(1) The declarant, on behalf of the association of unit owners, shall:
(a) Conduct an initial reserve study as described in subsection (3) of this section;
(b) Prepare an initial maintenance plan as described in subsection (4) of this section; and
(c) Establish a reserve account as provided in subsection (2) of this section.
(2)(a) A reserve account shall be established to fund major maintenance, repair or replacement of those common elements all or part of which will normally require major maintenance, repair or replacement in more than one and less than 30 years, for exterior painting if the common elements include exterior painted surfaces, and for such other items as may be required by the declaration or bylaws. The reserve account need not include:
(A) Items that can reasonably be funded from the general budget or other funds or accounts of the association; or
(B) A reserve for limited common elements for which maintenance and replacement are the responsibility of one or more, but less than all, unit owners under the provisions of the declaration or bylaws.
(b) The reserve account shall be established in the name of the association of unit owners. The association is responsible for administering the account and for making periodic payments into the account.
(c) The reserve portion of the initial assessment determined by the declarant shall be based on:
(A) The reserve study described in subsection (3) of this section;
(B) In the case of a conversion condominium, the statement described in ORS 100.655 (Disclosure statement) (1)(g); or
(C) Other reliable information.
(d) The reserve account must be funded by assessments against the individual units for the purposes for which the reserve account is established.
(e) The assessment under this subsection accrues from the time of the conveyance of the first individual unit assessed as provided in ORS 100.530 (Allocation of common profits and expenses).
(3)(a) The board of directors of the association annually shall conduct a reserve study or review and update an existing study to determine the reserve account requirements. Subject to subsection (10) of this section, after a review of the reserve study or the reserve study update, the board may, without any action by the unit owners:
(A) Adjust the amount of payments in accordance with the study or review; and
(B) Provide for other reserve items that the board of directors, in its discretion, may deem appropriate.
(b) The reserve study shall:
(A) Identify all items for which reserves are or will be established;
(B) Include the estimated remaining useful life of each item as of the date of the reserve study; and
(C) Include for each item, as applicable, an estimated cost of maintenance and repair and replacement at the end of the items useful life.
(4)(a) The board of directors shall prepare a maintenance plan for the maintenance, repair and replacement of all property for which the association has maintenance, repair or replacement responsibility under the declaration or bylaws or this chapter. The maintenance plan shall:
(A) Describe the maintenance, repair and replacement to be conducted;
(B) Include a schedule for the maintenance, repair and replacement;
(C) Be appropriate for the size and complexity of the maintenance, repair and replacement responsibility of the association; and
(D) Address issues that include but are not limited to warranties and the useful life of the items for which the association has maintenance, repair or replacement responsibility.
(b) The board of directors shall review and update the maintenance plan described under this subsection as necessary.
(5)(a) Except as provided in paragraph (b) of this subsection, the reserve study requirements under subsection (3) of this section and the maintenance plan requirements under subsection (4) of this section do not apply to a condominium consisting of one or two units, excluding units used for parking, storage or other uses ancillary to a unit:
(A) After the sale of the first unit to a person other than a successor declarant, if the condominium is created on or after September 27, 2007; or
(B) If the condominium was created before September 27, 2007, notwithstanding any requirement in the declaration or bylaws.
(b) The reserve study requirements under subsection (3) of this section and the maintenance plan requirements under subsection (4) of this section apply to a flexible condominium or a staged condominium created on or after September 27, 2007, if the condominium might in the future consist of more than two units.
(6)(a) If the declaration or bylaws require a reserve account, the reserve study requirements of subsection (3) of this section and the maintenance plan requirements of subsection (4) of this section first apply to the association of a condominium recorded prior to October 23, 1999:
(A) Upon adoption of a resolution by the board of directors in accordance with the bylaws providing that the requirements of subsections (3) and (4) of this section apply to the association; or
(B) Upon submission to the board of directors of a petition signed by a majority of unit owners mandating that the requirements of subsections (3) and (4) of this section apply to the association.
(b) The reserve study and the maintenance plan shall be completed within one year of the date of adoption of the resolution or submission of the petition to the board of directors.
(7)(a) Except as provided in paragraph (b) of this subsection, the reserve account is to be used only for the purposes for which reserves have been established and is to be kept separate from other funds.
(b) After the individual unit owners have assumed administrative responsibility for the association under ORS 100.210 (Turnover meeting), if the board of directors has adopted a resolution, which may be an annual continuing resolution, authorizing the borrowing of funds:
(A) The board of directors may borrow funds from the reserve account to meet high seasonal demands on the regular operating funds or to meet unexpected increases in expenses.
(B) Not later than the adoption of the budget for the following year, the board of directors shall adopt by resolution a written payment plan providing for repayment of the borrowed funds within a reasonable period.
(8) The reserve account is subject to the requirements and restrictions of ORS 100.480 (Maintaining documents and records) and any additional requirements or restrictions imposed by the declaration, bylaws or rules of the association of unit owners.
(9) Assessments paid into the reserve account are the property of the association of unit owners and are not refundable to sellers of units.
(10)(a) Except as provided under paragraph (b) of this subsection, unless the board of directors under subsection (3) of this section determines that the reserve account will be adequately funded for the following year, the board of directors or the owners may not vote to eliminate funding a reserve account required under this section or under the declaration or bylaws.
(b) Following the turnover meeting described in ORS 100.210 (Turnover meeting), on an annual basis, the board of directors, with the approval of all owners, may elect not to fund the reserve account for the following year. [Formerly 94.072; 1997 c.816 §7; 1999 c.677 §44; 2001 c.756 §34; 2003 c.569 §27; 2005 c.543 §2; 2007 c.409 §23; 2009 c.641 §23; 2011 c.532 §7]