What is a reserve study?

A reserve study pairs a physical inspection of common areas, roofs, elevators, pools, with a financial review to produce three things: a component list of what needs repair or replacement, a percent-funded score showing how healthy the reserve account is, and a savings plan to close any gap. A funding level of 70 to 130 percent is a widely used industry planning benchmark, not a legal standard, for what counts as well-funded. Thirteen states currently require a reserve study by law, per the Community Associations Institute’s state-by-state summary of reserve laws: California, Colorado, Delaware, Florida, Hawaii, Maryland, Nevada, New Jersey, Oregon, Tennessee, Utah, Virginia, and Washington, each with its own scope and schedule. California’s version (Civil Code §5550) calls for a visual inspection of major components at least every three years, with annual reviews in between, and Florida’s Structural Integrity Reserve Study rules under Fla. Stat. §718.112 apply specifically to condo and co-op buildings three habitable stories and up.

Why does a reserve study matter?

A community without a current reserve study is essentially guessing at how much to save, and that guess is exactly what turns into a surprise special assessment when a roof or elevator fails ahead of schedule. Even where state law doesn’t require one, skipping it just trades a small upfront cost for a much bigger, much less predictable bill later.

When You’ll Run Into This

This gets performed on a regular cycle, often every few years, and reviewed most closely right before a big budget decision. Our breakdown of the HOA reserve study explains how boards figure out if they’re saving enough.