Reserve Study is a written report which identifies all of the major components which the association is obligated to repair, replace, restore or maintain having a remaining useful life of more than two years and less than 30 years as of the date of the study. The report estimates the remaining useful life of each component and the amount of funds the association must set aside each month (Reserves) in order to have the cash available to make all necessary repairs and replacements. It is a cash flow report. California law requires most associations to obtain a reserve study at least every three years and to update the report annually as needed.

Reserves are the funds set aside for repairs and replacements to be made by an association as determined by a Reserve Study.

Separate Interest has the following meanings:

1. In a condominium project, “separate interest” means an individual unit or separate interest in space. See “Condominium.”
2. In a planned development, “separate interest” means a separately owned lot, parcel, area or space.”
3. In a stock cooperative, “separate interest” means the exclusive right to occupy a portion of the real property.”

With both condominiums and planned developments, the transfer by sale or foreclosure of a separate interest, includes the automatic transfer of the owner’s undivided interest in the common area or membership interest in the association. Under California law, the owner of each separate interest is responsible for maintaining it.

Special Assessment is an assessment made usually for a special project or in response to a large unbudgeted expense.

Stock Cooperative is a project in which a corporation is formed for the purpose of holding title to the property and where the shareholders of the corporation receive a right of exclusive occupancy in a portion of the property (either an apartment, space or home site). The shareholder’s interest in the corporation is evidenced by a share of stock or a membership certificate.

Structural refers to the load-bearing components of a building as opposed to the screening or ornamental elements. Structural lumber is generally, at least a 2 x 4.

Townhouse is not a legal form of ownership. It is an architectural style. Townhouses may be condominiums or planned developments. Townhouses are multi-level homes, usually built in rows with individual garages. The homes are not stacked one on top of another so that no owner lives above or below another owner.

Undivided Interest refers to the type of ownership interest that the owner of a separate interest has in the common area. In a condominium or planned development, this undivided interest consists of a tenancy in common which means that each owner having an undivided interest may use all or any portion of the common area, subject to any restrictions set forth in the Declaration or CC&Rs.