Virginia Reserve Study Laws and Requirements: What HOAs and Condos Must Do

Virginia was one of the first states to put reserve studies into statute. Both the Condominium Act and the Property Owners' Association Act require a reserve study at least every five years, an annual review of the results, and specific reserve disclosures in the budget and in every resale packet. A 2024 amendment then gave boards stronger tools to act on what the study finds.

This guide sets out what the law requires, what changed on July 1, 2024, and how to stay compliant. For how we prepare studies in the Commonwealth, see our Virginia reserve study page.

Which Law Applies to Your Association

Virginia splits community associations across two statutes with matching reserve provisions:

• Condominium associations fall under Code Section 55.1-1965 of the Virginia Condominium Act.
• Property owners' associations, the Virginia term for HOAs of lots and homes with mandatory assessments, fall under Code Section 55.1-1826 of the Property Owners' Association Act, which applies to developments with declarations recorded after January 1, 1959.

Both sections apply except where the governing documents provide otherwise, so a declaration can vary the details. Stricter document requirements control, and the statutory five-year cycle is the floor most boards work to.

The Core Requirement: A Study Every Five Years, Reviewed Annually

Under both sections, the board must:

• Conduct a reserve study at least once every five years to determine the necessity and amount of reserves required to repair, replace and restore the capital components.
• Review the results at least annually to decide whether reserves are sufficient.
• Make any adjustments the board considers necessary to maintain reserves.

"Capital components" are defined as the items, whether or not part of the common area or common elements, that the association is obligated to repair, replace or restore and for which the board determines funding is necessary. It is broader than the common elements alone.

Since 2024 the Code also defines a reserve study itself, as a capital budget planning tool used to determine the physical status and estimated repair or replacement cost of capital components, together with an analysis of the association's funding capacity to maintain, repair and replace them. That definition tracks the two-part structure of a professional study, a physical analysis and a financial analysis, described in our overview of what a reserve study is.

The statute does not say who must prepare the study. The Common Interest Community Board has published guidelines, and lenders and buyers expect an independent, credentialed provider.

What the Annual Budget Must Disclose

Before each fiscal year, the board must make the annual budget or a summary available to owners. Where the reserve study indicates a need to budget for reserves, that budget must include:

• The current estimated replacement cost, estimated remaining life and estimated useful life of the capital components
• The accumulated cash reserves set aside for capital components as of the start of the fiscal year, and the expected contribution to the reserve fund for that year
• A statement describing the procedures used to estimate and accumulate cash reserves
• A statement of the amount of reserves recommended in the study and the amount of current cash for replacement reserves

The last item puts the study's recommendation and the actual balance side by side, the comparison percent funded expresses as a ratio.

The Code lets boards meet repair and replacement obligations through replacement reserves, additional assessments or borrowed funds, in any combination.‍

What Changed on July 1, 2024

House Bill 1209, enacted as Chapter 324 of the 2024 Acts of Assembly, came out of a post-Surfside work group on whether boards had the tools to keep capital components in good repair. It amended both Acts in three ways:

• A statutory definition of "reserve study" was added, as set out above.
• Owners can no longer vote to rescind or reduce an additional assessment that is levied primarily for the maintenance, repair or replacement of capital components. Before the change, owners had a statutory right to overturn a special assessment within 60 days of notice.
• Boards have express authority to borrow on the association's behalf for capital component work and to pledge assessment income as security.

The practical effect is that "we cannot raise assessments because the owners will vote it down" is no longer an answer to a reserve shortfall for capital work. The board holds the tools, and with them the responsibility. Our guide to underfunded HOA reserves covers how to build a catch-up plan.

Resale Disclosure: The Study Goes in Every Packet

Under the Virginia Resale Disclosure Act, Code Section 55.1-2310, the resale certificate an association issues when a unit or lot is sold must include the current reserve study or a summary of it, a statement of the amount of reserves and any portion designated for a specific project, the current budget and the latest financial statements. The Common Interest Community Board's standard certificate form has a line for each.

Every buyer and lender therefore sees the study before closing, and a missing or stale study shows up at the moment it affects the sale price.

No Minimum Funding Level, but Real Pressure to Fund

Neither Act sets a required funding percentage or dollar amount. Three things fill the gap:

• The board's fiduciary duty and the 2024 amendments, which remove the main excuse for under-contributing.
• Lender rules. Fannie Mae and Freddie Mac condominium standards require at least 10% of assessment income to go to reserves, rising to 15% for loan applications from January 4, 2027, unless the association follows the highest funding level in a study under 36 months old. See our guide to condo reserve studies.
• Industry benchmarks: 70% funded or better is considered strong, below 30% is where special assessments become likely.

Virginia Compliance Checklist

• Date of the last reserve study is within five years
• Board minutes record an annual review of the study and any adjustment decided
• Annual budget or summary carries the four reserve disclosures above
• Resale packets include the current study or a summary
• Additional assessments for capital work are noticed to owners correctly under the 2024 rules
• Contributions match the study's recommended level, or a written catch-up plan explains the gap

Frequently Asked Questions

• Is a reserve study required in Virginia? Yes, for condominium associations and property owners' associations subject to the two Acts, at least once every five years with an annual review.
• Does it have to be prepared by a professional? The Code does not specify, but the Common Interest Community Board's guidelines, lender standards and the resale disclosure all assume a credible, independent study.
• Can owners still vote down a reserve assessment? Since July 1, 2024, not where the additional assessment is levied primarily for the maintenance, repair or replacement of capital components.
• Does Virginia require reserves to be funded to a set percentage? No. It requires the study, the annual review and the disclosures, and leaves the funding level to the board's judgment and fiduciary duty.

How Reserve Study Group Can Help

Our Virginia studies are built around the statutory five-year cycle and deliver the four budget disclosures, the resale summary and a 30-year funding plan in one report. If your association's study is approaching five years old, or the 2024 changes have prompted a fresh look at reserves, request a proposal and our Virginia team will be in touch.

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