Do Condos Need a Reserve Study?

Yes. For most condominium associations a reserve study is now a legal requirement, a lending requirement, or both, and even where neither applies the building itself makes the case.

Condominium owners share roofs, elevators, plumbing stacks and structural elements that cost six or seven figures to replace, and no individual owner can opt out of the bill when they fail.

This guide covers who requires condo reserve studies, what they include, and how often they need updating.

Why Condominiums Are Different from HOAs

In a planned development of detached homes, owners maintain their own roofs and the association looks after roads, fences and amenities. In a condominium, the association owns the building envelope and its systems, so the component list is longer and far more expensive:

• Roofs, facades, waterproofing and windows
• Elevators, boilers, chillers and rooftop HVAC
• Plumbing risers, electrical service and fire protection systems
• Balconies, decks, walkways and parking structures
• Lobbies, corridors and shared amenities

Most of these cannot be deferred safely, and several are now subject to mandatory engineering inspections in states such as Florida and California. A reserve study is the only tool that turns that inventory into a funding plan every owner pays into fairly, year by year, instead of a special assessment when something fails.

States That Require Condo Reserve Studies

The list of states with statutory requirements for condominiums has grown quickly since the 2021 Surfside collapse:

• California. All common interest developments need a visual inspection of major components at least every three years and an annual review of the study under Civil Code Section 5550. See our guide to California reserve study laws.
• Florida. Condominium and cooperative buildings of three or more habitable stories need a Structural Integrity Reserve Study every ten years, and the law sharply limits an association's ability to waive or reduce funding for the structural items it covers. See how often a Florida association must do a reserve study.
• Maryland. Since October 2022, condominiums, HOAs and cooperatives statewide must obtain a reserve study, update it at least every five years and fund the recommended amount annually. See Maryland's reserve study law.
• New Jersey. The 2024 structural integrity law requires associations responsible for structural components to obtain reserve studies and fund them. See our New Jersey requirements guide.
• Tennessee. Since January 1, 2024, condominium associations with common elements worth more than $10,000 must have a reserve study and update it every five years. Single-family HOAs are not covered. See our Tennessee page.
• Virginia. Condominium boards must conduct a reserve study at least every five years and review it annually under Code Section 55.1-1965. See our Virginia page.
• Washington. Associations must update their reserve study annually, with a site-visit update by a reserve study professional at least every third year, unless a narrow exemption applies. See is a reserve study mandatory in Washington State.

Oregon, Hawaii, Nevada and Utah have requirements of their own, and several other states are considering them. Our Law Guide tracks all 50 states.

What Lenders Require: Fannie Mae, Freddie Mac and FHA

Even in states with no statute, the mortgage market imposes its own rule. A condominium that fails Fannie Mae or Freddie Mac project standards becomes non-warrantable, which means buyers cannot get a conventional loan and owners struggle to sell or refinance.

• Reserve allocation. Established projects must budget at least 10% of annual assessment income for replacement reserves. Under Fannie Mae Lender Letter LL-2026-03 and Freddie Mac Bulletin 2026-C, that minimum rises to 15% for loan applications dated on or after January 4, 2027.
• The reserve study alternative. An association that budgets less than the minimum can still qualify if it follows the highest recommended funding level in a reserve study completed or updated within the past 36 months. A baseline plan that lets reserves approach zero is no longer accepted.
• Full Review for almost everyone. From August 3, 2026 the Limited Review option was retired for established projects with more than ten units, so the budget, reserves, deferred maintenance and special assessments are examined on nearly every conventional condo loan.
• Deferred maintenance. Since the post-Surfside project standards, buildings with significant deferred maintenance or unsafe conditions are ineligible until repairs are complete.
• FHA. FHA condominium approval also requires at least 10% of the budget to go to reserves.

In practice, a current reserve study is the document that keeps a building financeable.

What a Condo Reserve Study Includes

A full study prepared to CAI's Reserve Study Standards has five parts: a component inventory, a condition assessment, life and valuation estimates for each component, the fund status expressed as percent funded, and a 30-year funding plan. Our overview of what a reserve study is explains each step.

For condominiums there are three additions worth checking:

• Structural and inspection items. Where a milestone inspection, SIRS or balcony inspection report exists, its findings and repair timelines belong in the study.
• Utility infrastructure. Underground gas, water and electrical lines are easy to miss and, in California, now must be listed.
• Building systems. Elevators, fire alarm and sprinkler systems, and mechanical plant need their own line items with realistic replacement costs, not a general allowance.

Do Small Condo Buildings Need One?

A six-unit building still shares a roof, and lender rules apply regardless of size. Some statutes exempt the smallest associations, such as Tennessee's $10,000 component threshold or Washington's exemption where the study would cost more than 10% of the annual budget, but the exemptions are narrow.

For a small building, the study is often the only record of what the association actually owns and when it will need money.

How Often Should a Condo Update Its Study?

CAI's best practice is a site-visit update at least every third year, with annual updates in between.

State minimums range from every three years in California and Washington to every five in Maryland, Tennessee and Virginia, and lenders want a study no more than 36 months old. Our guide to how often to conduct or update a reserve study explains the update levels.

Frequently Asked Questions

• Is a reserve study legally required for condos? In California, Florida, Maryland, New Jersey, Tennessee, Virginia and Washington, among others, yes. Elsewhere, governing documents and lender rules usually require one in practice.
• What happens if a condo has no reserve study? The board is budgeting blind, owners face a higher risk of special assessments, and the building can fail lender review. Our guide to underfunded HOA reserves explains the warning signs.
• Who can prepare a condo reserve study? A credentialed Reserve Specialist or a licensed architect or engineer. Some states, including Tennessee, specify those qualifications in statute.
• How much does a condo reserve study cost? More than a study for a comparable HOA because there are more components. See how much a reserve study costs.

How Reserve Study Group Can Help

We prepare reserve studies and Structural Integrity Reserve Studies for condominium associations in 14 states, built to CAI standards and the lender rules above. If your building needs a first study or an update, request a proposal and our team will be in touch.

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