State Requirements

The National Trend Toward Mandatory Reserve Studies

For decades, reserve studies were a best practice that most states left entirely to boards. That era is ending. Since the 2021 Surfside collapse, state after state has moved toward mandating reserve studies, structural inspections, and reserve funding — and the federal lending agencies have tightened their standards in parallel. For boards anywhere, the direction is clear: the floor is rising, and "we're not required to" is becoming a weaker answer every year. Here's the trend and where it's heading.

The Catalyst: Surfside

The June 2021 collapse of Champlain Towers South in Surfside, Florida, which killed 98 people, was the turning point. Investigations revealed long-standing structural deterioration, documented but unaddressed deferred maintenance, and chronically underfunded reserves. The tragedy made vivid what reserve professionals had long warned: that deferring structural maintenance and underfunding reserves isn't just a financial risk — it can be a fatal one.

The policy response has been sustained and multi-front. Legislatures, lenders, and insurers all moved to force the reserve discipline that Surfside showed was missing.

The State Wave

State after state has acted, each somewhat differently, but in the same direction:

• Florida built the model — SIRS for buildings 3+ stories, non-waivable structural reserves, and milestone inspections, through SB 4-D, SB 154, and HB 913
• New Jersey enacted a 2024 structural integrity law requiring reserve studies and structural inspections of covered buildings, with personal liability for non-compliant boards
• Colorado moved (via HB 22-1387) from a policy-only requirement toward expecting regular studies
• Washington is phasing WUCIOA's reserve study requirement to all communities by 2028
• Illinois has pending legislation (HB2563) that would mandate a study every five years
• Established mandate states like California, Nevada, Virginia, Utah, Hawaii, and Oregon continue to enforce and in some cases tighten their requirements

Meanwhile, California's SB 326 balcony law — though predating Surfside — became part of the same structural-accountability wave, requiring exterior-elevated-element inspections incorporated into reserve studies.

The pattern: states are moving from "no mandate" toward "study mandate," and from "study mandate" toward "structural inspection plus non-waivable reserves." Few are moving the other direction. (The full state-by-state map.)

The Federal Lending Wave

The mortgage agencies moved in parallel, and their reach is national — affecting condos in every state regardless of local law:

• Fannie Mae and Freddie Mac are raising the condo reserve minimum from 10% to 15% of budget (effective for loan applications dated on or after January 4, 2027), retiring streamlined reviews, and adding a critical-repair threshold (the 2026 GSE changes)
• FHA and VA maintain their own reserve standards (centered on 10%) for project approval

Because these standards govern most mortgages, they function as a de facto national reserve mandate — a condo in a no-mandate state still needs healthy reserves to keep its units financeable. The agencies explicitly cited the link between underfunded reserves and critical-repair risk as their motivation. (Why the GSE rules act like a national mandate.)

What's Driving It Beyond Surfside

Several forces reinforce the trend:

• Aging infrastructure — a huge share of the nation's condo stock is reaching the age where structural and major components come due (aging communities)
• The insurance crisis — rising premiums and tightening availability make underfunded communities more vulnerable and push insurers to demand documented reserves and inspections
• Construction inflation — rising costs make underfunding more dangerous and more visible
• Buyer and lender awareness — reserve health is increasingly scrutinized at sale and financing, creating market pressure even where law doesn't

What It Means for Boards

The strategic takeaway is simple: plan as if a mandate is coming, because it increasingly is. Whether or not your state currently requires a reserve study:

• The legal trend is toward requiring one
• The lending rules effectively require healthy reserves already
• The insurance market rewards documented reserve discipline
• Your fiduciary duty has always pointed this way

A board that voluntarily runs a strong reserve program — current study, funded plan, structural attention — is compliant under any current or coming rule, financeable under the lending standards, and protected against the special assessments that catch underfunded communities. The boards waiting to be forced are the ones most exposed when the mandate arrives, the lender says no, or the component fails.

The Bottom Line

Since Surfside, the national direction has been unmistakable: states moving toward mandatory reserve studies and structural inspections, federal lenders raising reserve standards, and insurers demanding documented discipline. The floor is rising everywhere. For boards, the smart move isn't to wait for the mandate — it's to run the strong-state playbook now, voluntarily, because the law, the lenders, and the buildings are all converging on the same answer. For where every state stands today, see HOA Reserve Requirements by State; for the lending rules, Fannie Mae and Freddie Mac Reserve Requirements.