What a Reserve Fund Is For

"Reserve funds" means money to cover the cost of repairing, replacing, or restoring common areas and facilities that have a useful life of three years or more and a remaining useful life of less than 30 years, if the cost cannot reasonably be funded from the general budget or other funds of the association.

There is a second, narrow use. Reserve funds may cover a shortfall in the general budget, but only when all three of the following are true.

• A state of emergency declared under Section 53-2a-206 is in effect
• The area covered by that emergency declaration extends to the entire state
• At the time the money is spent, more than 10% of unit owners who are not on the management committee are delinquent on assessments as a result of the events behind the emergency

All three conditions, together. A local emergency is not enough, and neither is a general budget shortfall on its own.

How Often the Analysis Must Be Done

Except as otherwise provided in the declaration, a management committee shall cause a reserve analysis to be conducted no less frequently than every six years, and shall review and, if necessary, update a previous analysis no less frequently than every three years.

Only the declaration can change that. Not the bylaws, not a board rule, not a vote of the committee. If someone tells you your association is exempt, the exemption must be included in the recorded declaration. 

The committee may conduct the analysis itself or engage a reliable person or organization, as the committee determines. The statute requires no license or credential. An in-house analysis is not automatically deficient, and one prepared by an outside firm is not automatically sufficient. What controls is the content required below.

The Five Things a Reserve Analysis Must Contain

This is the checklist to hold a document against. A reserve analysis shall include all five.

• A list of the components identified in the analysis that will reasonably require reserve funds
• A statement of the probable remaining useful life of each component, as of the date of the analysis
• An estimate of the cost to repair, replace, or restore each component
• An estimate of the total annual contribution needed to meet those costs during and at the end of each component's useful life, and to prepare for a general budget shortfall, the association may use reserves to cover
• A reserve funding plan recommending how the association may fund that annual contribution

A document that names components but gives no remaining useful life, or gives costs but no annual contribution figure, is missing something the statute requires.

What You Are Entitled To Receive

An association shall annually provide unit owners a summary of the most recent reserve analysis or update, and shall provide a copy of the complete analysis to any unit owner who requests one.

Note the split. The summary arrives every year without you asking. The complete document is available upon request, and timing and fees are subject to the same requirements as other records under Section 57-8-17. 

The Reserve Line Item in the Budget

In formulating the budget each year, the association shall include a reserve fund line item in an amount the management committee determines, based on the reserve analysis, to be prudent, or in a higher amount if the declaration requires one.

The line item is mandatory. The amount is the committee's judgment, anchored to the analysis, with the declaration able to set a floor above it.

The Owners' Veto, and the 45-Day Clock

Within 45 days after the association adopts its annual budget, the unit owners may veto the reserve fund line item by a 51% vote of the allocated voting interests, at a special meeting the owners call for that purpose.

A veto does not zero out the reserve. If the owners veto the line item and a prior-approved budget included a reserve line item that was not vetoed, the association shall fund the reserve account in accordance with that prior line item. The practical effect is a reversion to the last unvetoed amount, not an elimination.

The 45 days run from the adoption of the budget, and the meeting is one that the owners call. Nothing in the section requires the committee to schedule it.

What the Committee May Not Do With the Money

A management committee may not use reserve money for any purpose other than the purpose for which the reserve fund was established, unless a majority of the association's members vote to approve that use.

Daily maintenance is called out specifically. Reserve money may not be used for daily maintenance expenses unless a majority of members approve it, or unless the general budget has a narrow emergency shortfall described above.

Even in that emergency case, the owners can shut it off. Members may prohibit the use of reserve money for daily maintenance by a 51% vote of the allocated voting interest at a special meeting for which each owner receives at least 48 hours' notice.

The reserve fund must be kept separate from other association funds. Commingled reserves are a compliance problem on their face.

The committee may still prudently invest reserve funds, subject to any investment constraints in the declaration. And reserve money may not be used for a legal action described in Section 57-8-58, the declarant-control lawsuit provision. Reserves are not a litigation fund.

If the Association Will Not Comply: $500 or Actual Damages

If the association fails to comply with Subsection (5), (6), or (7), the disclosure, budget line item, or veto requirements, and does not remedy it in time, a unit owner may file an action in state court for injunctive relief, $500 or actual damages, whichever is greater, any other remedy provided by law, and reasonable costs and attorney fees.

There is a mandatory 90-day notice first. No fewer than 90 days before filing, the owner must deliver written notice stating which requirement the association failed to meet, a demand that it come into compliance, and a date at least 90 days out by which it must remedy the noncompliance.

One more tool worth knowing: in such a case, a court may order the association to produce the summary or the complete reserve analysis on an expedited basis and at the association's own expense.

Note the limit on this remedy. It reaches Subsections (5), (6), and (7). The obligation to conduct the analysis on schedule is outlined in Subsection (2), which this private right of action does not list.

Two Timing Rules That Decide Whether Any of This Applies

None of Subsections (2) through (9) applies during the period of administrative control. While the declarant still controls the association, the analysis schedule, the disclosure duties, the budget line item, the veto, and the spending restrictions are all switched off. If your project is new, read Declarant Control and Turnover to find out when that period ends.

There are two declarant duties that do apply during that period. First, for a condominium project whose initial declaration of covenants, conditions, and restrictions was recorded on or after May 12, 2015, a declarant selling property to a third party during administrative control must give that buyer the governing documents and the association's most recent financial statement, including any reserve funds held. If you bought from a declarant and never received it, that was a breach of a statutory obligation.

Second, under Section 57-8-16.5(5)(b), during the period of administrative control, a declarant must establish a sound fiscal basis for the association by collecting assessments and establishing reserves for the maintenance and replacement of common areas. 

Otherwise, this section applies to every association regardless of when it was created. An older condominium project is not immune to it.

Every deadline on this page also appears in Deadlines and Thresholds. The reserve line item is part of the annual budget, so read Budgets alongside this page. If the association will not give you the analysis, read Advisory Opinions and Where To Take a Problem.

New Lender Reserve Requirements Every Management Committee Should Know

One other important point. Following the collapse of the condo tower in South Florida, national mortgage lenders are taking a closer look at a condominium association's finances before approving a loan for a new buyer. 

Specifically, Fannie Mae and Freddie Mac issued bulletins in early 2026 stating that, among other things, they will now require that at least 15% of the assessments collected be deposited into reserves each year. They are also starting to take a closer look at the association's financials, and if the numbers don’t add up, they may not back the loan. These are federal requirements, not state requirements, but they matter to each condominium association just as much.

This change is already having a huge impact on the value and marketability of property in condominium associations. Management committees now need to make sure that they meet those lending thresholds or they could be putting owners at risk of losing potential buyers and deflating property values in the community. Owners need to make sure they are looking closely at the budget each year and using the disapproval tools veto powers described below if the numbers don’t match up.

Reviewed against the Utah Code, current as of September 9, 2026.