Reserve funding at turnover

Who pays for reserves before turnover

While a declarant still owns unsold units or lots, someone has to cover the reserve contributions those units would otherwise generate. Whether the declarant is on the hook for that gap, and for how long, depends on your state's statute and your declaration. Oregon's planned community law is one example of how a state can answer this:

"The declarant of a planned community shall pay all common expenses of the planned community until the individual lots subject to assessment are assessed for common expenses."

Source: Oregon Revised Statutes 94.704, Oregon State Legislature

Under that same statute, the declarant can defer paying into the reserve account on unsold lots, but only up to the turnover meeting, not indefinitely. If your state or declaration has no equivalent language, a shortfall on unsold units may simply sit on the association's books until owners vote to fix it. Ask your transition attorney whether your declaration or state statute creates a declarant subsidy obligation, and whether it was actually paid.

A reserve study and a transition study are not the same document

A reserve study is a funding plan. It estimates how much life is left in the roof, the pavement, the pool, and sets an assessment level to cover replacing them on schedule. A transition (or turnover) study is broader: engineering practitioners describe it as evaluating common elements for design, construction, or code problems that could affect the association's future finances, not just their replacement date. One tells you how much to save. The other tells you whether what you are saving for is sound.

A board that only orders a reserve study can miss a construction defect the study was never built to find. Where your budget allows, order both, and treat the transition study as a record of potential claims against the developer, not only a maintenance forecast.

Florida's structural reserve rules show what a stricter law looks like

This is Florida's rule, not a national one. Following the 2021 Surfside collapse, Florida now requires certain condominiums to fund a Structural Integrity Reserve Study, and takes the waiver option off the table for those reserves:

"Owners cannot vote to waive or reduce funding of the SIRS reserves."

Source: 2023 Legislative Update on Milestone Inspections and SIRS, Falk Law Firm, P.A.

Florida also requires a structural milestone inspection for taller buildings by December 31 of the year the building turns 30, and every ten years after. A board taking over from a developer anywhere outside Florida should not assume no equivalent law exists, and should not assume one does either. Find your own state's condominium or common interest community act before you budget.