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Summary of Reserve Study State Law

Many states have enacted legislation dealing with community association reserve and operating funds to protect owners from fiscal problems and financial hardship. More states may enact similar legislation as community associations continue to gain popularity. The most important point we like to make is that completing a reserve study just to comply with State Law is of little value to a community, as even in States that have enacted laws there is little in the way of enforcing them. The best and most advantageous use of a reserve study comes from the point of fairness and full disclosure to the community members. The reserve study is completed to first determine project expenses but also to distribute the costs as fairly as possible amongst all the community members over time so everyone pays their fair share in to the reserve account. The following is a summary of each state reserve fund law.


Even though most States have not enacted laws specifically requiring reserve studies many have enacted disclosure requirements to the community members and/or buyers of homes within the community; these disclosures can typically only be addressed adequately after a reserve study has been performed. Additionally most governing documents within common interest communities indicate that a reserve account has to be established and adequate reserves maintained. Often Boards are seeking a way to get around reserve requirements and are totally unaware that it is not State Law that they need to be concerned with but their own governing documents. Ignoring governing documents can increase the exposure of Board members to lawsuits.


Please remember that community associations are governed by state law, which can vary widely from state to state. This information is intended for general educational and informational purposes only; it may not reflect the most recent developments, and it may contain errors or omissions. The publisher does not warrant or guarantee that the information contained here complies with applicable law of any given state. It is not intended to be a substitute for advice from a lawyer, community manager, accountant, insurance agent, reserve professional, lender, or any other professional.


Choose the State tab below for more information. States with a   icon have enacted laws that require reserve studies to be completed. 

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Alabama

Alabama Reserve Study Laws

 

There is no statutory requirement to conduct a reserve study and no statutory requirement to fund reserves.

 

The unit owners’ associations may adopt and amend budgets for revenues, expenditures and reserves and impose and collect assessments for common expenses from unit owners. Section 35‐8A‐302(2). Sellers must present buyers with an offering statement of the amount, or a statement that there is no amount, included in the budget as a reserve for repairs and replacement, and a statement of any other reserves. Section 35‐8A‐403(5).

Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming