Common interest developments: reserve accounts

The law is intended to make associations save for major repairs before costs become emergencies. It can require higher reserve transfers or special assessments when long-term reserves are inadequate.

What the law does ​

• Requires reserve studies to calculate a minimum annual contribution that prevents the reserve account from going below zero over the next 30 years.
• Requires associations to fund reserves annually at least at that calculated minimum.
• Requires an association with a projected reserve shortfall to transfer at least 15% of its gross annual budget into reserves each year until the shortfall is eliminated.
• Requires a reserve-funding special assessment if the association cannot meet the minimum through its regular budget, with a membership vote if the needed assessment exceeds the statutory no-vote cap.
• Limits reserve-funding special assessments to no more than once every nine years.
• Keeps the existing three-year visual inspection and annual reserve-study update requirements, covering association-maintained major components, including applicable gas, water, and electrical lines.

Who it affects ​

• Common interest development associations and their boards.
• Homeowners in condominiums and other common interest developments.

Context ​

The new reserve-funding rules take effect January 1, 2032.