Dues & Assessments

HOA Reserve Funds: What State Law Requires and What Underfunding Can Mean

By The HOARebel Team · October 5, 2026 · 9 min read

Not legal advice. This article is general information based on publicly available state law, which can change and varies by state. It is not legal advice and does not create an attorney-client relationship. Your community's governing documents may impose additional requirements. Verify the current statutes and consult a licensed attorney in your state about your specific situation.

An HOA reserve fund is money an association sets aside for big, predictable expenses such as a new roof, repaving or pool resurfacing. What an association must save, study and disclose depends mostly on state law and its governing documents, and the rules vary widely.

This guide uses California, Florida, Nevada, Virginia and Washington as examples. Reserve decisions can affect what owners pay for years, so for your specific situation a licensed attorney in your state is the right resource. This is general information, not legal advice.

What is an HOA reserve fund?

A reserve fund is separate from the operating budget that pays for landscaping, insurance and management. It covers the repair or replacement of major components the association is responsible for, on a schedule that can stretch decades. Nevada's statute describes the purpose plainly: reserves are for the "repair, replacement and restoration of the major components" the association must maintain, may cover "roofs, roads and sidewalks," and "must not be used for daily maintenance" (NRS 116.3115(2)(b)).

Where a reserve requirement exists, it usually comes from a state's main HOA or common-interest statute working alongside the declaration (CC&Rs), the bylaws, state nonprofit corporation law and, where relevant, federal law. The statute often sets a floor the documents can raise: "The governing documents may impose greater requirements on the board" (RCW 64.90.545(3)).

What is an HOA reserve study?

A reserve study is the planning document behind the fund. It lists the components, estimates how long each will last and what it will cost to replace, and proposes a funding plan. California's version must identify major components with "a remaining useful life of less than 30 years," estimate their costs, and include "A reserve funding plan" (Cal. Civ. Code § 5550(b)).

What state law requires: five examples

California. The board must have a study done "At least once every three years," including "a reasonably competent and diligent visual inspection of the accessible areas of the major components," when their replacement value equals at least half of the association's gross budget, excluding reserves. The board reviews it annually (Cal. Civ. Code § 5550(a)). Effective January 1, 2027, AB 2050 (Stats. 2026, ch. 796) adds that this version "shall remain in effect only until January 1, 2032," when a replacement § 5550 requires the association to "review and update this study annually." A new § 5552, also operative January 1, 2032, requires an association to "fund the reserve account on an annual basis in at least the minimum reserve contribution level" shown in its most recent study. The funding plan must include "a schedule of the date and amount of any change in regular or special assessments that would be needed," is adopted at an open board meeting, and any increase follows the § 5605 procedure (§ 5560), which How Much Can My HOA Raise Dues? explains.

Nevada. The association "shall establish adequate reserves, funded on a reasonable basis" (NRS 116.3115(2)(b)). The board must have a reserve study done "At least once every 5 years," review it at least annually, and adjust the funding plan as needed (NRS 116.31152(1)). The study is generally performed by a person holding a state permit (NRS 116.31152(2)). Notably, to fund reserves the board "may, without seeking or obtaining the approval of the units’ owners, impose any necessary and reasonable assessments," which "must be based on the study of the reserves" (NRS 116.3115(2)(b)). Residential planned communities of six or fewer units that are not subject to developmental rights are largely exempt unless the declaration opts in (NRS 116.1203).

Virginia. Under the Property Owners' Association Act, the board must "Conduct at least once every five years a study to determine the necessity and amount of reserves," review it at least annually, and make budget and assessment adjustments it "deems necessary to maintain reserves" (Va. Code § 55.1-1826(B)). Where the study shows a need, the budget must disclose the components, the cash reserves on hand and "the amount of reserves recommended in the study" (§ 55.1-1826(C)).

Washington. Under the Uniform Common Interest Ownership Act, an association must have a reserve study and update it annually; an update "must be prepared at least every third year by a reserve study professional and based upon a visual site inspection" (RCW 64.90.545(1)). Exemptions include communities with "only nominal reserve costs" and cases where the study would cost more than 10 percent of the annual budget (§ 64.90.545(2)). Before January 1, 2028, the Act mainly covers communities created on or after July 1, 2018 or that opt in; from 2028 it applies to common interest communities generally, with exceptions (RCW 64.90.360). The reserve-study requirement in RCW 64.90.545 already reaches many older communities (RCW 64.90.365).

Florida HOAs. Chapter 720 does not require reserves or a reserve study on its own: the budget "may include reserve accounts for capital expenditures and deferred maintenance" (Fla. Stat. § 720.303(6)(b)). Owners can require reserves by "the affirmative approval of a majority of the total voting interests" (§ 720.303(6)(d)), and once established, owners can waive or reduce funding by majority vote at a meeting with a quorum, but "only to one budget year" at a time (§ 720.303(6)(f)). If there are no reserves and capital repairs could lead to special assessments, the annual financial report must say, in conspicuous type, "THE BUDGET OF THE ASSOCIATION DOES NOT PROVIDE FOR FULLY FUNDED RESERVE ACCOUNTS" (§ 720.303(6)(c)1.).

Florida condos are different. A condominium is not an HOA under chapter 720 (see Condo Association vs. HOA). Florida residential condominium associations "must have a structural integrity reserve study completed at least every 10 years" for each building three habitable stories or higher (Fla. Stat. § 718.112(2)(g)1.). For budgets adopted on or after December 31, 2024, owners in those associations generally "may not determine to provide no reserves or less reserves than required" for the study's items (§ 718.112(2)(f)2.b.). None of this applies to a typical single-family Florida HOA.

Other states take other approaches; HOA laws by state links each state's main statute, and attending HOA meetings in Oregon covers Oregon's reserve rules.

What underfunded HOA reserves can mean for homeowners

When reserves fall short of what the study projects, the repairs usually still have to be paid for. Washington's Act requires reserve studies under it to carry a disclosure that leaving components out or unfunded "may, under some circumstances, require the association to (1) defer major maintenance, repair, or replacement, (2) increase future reserve contributions, (3) borrow funds to pay for major maintenance, repair, or replacement, or (4) impose special assessments" (RCW 64.90.550(3)). Virginia gives the board "the discretion to meet repair and replacement requirements through replacement reserves, additional assessments, or borrowed funds" (Va. Code § 55.1-1826(D)).

Those statutes point to the same few possibilities:

Higher regular dues to catch up on contributions. See HOA Fees and Dues Explained.
Special assessments for a project the fund cannot cover. See HOA Special Assessments: Votes, Notice and Limits.
Loans repaid through future assessments.
Deferred repairs, which California's budget report must disclose with "a justification for the deferral" (Cal. Civ. Code § 5300(b)(4)).

Some states also regulate borrowing from reserves. California generally bars spending reserves on anything but major-component repair or related litigation (§ 5510(b)), but allows a noticed temporary transfer to the operating fund, repaid "within one year" unless the board makes a documented finding to delay (§ 5515). Washington allows withdrawals for unforeseen costs with notice to owners and a repayment schedule "not to exceed twenty-four months" unless the board finds that unreasonably burdensome (RCW 64.90.540(1)).

Washington's statute addresses whether reserve problems affect an owner's own payments: "A unit owner's duty to pay assessments is not excused because of the association's failure to comply" with the reserve-study rules (RCW 64.90.555(3)). What Happens If I Stop Paying HOA Dues? covers the consequences of nonpayment.

Where homeowners find reserve information

Several states push reserve information to owners each year. California's annual budget report must include a reserve summary, a statement on whether special assessments are anticipated, and notice that "the full reserve study plan is available upon request" (Cal. Civ. Code § 5300(b)(2), (3), (5)). Its disclosure form asks whether reserves will be sufficient "during the next 30 years" (§ 5570), and the summary shows "The current deficiency in reserve funding expressed on a per unit basis" (§ 5565(d)).

In Washington, if more than three years have passed since the last professional study, owners holding at least 20 percent of the votes may demand one, and owners may sue to enforce the reserve-study rules (RCW 64.90.555(1), (2)). Whether a step like that makes sense depends on the facts and the costs involved.

Budgets and reserve studies can also come up under a state's records-inspection law; see the guides for California, Florida, Nevada, Virginia and Washington, or the HOA records requests topic page. More on dues is on the HOA fees and dues topic page.

Frequently asked questions

Is every HOA required to have a reserve fund?

No. It depends on the state and the governing documents. Nevada requires "adequate reserves," while Florida's HOA statute does not itself require them, though owners can vote to establish them. Florida condos face stricter rules for buildings three habitable stories or higher.

How often does an HOA need a reserve study?

In these examples: California at least every three years, Nevada and Virginia at least every five, and Washington an annual update with a professional, site-inspected study at least every third year. Florida condos need a structural integrity reserve study at least every 10 years; Florida's HOA statute has no study requirement.

Can an HOA use reserve funds for other things?

Only within limits. California and Nevada restrict reserves to major repairs and replacements, though California allows short-term transfers that generally must be repaid within a year. Washington allows withdrawals for unforeseen costs with notice and a repayment schedule.

What happens if HOA reserves are underfunded?

Repairs usually still need funding, so underfunding can lead to higher dues, special assessments, loans or deferred maintenance, the same outcomes Washington's required reserve-study disclosure lists. The effect on any community depends on its budget, documents and state law.

Can homeowners see the HOA reserve study?

Often, yes. California requires the full reserve plan to be provided to any member on request, and records-inspection laws in many states cover budgets and reserve studies. A licensed attorney in your state can confirm what a particular association must provide.

Sources

Keep reading

The rules above are the general picture; the details come from state law. Every state's article on this question is listed on HOA fees & dues by state, and each state guide explains the governing statute.