What 'percent funded' is too low for a reserve study?

There's no universal line, but below roughly 30% is generally considered weak, and below 10% is a strong warning sign. The lower the percent funded, the more likely the association will need a special assessment or a loan when a major component fails. The trend over time matters as much as the single number.

Does my state require my HOA to fund reserves?

It varies a lot. Some states mandate both a reserve study and funding (e.g., Florida, New Jersey, Maryland, Hawaii, Utah, Oregon), some require a study but not funding (e.g., Tennessee, Virginia), and many require neither. CondoSignal checks your state's specific rule against your building's actual reserves.

Can I do anything about an underfunded reserve?

As an owner, you usually can't force funding, but you can understand the exposure before it becomes a surprise — and in some states you have a vote on the budget or the reserve line. The first step is reading the study against the budget and your state's rules, which is exactly what CondoSignal does.

For owners

Your reserve study says you're underfunded — how bad is it, and what's coming?

A reserve study can look reassuring — a thick report with charts — while quietly telling you the building is years behind on saving for its roof, elevators, or façade. The number that matters is how funded the reserves actually are, and what your state requires.

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The short answer

A reserve study estimates what your building's big-ticket components will cost to replace and how much should be saved each year. When the 'percent funded' is low, special assessments are usually how the gap gets closed. CondoSignal reads your reserve study, budget, and your state's funding rules to tell you how serious it is. The review is free.

What a reserve study actually tells you

A reserve study lists the major common components (roof, mechanicals, paving, envelope), estimates their remaining life and replacement cost, and recommends an annual contribution. The headline figure is 'percent funded' — the ratio of what's saved to what should be saved. Below roughly 30% is widely considered weak; the lower it is, the more likely a special assessment is when something fails.

Why underfunding turns into an assessment

If reserves are thin and a major component reaches the end of its life, the money has to come from somewhere — and that's almost always a special assessment or a loan repaid through higher dues. Many associations keep dues artificially low for years, which feels good until the bill arrives all at once.

Your state's rules vary widely

Some states now mandate reserve studies and funding (Florida's SIRS, New Jersey's 2024 law, Maryland, Hawaii, Utah, Oregon), some require a study but not funding (Tennessee, Virginia), and many require neither. After Surfside, several states tightened these rules — and a building catching up to a new mandate is a common source of today's assessments. Knowing your state's requirement tells you whether a thin reserve is merely risky or actually out of compliance.

What to check

Find the reserve study's 'percent funded' figure.
Compare the recommended annual contribution to what's actually budgeted.
Check the remaining life of the roof, elevators, and façade.
Confirm whether your state mandates reserve funding.
Look for a reserve catch-up or a recent special assessment.
Check the study's date — an old study understates today's costs.

Related guide

Reserve studies — the full guide →

This page is for owners reacting to a specific event. For how reserve studies works in general — the mechanics, the documents, and what to check — read the evergreen guide.

Your state's rules

The specifics — who can act, what notice is required, and what your rights are — vary by state. Find yours:

FAQ

Frequently asked questions

What a finding looks like

Every finding cites the exact page in your documents

Sample finding — illustrative

ElevatedSpecial assessment risk

“The board approved a $15,000-per-unit special assessment for façade repairs, payable over 12 months.”

Source: Board meeting minutes, p. 12 — quoted and linked in your report so you can verify it in seconds.

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