HOA Reserve Studies: How Often Should Boards Update Them?

A well-planned HOA reserve study is one of the most important tools your board can use to maintain financial stability. It helps ensure your community has the funds needed for future repairs, replacements, and large-scale maintenance projects.

In California, reserve studies are not just best practice, but they’re a legal requirement. However, many HOA boards still wonder how often they should update their documents to stay compliant and financially prepared. 

Let’s take a closer look at what the law says, why regular updates matter, and how proactive planning can strengthen your association’s long-term success.

What Is an HOA Reserve Study and Why Does It Matter

A reserve study is a professional evaluation of your community’s major assets (like roofs, paving, siding, lighting, and recreation facilities) and the funds needed to maintain or replace them over time. It gives the board a clear picture of your HOA’s long-term financial health.

A comprehensive reserve study helps boards:

• Plan for predictable expenses before they become emergencies.
• Reduce the risk of special assessments that surprise homeowners.
• Protect property values by keeping the community well-maintained.

When an HOA maintains healthy reserves, it builds trust with homeowners and future buyers alike. Consistent updates to your reserve study help the community make smart financial decisions with confidence.

California HOA Reserve Study Requirements

California takes HOA financial planning seriously. The state’s Davis-Stirling Act outlines specific requirements for reserve studies to ensure transparency and responsible management.

What the Davis-Stirling Act Requires for HOA Reserve Studies

Under California Civil Code §5550, every HOA in the state must:

• Conduct a full reserve study at least once every three years.
• Review and update the financial summary annually to account for changes in costs and funding levels.

This legal framework ensures that boards regularly evaluate their community’s assets and reserve balances, keeping homeowners informed about the HOA’s long-term financial position.

Why the Three-Year Minimum Isn’t Always Enough for California HOAs

While the law sets a minimum requirement, real-world conditions often change faster than every three years. Construction costs, material prices, and inflation can shift dramatically in a short period, making an older reserve study less accurate.

Many financial and HOA management experts recommend updating your reserve study every three to five years, with annual internal reviews to monitor any major shifts. This more proactive approach helps your board make timely adjustments before small issues grow into larger financial challenges.

4 Benefits of Regularly Updating Your HOA Reserve Study

Keeping your reserve study current does more than meet state requirements. It’s also one of the most effective ways to safeguard your community’s future.

Regular updates can:

• Improve budgeting accuracy: Updated data ensures that funding plans reflect current repair and replacement costs.
• Build homeowner trust: Transparent financial planning demonstrates fiscal responsibility and strengthens community confidence.
• Prevent deferred maintenance: When reserves accurately reflect future needs, the HOA can complete projects on time instead of delaying them due to lack of funds.
• Maintain legal compliance: Regular reviews help ensure your board meets California’s statutory obligations.

Frequent updates make it easier to spot patterns and plan years ahead, helping your HOA stay stable even when the economy or construction market fluctuates.

3 Signs It’s Time to Update Your Reserve Study Early

Even with a structured three-year review schedule, certain events can make it necessary to update your reserve study sooner.

Major Repairs or Capital Improvements

If your association completes a large-scale project, like a roof replacement, pool renovation, or road resurfacing, those costs and remaining asset lifespans should be reflected in your reserve study. Ignoring these updates can cause inaccuracies in future funding projections.

Significant Budget or Membership Changes

Changes to your HOA’s budget, monthly dues, or community size can affect long-term planning. For example, adding new facilities or amenities increases the number of components your reserves must cover. Similarly, fluctuations in homeowner participation or delinquency rates may alter your cash flow projections.

Economic Shifts or Inflation Impacts

Inflation and supply chain changes can raise construction and material costs quickly. If your reserve study is based on outdated cost data, your funding targets may no longer match actual repair expenses. An early update helps recalibrate your financial plan before shortfalls occur.

Being proactive when these changes happen gives your board the flexibility to make timely, informed decisions and avoid financial surprises.

How Hignell HOA Helps Boards Stay Compliant and Proactive

At Hignell HOA, we work closely with homeowner association boards across Northern California to help them understand, interpret, and act on their reserve studies. Our goal is to make compliance easy and long-term planning seamless.

Our team provides:

• Guidance on when and how to update your reserve study.
• Expert interpretation of reserve funding projections.
• Support in integrating study results into your annual budgets and strategic financial plans.

We also help boards collaborate effectively with reserve study professionals and make data-driven decisions that align with the community’s priorities. By combining our local expertise with decades of HOA management experience, we ensure your association remains compliant, well-prepared, and financially strong.

Build a Financially Confident Future with Hignell HOA

Your HOA reserve study is more than a compliance requirement—it’s a roadmap for your community’s financial health. Regular updates help your board plan ahead, avoid unnecessary assessments, and maintain property values over time.

At Hignell HOA, we specialize in helping boards like yours stay proactive about reserve planning and long-term community management. Our experienced team can guide you through every step, from understanding the legal requirements to developing a plan that fits your association’s needs.

Ready to strengthen your HOA’s financial future? Download our free guide: Top 7 Considerations for Planning Your HOA Reserve Funds to learn how to plan ahead with confidence.