Delaware • Reserve study / underfunding
Is your Delaware condo's reserve underfunded — and does the state require funding?
A reserve study can read as reassuring while quietly showing your Delaware building is years behind on saving for its roof, elevators, or façade. What matters is how funded the reserves actually are — and what Delaware requires.
The short answer
Delaware requires a reserve study and requires the association to fund it. Reserves must be funded to the study's level; absent a current study, a floor of 5%/10%/15% of budget applies by number of major systems. Pure HOAs have a weaker mandate. A thin reserve is the most common reason a special assessment lands later, so the study-versus-actual-balance gap is the number that matters. CondoSignal reads your reserve study and budget against Delaware's rules. Free.Delaware at a glance
Reserve study
Required
Reserve study updated within 5 years (condos/co-ops)
Reserve funding
Required
Funded to the study
Super-lien
Yes
Six months of regular common-expense assessments take priority over the first mortgage
Resale disclosure
Cancellation right
5 days after the resale certificate, if not delivered before signing (§ 81-409)
What Delaware requires
Reserves must be funded to the study's level; absent a current study, a floor of 5%/10%/15% of budget applies by number of major systems. Pure HOAs have a weaker mandate. Whether a thin reserve is merely risky or actually out of compliance depends on that rule — which is the first thing to establish.
Why underfunding becomes an assessment
The annual budget passes by negative option (§ 81-324) unless a majority of all owners reject it; no statutory cap. Coastal storm and structural-inspection findings are common triggers. The 'percent funded' figure in the study, compared to the actual reserve balance, tells you how exposed you are.
What it means for collection and resale
Limited super-priority (§ 81-316) for regular assessments only — special assessments are excluded; judicial foreclosure required. The certificate (accurate within 120 days, due within 10 days of request) discloses past-due and unpaid specials, the reserve study, and the reserve balance.
Your rights in Delaware
As a Delaware owner, your reserve information and any approved special assessments should appear in the association's budget and resale disclosures (5 days after the resale certificate, if not delivered before signing (§ 81-409)). None of this is legal advice — confirm against the current statute and a licensed professional in your state.
What to check
- Find the reserve study's 'percent funded' figure.
- Compare the recommended contribution to what's budgeted.
- Confirm whether Delaware mandates reserve funding.
- Check the remaining life of the roof, elevators, and façade.
- Look for a reserve catch-up or a recent special assessment.
- Check the study's date — an old study understates today's costs.
Sources
- 25 Del. C. § 81-316 — super-priority lien (6-month)(High)
- 25 Del. C. § 81-409 — resale certificate (5-day cancellation)(High)
- 25 Del. C. § 81-324 — budget ratification (negative option)(High)
Educational only — not legal, financial, or engineering advice. Confirm against the current statute and, where it matters, a Delaware-licensed professional.
FAQ
Frequently asked questions
Not sure what your documents are really telling you?
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