Colorado HOA reserve fund requirements: What to know

What are HOA reserves?

HOA reserves are money set aside for major repairs, replacements, and capital expenses that do not belong in the community’s regular operating budget. Depending on the property, reserves may help pay for projects such as roof replacement, private road work, exterior painting, pool equipment, elevators, or other association-maintained components.
 

HOA reserve funds

An HOA reserve fund is the account where money for future major projects is held. Unlike the operating account used for recurring expenses such as landscaping, utilities, and routine maintenance, reserve funds are intended to support longer-term repair and replacement needs.
 

HOA reserve study

An HOA reserve study looks at the major components an association is responsible for maintaining, estimates when they may need repair or replacement, and projects what that work could cost. The financial portion can then help the board determine how much the association may need to contribute to reserves over time.
 

Colorado HOA reserve fund requirements

The Colorado Common Interest Ownership Act (CCIOA) requires associations to:

• Adopt a written policy explaining when the association will have a reserve study prepared and how study recommendations may be funded (C.R.S. § 38-33.3-209.5(1)(b)(IX)).
   
• Include in that policy whether the reserve study is based on a physical analysis and financial analysis (C.R.S. § 38-33.3-209.5(1)(b)(IX)).
   
• Adopt a policy governing how reserve funds are invested (C.R.S. § 38-33.3-209.5(1)(b)(VI)).
   
• Maintain accurate and complete accounting records as part of the association’s responsible governance responsibilities (C.R.S. § 38-33.3-209.5(1)(a)).

Are reserve studies required in Colorado?

For most existing associations, Colorado does not require reserve studies on a fixed schedule. Associations must have a reserve study policy, but their governing documents may set additional requirements.

A newer exception applies to certain communities transitioning from developer control, where Colorado HOA laws now require an independent reserve study before turnover.
 

What changed with Colorado HB 26-1099?

Colorado HB 26-1099, effective August 12, 2026, added new reserve study requirements before control of a new planned community or condominium is turned over from the developer to homeowners.

The declarant must:

• Pay for an independent reserve study before transition.
   
• Include common elements and other property the association will maintain, repair, or replace.
• Project maintenance, repair, and replacement costs over 30 years.
   
• Use an independent reserve study professional or another qualified professional familiar with industry standards.
   
• Avoid using someone with a prohibited business or financial relationship with the declarant.
   
• Give the completed study to the association within 60 days after homeowners elect a majority of the board.

The association must:

• Make the most recent required study available as part of the association’s disclosures.
  
  (C.R.S. §§ 38-33.3-209.2, 38-33.3-209.4(2)(j), 38-33.3-303(9)(n)).

How much should a Colorado HOA have in reserves?

There is no single dollar amount that every HOA should keep in its reserve fund. A commonly used industry measure is “Percent Funded,” which compares the association’s actual reserve balance with its fully funded balance at a specific point in time.

As a general benchmark, reserve professionals often consider:

• 70% funded or higher: Strong reserve position, with a lower risk of needing a special assessment.
   
• 30% to 69% funded: Fair reserve position, with a moderate risk of additional funding needs.
   
• Below 30% funded: Weak reserve position, with a higher risk of special assessments or other outside funding.

While 100% funded is generally considered the ideal target, being at or above roughly 70% is commonly viewed as a strong position.
 

How often should an HOA update its reserve study?

Boards should review reserve assumptions annually, especially after major repairs, cost changes, or other significant updates, and generally update the full reserve study every three to five years. Colorado law does not set a required schedule for existing associations, so the community’s reserve policy and governing documents should guide the timing.
 

What happens when an HOA does not have enough reserves?

An underfunded reserve account does not automatically mean the association is violating Colorado law, since the state generally does not prescribe a minimum balance. But it can leave the board with fewer options when a major repair becomes necessary.

The association may need to charge homeowners a one-time or temporary special assessment, obtain financing, adjust upcoming budgets, or delay work when appropriate. Delaying necessary maintenance can also allow smaller problems to become more expensive repairs.
 

Tips for board members

1. Start with the association’s reserve policy

   Review the policy required under CCIOA and confirm that it reflects how the community currently handles reserve studies and funding. If the policy no longer matches actual practices, work with qualified association counsel on updates.
    

2. Know what the association maintains

   Create a clear inventory of roofs, pavement, mechanical systems, amenities, structures, and other components that are the association’s responsibility. This gives the board a stronger starting point for estimating future expenses.
    

3. Connect reserves to the annual budget

   A reserve study is most useful when its recommendations are built into financial planning. Review upcoming projects, current reserves, projected contributions, and other community priorities when preparing each annual budget.
    

4. Revisit assumptions as conditions change

   Construction costs, component condition, and project timing can change. Review the plan when a major repair is completed or when new information makes previous cost or timing assumptions less realistic.
    

5. Keep homeowners informed

   Reserve contributions can be easier to understand when homeowners know what the money is being saved for. Clear communication about future projects, costs, and funding can help residents see how today’s budget supports the community over time.

How FirstService Residential can help

Reserve planning can be complex, especially when boards are balancing today’s budget with repairs and replacements that may be years away. As North America’s leading property management company, FirstService Residential can simplify that work by helping boards organize reserve priorities, build them into the annual budget, coordinate preventive maintenance, track upcoming capital projects, and stay focused on what needs attention now versus what can be planned for later.

Through our affiliate FirstService Financial, managed communities can also access financial and insurance services designed to support the long-term financial health of the association.

Contact FirstService Residential to learn how our Colorado team can support your HOA.

This information is provided for general informational purposes only and is not intended to constitute, and should not be relied upon as, legal, regulatory, financial, or operational advice, or as a representation or guarantee of any specific services, capabilities, or outcomes. Property management needs, regulatory requirements, market conditions, and available services vary by jurisdiction, property type, and community. FirstService Residential provides services through locally based affiliates and associates, and services and results may vary by community, region, contractual terms, and applicable law.