HOA Reserve Study Requirements By State

What are the HOA reserve study requirements by state? Depending on the location, some homeowners associations have a statutory requirement to conduct a reserve study. Board members must understand whether such a requirement applies to their HOA to avoid potential liability.

 

HOA Reserve Study Requirements by State

A reserve study is an integral tool for any homeowners or condominium association. There are 13 states that require a reserve study or a reserve schedule for condo associations. These are California, Colorado, Delaware, Florida, Hawaii, Maryland, New Jersey, Nevada, Oregon, Tennessee, Utah, Virginia, and Washington.

Here are the HOA reserve study requirements by state.

 

Alabama

There is no law that imposes HOA reserve study requirements in Alabama. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Alaska

There is no law that imposes HOA reserve study requirements in Alaska. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Arizona

There is no law that imposes HOA reserve study requirements in Arizona. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Arkansas

There is no law that imposes HOA reserve study requirements in Arkansas. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

California

These are the California HOA reserve study requirements.

California Civil Code Section 5550 states:

“(a) At least once every three years, the board shall cause to be conducted a reasonably competent and diligent visual inspection of the accessible areas of the major components that the association is obligated to repair, replace, restore, or maintain as part of a study of the reserve account requirements of the common interest development, if the current replacement value of the major components is equal to or greater than one-half of the gross budget of the association, excluding the association’s reserve account for that period. The board shall review this study, or cause it to be reviewed, annually and shall consider and implement necessary adjustments to the board’s analysis of the reserve account requirements as a result of that review.

(b) The study required by this section shall at a minimum include:

(1) Identification of the major components that the association is obligated to repair, replace, restore, or maintain that, as of the date of the study, have a remaining useful life of less than 30 years.

(2) Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.

(3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1).

(4) An estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in paragraph (1) during and at the end of their useful life, after subtracting total reserve funds as of the date of the study.

(5) A reserve funding plan that indicates how the association plans to fund the contribution identified in paragraph (4) to meet the association’s obligation for the repair and replacement of all major components with an expected remaining life of 30 years or less, not including those components that the board has determined will not be replaced or repaired.”

 

Colorado

These are the Colorado HOA reserve study requirements.

Colorado Common Interest Ownership Act Section 38-33.3-209.5 states:

“When the association has a reserve study prepared for the portions of the community maintained, repaired, replaced, and improved by the association; whether there is a funding plan for any work recommended by the reserve study and, if so, the projected sources of funding for the work; and whether the reserve study is based on a physical analysis and financial analysis. For the purposes of this subparagraph (IX), an internally conducted reserve study shall be sufficient.”

 

Connecticut

There is no law that imposes HOA reserve study requirements in Connecticut. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Delaware

These are the Delaware HOA reserve study requirements.

According to Delaware Uniform Common Interest Ownership Act Section 81-205, one of the contents of the declaration should be the following:

“In the case of a condominium or cooperative, provisions that mandate that the association create and maintain, in addition to any reserve for contingencies, a fully funded repair and replacement reserve based upon a current reserve study.”

According to Section 81-315, minimum reserve contributions should depend on the reserve study or a statutory formula on the basis of the number of common area elements.

The condominium disclosure statement must also include the most recent reserve study, as per Section 81-409.

 

Florida

These are the Florida HOA reserve study requirements.

According to Section 718-111, condominium financial reporting must follow guidelines that include providing a summary of the association’s reserves. This summary should contain an estimate of the yearly reserve funds needed to fully fund each reserve item, following the straight-line accounting method.

According to Section 718.112, the annual budget must also account for reserve funds for major expenses, such as replacing the roof, repaving, and painting, or any item with a replacement cost above $10,000. These reserve amounts are based on the latest structural integrity reserve study, which must be completed by December 31, 2024.

If an item is not covered in the most recent study or if no study has been conducted, the reserve amount is calculated using the estimated remaining lifespan and replacement or deferred maintenance costs. Reserve assessments can be adjusted annually to reflect changes in estimates or extended lifespan due to deferred maintenance.

 

Georgia

There is no law that imposes HOA reserve study requirements in Georgia. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Hawaii

These are the Hawaii HOA reserve study requirements.

According to Section 514B-148, condominium budgets must detail the current reserve funds, projected future reserves based on a reserve study conducted by the association, an explanation of the reserve calculation method, and the amount to be collected for reserves in the upcoming year.

The association calculates estimated replacement reserves using a formula that considers the estimated lifespan and capital expenses or major maintenance required for each property component. These estimates should account for any revenues or expenditures expected before the fiscal year begins. Additionally, the budget should include separate reserves for any property component requiring capital expenditures or maintenance costs exceeding $10,000, while components with costs under $10,000 can be grouped into a single reserve fund.

 

Idaho

There is no law that imposes HOA reserve study requirements in Idaho. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Illinois

There is no law that imposes HOA reserve study requirements in Illinois. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Indiana

There is no law that imposes HOA reserve study requirements in Indiana. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Iowa

There is no law that imposes HOA reserve study requirements in Iowa. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Kansas

There is no law that imposes HOA reserve study requirements in Kansas. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Kentucky

There is no law that imposes HOA reserve study requirements in Kentucky. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Louisiana

There is no law that imposes HOA reserve study requirements in Louisiana. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Maine

There is no law that imposes HOA reserve study requirements in Maine. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Maryland

These are the Maryland HOA reserve study requirements.

According to Section 11-109.4, if a condominium’s governing body has conducted a reserve study on or after October 1, 2018, it must complete an updated study within five years and continue to do so every five years thereafter. If no reserve study was conducted after October 1, 2018, the governing body must complete one by October 1, 2023, and follow up with updates every five years.

Under Section 11-109, condominium councils have the authority to create and amend budgets for revenue, expenses, and reserves, as well as collect assessments from unit owners for common expenses. The annual budget must include reserve levels, which should be funded according to the latest reserve study.

If the most recent study is the first one conducted, the governing body must reach the recommended annual reserve funding level within three fiscal years. Additionally, resale certificates must disclose the current operating budget, including the reserve fund for repairs and replacements, or indicate if no reserve fund exists, as required by Section 11-135.

 

Massachusetts

There is no law that imposes HOA reserve study requirements in Massachusetts. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Michigan

There is no law that imposes HOA reserve study requirements in Michigan. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Minnesota

There is no law that imposes formal HOA reserve study requirements in Minnesota. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Mississippi

There is no law that imposes HOA reserve study requirements in Mississippi. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Missouri

There is no law that imposes HOA reserve study requirements in Missouri. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Montana

There is no law that imposes HOA reserve study requirements in Montana. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Nebraska

There is no law that imposes HOA reserve study requirements in Nebraska. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Nevada

These are the Nevada HOA reserve study requirements.

The Common Interest Ownership Act Section 116.3115 mandates that associations create and maintain adequate reserves, funded reasonably, to cover the repair, replacement, and restoration of major common elements. The association’s executive board is also required to conduct a reserve study at least every five years, review it to assess whether the reserves are sufficient, and make adjustments if needed. Section 116.31152 provides guidelines for how this study should be conducted.

 

New Hampshire

There is no law that imposes HOA reserve study requirements in New Hampshire. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

New Jersey

These are the New Jersey HOA reserve study requirements.

According to Section ​52:27D-132.4, reserve studies must be completed within one year if not conducted in the past five years. However, associations with planned real estate developments and less than $25,000 in total common area capital assets are exempt from this requirement. These rules are designed to ensure financial preparedness for the long-term maintenance of community assets, encouraging transparency and effective planning.

 

New Mexico

There is no law that imposes HOA reserve study requirements in New Mexico. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

New York

There is no law that imposes HOA reserve study requirements in New York. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

North Carolina

There is no law that imposes HOA reserve study requirements in North Carolina. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

North Dakota

There is no law that imposes HOA reserve study requirements in North Dakota. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Ohio

There is no law that imposes HOA reserve study requirements in Ohio. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Oklahoma

There is no law that imposes HOA reserve study requirements in Oklahoma. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Oregon

These are the Oregon HOA reserve study requirements.

The Oregon Revised Statutes Section 94.595 states:

“The declarant, on behalf of a homeowners association, 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.”

The section goes on to state:

“(a)The board of directors of the association shall annually determine the reserve account requirements by conducting a reserve study or reviewing and updating an existing study using the following information:

(A)The starting balance of the reserve account for the current fiscal year;

(B)The estimated remaining useful life of each item for which reserves are or will be established, as of the date of the study or review;

(C)The estimated cost of maintenance and repair and replacement at the end of the useful life of each item for which reserves are or will be established;

(D)The rate of inflation during the current fiscal year; and

(E)Returns on any invested reserves or investments.

(b)Subject to subsection (8) of this section, after review of the reserve study or reserve study update, the board of directors may, without any action by owners:

(A)Adjust the amount of payments as indicated by the study or update; and

(B)Provide for other reserve items that the board of directors, in its discretion, may deem appropriate.

(c)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 item’s useful life.”

Furthermore, “a reserve study and maintenance plan shall be completed within one year of adoption of the resolution or submission of the petition to the board of directors.”

 

Pennsylvania

There is no law that imposes HOA reserve study requirements in Pennsylvania. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Rhode Island

There is no law that imposes HOA reserve study requirements in Rhode Island. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

South Carolina

There is no law that imposes HOA reserve study requirements in South Carolina. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

South Dakota

There is no law that imposes HOA reserve study requirements in South Dakota. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Tennessee

These are the Tennessee HOA reserve study requirements.

According to Section 66-27-403, if a condominium board has conducted a reserve study on or after January 1, 2023, it must update the study within five years and continue to do so every five years thereafter. The goal is to evaluate the condition and plan for the repair and maintenance of common elements essential to structural integrity and safety. If no reserve study has been conducted since January 1, 2023, the board must complete one by January 1, 2024, and update it every five years for the same purpose.

 

Texas

There is no law that imposes HOA reserve study requirements in Texas. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Utah

These are the Utah HOA reserve study requirements.

According to Section 57-8-7.5:

“(2) Except as otherwise provided in the declaration, a management committee shall:

(a) cause a reserve analysis to be conducted no less frequently than every six years; and

(b) review and, if necessary, update a previously conducted reserve analysis no less frequently than every three years.

(3) The management committee may conduct a reserve analysis itself or may engage a reliable person or organization, as determined by the management committee, to conduct the reserve analysis.

(4) A reserve fund analysis shall include:

(a) a list of the components identified in the reserve analysis that will reasonably require reserve funds;

(b) a statement of the probable remaining useful life, as of the date of the reserve analysis, of each component identified in the reserve analysis;

(c) an estimate of the cost to repair, replace, or restore each component identified in the reserve analysis;

(d) an estimate of the total annual contribution to a reserve fund necessary:

(i) to meet the cost to repair, replace, or restore each component identified in the reserve analysis during the component’s useful life and at the end of the component’s useful life; and

(ii) to prepare for a shortfall in the general budget that the association or management committee may use reserve funds to cover; and

(e) a reserve funding plan that recommends how the association of unit owners may fund the annual contribution described in Subsection (4)(d).

(5) An association of unit owners shall:

(a) annually provide unit owners a summary of the most recent reserve analysis or update; and

(b) provide a copy of the complete reserve analysis or update to a unit owner who requests a copy.”

Similar provisions exist under Section 57-8a-211 of the Utah Community Association Act.

 

Vermont

There is no law that imposes HOA reserve study requirements in Vermont. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Virginia

These are the Virginia HOA reserve study requirements.

Section 55.1-1965 states:

“A. Except to the extent otherwise provided in the condominium instruments and unless the condominium instruments impose more stringent requirements, the executive organ shall:

1. Conduct at least once every five years a study to determine the necessity and amount of reserves required to repair, replace and restore the capital components;

2. Review the results of that study at least annually to determine if reserves are sufficient; and

3. Make any adjustments the executive organ deems necessary to maintain reserves, as appropriate.

B. To the extent that the reserve study conducted in accordance with this section indicates a need to budget for reserves, the unit owners’ association budget shall include, without limitations:

1. The current estimated replacement cost, estimated remaining life and estimated useful life of the capital components;

2. As of the beginning of the fiscal year for which the budget is prepared, the current amount of accumulated cash reserves set aside, to repair, replace or restore the capital components and the amount of the expected contribution to the reserve fund for that fiscal year; and

3. A general statement describing the procedures used for the estimation and accumulation of cash reserves pursuant to this section and the extent to which the unit owners’ association is funding its reserve obligations consistent with the study currently in effect.”

Similar provisions exist under Section 55.1-1965 of the Virginia Condominium Act.

 

Washington

These are the Washington HOA reserve study requirements.

The board of directors of an association has the responsibility to make decisions regarding the preparation and updating of a reserve study, exercising reasonable discretion. This includes determining whether to conduct or update a reserve study and whether to seek assistance from a reserve study professional (Section 64.34.388).

Sections 64.34.380 and 64.38.065 encourage associations to establish a reserve account to fund major maintenance, repair, and replacement of common elements, including those requiring work within the next 30 years. If an association has significant assets, it must prepare and update a reserve study, unless doing so would cause undue hardship. The initial study must be based on a visual inspection by a reserve study professional, with updates required annually. At least every three years, a reserve study update must include a visual site inspection.

A public offering statement must include the association’s current reserve study. If no study exists, the statement must warn potential buyers that this poses a risk, as insufficient reserves may lead to special assessments for major repairs (Section 64.34.410).

Any association created after 2018 must follow the rules for reserve studies, which require an initial study by a reserve study professional, based on a site inspection or a review of plans. Annual updates are required unless it causes undue hardship, with a site visit at least every three years (Section 64.90.545).

 

West Virginia

There is no law that imposes HOA reserve study requirements in West Virginia. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Wisconsin

There is no law that imposes HOA reserve study requirements in Wisconsin. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Wyoming

There is no law that imposes HOA reserve study requirements in Wyoming. However, an HOA’s governing documents may require a reserve study. As such, board members should check their CC&Rs and bylaws.

 

Requirement or Not

It pays to know the different HOA reserve study requirements by state. In doing so, board members can ensure compliance and avoid potential liability. Even if there are no statutory requirements to perform a reserve study, though, HOAs would benefit from it. As such, associations should still consider conducting one.

An HOA management company can help community associations comply with reserve study laws. Start looking for the best one in your area using our online directory!

 

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