Statutory reserve requirements
What your state actually makes you do about reserves, and what it leaves to your own board.
Whether your association must get a reserve study, and how often, depends on your state. California requires one at least every three years once major components exceed half the budget. Nevada requires one every five years. Florida bars owners from voting to underfund structural items in taller condo buildings. No state law here sets a required reserve percentage.
State law usually regulates process, not a number
Where a state has a reserve statute at all, it typically answers three questions: does an association have to get a study, how often must it be updated, and does the board have to review it. Most of what these laws require is procedural, not a dollar or percentage target the board must hit.
Whether your state has a reserve statute at all, and what it requires, varies. Check your own state's condominium or common-interest-ownership statute.
Three states, three different rules
California requires the board to have components inspected on a set schedule once reserves become material to the budget.
"A reasonably competent and diligent visual inspection" is required "at least once every three years" once "the current replacement value of the major components is equal to or greater than one-half of the gross budget of the association."
Source: California Civil Code Section 5550, California Legislature
Nevada sets a longer cycle: a professional reserve study at least once every five years, with the board reviewing the results at least annually and reporting a summary to the state's Real Estate Division within 45 days of adopting it.
Florida goes further, but only for one category of building. Condominiums of three or more habitable stories must obtain a structural integrity reserve study covering items like the roof, load-bearing walls, and plumbing, and for budgets adopted on or after December 31, 2024, owners cannot vote to skip that funding.
"Members of a unit-owner-controlled association that must obtain a structural integrity reserve study may not determine to provide no reserves or less reserves than required by this subsection for items listed in paragraph (g)."
Source: Florida Statutes Section 718.112, The Florida Senate
What no statute here requires
A common belief is that reserves must be "100% funded" by law. No statute in this research sets that kind of figure for general reserves. California's rule is a sufficiency standard, not a percentage.
"The association shall levy regular and special assessments sufficient to perform its obligations."
Source: Is Reserve Funding Mandatory?, Berding Weil
That leaves a board little real discretion to fund nothing, but it does not name a required percent funded. The 70 percent and 30 percent risk bands you may hear from a reserve study preparer are that firm's industry convention, not a legal threshold anywhere in this evidence base.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your California HOA's major components are now worth more than half the annual budget. How often must the board have them visually inspected under Civil Code 5550?
A Florida condo board must obtain a structural integrity reserve study for its roof. Members propose a vote to skip funding it this year. What can they legally do?
A board member insists state law requires reserves to be at least 100 percent funded everywhere. Based on this evidence base, what's actually true?
Sources
- California Civil Code Section 5550, California Legislature
- Is Reserve Funding Mandatory?, Berding Weil
- Florida Statutes Section 718.112, The Florida Senate
- Nevada Revised Statutes Section 116.31152, Nevada Legislature
Related elsewhere in the Academy
Reserves
Now that you know what your state might require, learn what a reserve study itself has to show your board.
Whether your state requires a reserve study, how often, and whether your board may ever choose to underfund varies sharply by state and by association type. Check your own state's condominium or common-interest-ownership statute and your governing documents.