction of the board.

That second sentence matters at every officer change. Signers should be updated by board action recorded in the minutes, not by a departing treasurer handing over login credentials.

What reserves can be invested in

For securities, the 2025 amendments set these conditions, summarized from RCW 64.90.535(2)(c):

Most self-managed associations will stay with insured accounts, CDs and Treasuries. If you do, still adopt a written investment policy, and keep balances in mind against deposit insurance limits; HOA Fiscal covers that in HOA FDIC insurance limits.

Two signatures and documentation for every disbursement

Except for investments and transfers between the association's own reserve accounts:

(3) Except for investments and transfers between separate reserve accounts held by the same association, every disbursement of reserve funds requires: (a) The signature of at least two persons who are officers or directors of the association; and (b) Documentation of the expenses with supporting invoices including:

The documentation must tie the payment to one of three things: the reserve study components (and their classification, such as common elements), a reserve component not yet in the study, or a loan from reserves with its repayment plan. In practice, attach the invoice and a short memo naming the component to every reserve payment. That also makes your annual audit under RCW 64.90.530 much smoother.

Borrowing from reserves: RCW 64.90.540

(1) The board may withdraw funds from the association's reserve account to pay for unforeseen or unbudgeted costs that are unrelated to replacement costs of the reserve components. Any such withdrawal must be recorded in the minute books of the association.

The board must give notice of any such withdrawal to each unit owner and adopt a repayment schedule not to exceed twenty-four months unless the board determines that repayment within twenty-four months would impose an unreasonable burden on the unit owners.

With the next annual budget, the board must also give owners notice of the withdrawal, a statement of the current reserve funding deficiency on a per-unit basis, and the repayment plan. Those disclosures belong in the budget package described in our RCW 64.90.525 budget ratification guide.

There is one exception. Spending reserves on a replacement cost for a reserve component that is not in the reserve study does not trigger the notice and repayment rules:

(2) The board may withdraw funds from the reserve account without satisfying the notification of repayment requirements under this section to pay for replacement costs of reserve components not included in the reserve study.

When that happens, update the study at the next opportunity. See RCW 64.90.545 reserve study requirements.

A reserve checklist for Washington treasurers

1. Confirm every reserve account is titled solely in the association's name and kept separate from operating funds.
2. Update signers by board resolution after each election.
3. Adopt a written reserve investment policy that addresses RCW 11.100.020(3).
4. Require two officer or director signatures on every reserve disbursement, with the invoice and component noted.
5. If the board borrows from reserves for a non-reserve cost, record it in the minutes, notify owners, set a repayment schedule and disclose it with the next budget.

Board approvals of reserve transfers and loans should be written into the minutes clearly; HOA Board Minutes shows how to record a motion and vote.

How Dynamite helps

Dynamite Management keeps reserve and operating books separate, tracks reserve spending by component and prepares the budget disclosures Washington requires. For the bigger picture of WUCIOA, read our Washington HOA laws guide.

FAQ

Can a Washington HOA invest reserves in the stock market? Only within limits: reserves must total at least $250,000, at least 50 percent must stay in accounts, CDs, money market funds or Treasuries (unless 75 percent of the votes approve more), the investments must be approved in budget ratification, and they must be managed by a qualified fiduciary or with an independent adviser. The governing documents can prohibit it.

How many signatures are needed to spend Washington HOA reserves? At least two officers or directors, plus supporting invoices and documentation tying the payment to a reserve component or a reserve loan.

Can a Washington HOA borrow from reserves? Yes, for unforeseen or unbudgeted costs unrelated to reserve components. The withdrawal must be recorded in the minutes, owners must be notified, and the board must adopt a repayment schedule of up to 24 months unless that would be an unreasonable burden.

Do Washington HOA reserves need to be in a separate account? Yes. Reserve funds cannot be commingled with other association funds, and the account must be titled solely in the association's name.

This is not legal advice. Confirm with the current text of RCW 64.90.535 and 64.90.540 and your association's attorney, especially if your community was created before July 1, 2018.

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