Oregon HOA Reserve Study Requirements: ORS 94.595 Explained
Quick answer: Under ORS 94.595, an Oregon planned community must keep a reserve account for major maintenance, repair and replacement of common property expected to need that work in more than one and less than 30 years, plus exterior painting and anything else the declaration or bylaws require. Every year, the board must either conduct a reserve study or review and update the existing one. It must also keep a maintenance plan, and it can't stop funding reserves unless the study shows the account will be adequately funded or, after turnover, every owner approves skipping a year. Confirm the details with the statute and your attorney.
Here's what ORS 94.595 requires, which communities it covers, and how it fits into the budget your board adopts each year. This post covers planned communities under ORS 94.550 to 94.783. Oregon condominiums have their own reserve section, ORS 100.175, which isn't covered here.
Does ORS 94.595 apply to your community?
Oregon sorts planned communities into classes in ORS 94.550, and the reserve rules don't hit them all the same way:
| Community type | How ORS 94.595 applies (ORS 94.570 and 94.572) |
|---|---|
| Created under the planned community act before Jan. 1, 2002 | The act applies, including ORS 94.595 |
| Class I created on or after Jan. 1, 2002 (at least 13 lots, or the right to exceed 12, and estimated annual assessments over $10,000 for all lots or $100 per lot) | ORS 94.595 applies in full |
| Class II created on or after Jan. 1, 2002 (at least 5 lots, not Class I, and estimated annual assessments over $1,000 for all lots) | ORS 94.595 does not apply |
| Class III, or exclusively commercial or industrial, created on or after Jan. 1, 2002 | The act applies only if the declaration says so |
| Class I or II created before Jan. 1, 2002, not under the act | Only ORS 94.595(5) to (9) apply, to the extent consistent with the governing documents |
The class definitions turn on lot counts and estimated assessments at creation, so classification isn't always obvious. If you aren't sure where your community lands, have your attorney confirm it before you build next year's reserve line.
Older communities can opt in
ORS 94.595(5) covers subdivisions that meet the planned community definition and were recorded before October 23, 1999, when the declaration or bylaws require a reserve account. For those communities, the annual reserve study and maintenance plan requirements start once either the board adopts a resolution applying them, or a majority of owners sign a petition requiring them. The study and plan must then be completed within one year.
What the reserve account must cover
ORS 94.595(2) requires reserves for:
- Major maintenance, repair or replacement of common property that will normally need that work, in whole or in part, in more than one and less than 30 years.
- Exterior painting, if the common property includes exterior painted surfaces.
- Other items the association is responsible for maintaining, whether or not they're common property.
- Anything else the declaration or bylaws require.
Two exclusions apply. You don't have to reserve for items that can reasonably be paid from the general budget or other association funds, or for items that one or more owners, but not all of them, must maintain under the declaration or bylaws.
The account must be in the association's name, funded by assessments against the lots it covers, and administered by the association. Unless the declaration says otherwise, reserve assessments start accruing for all lots when the first lot is conveyed. Under ORS 94.595(9), money paid into reserves belongs to the association and isn't refunded to sellers or owners when a lot sells.
The annual reserve study or update
ORS 94.595(3) requires the board to determine reserve requirements every year by conducting a reserve study or reviewing and updating an existing one, using:
| Required input | What it means in practice |
|---|---|
| Starting balance of the reserve account for the current fiscal year | Tie this to your reconciled reserve bank balance |
| Estimated remaining useful life of each reserve item | Roofs, paving, fencing, paint, pool, play equipment |
| Estimated cost to maintain, repair and replace each item at the end of its useful life | Use current contractor pricing where you can |
| Rate of inflation during the current fiscal year | Note the source you used |
| Returns on invested reserves | Interest on reserve savings or CDs |
The study itself must identify every reserve item, give each one's remaining useful life as of the study date, and include the estimated cost of maintenance, repair and replacement at the end of that life.
The statute doesn't say who must prepare the study or require an outside professional. Many boards hire a reserve specialist every few years and do the annual updates themselves. Check your governing documents and lender requirements before deciding.
After reviewing the study, the board can adjust reserve payments and add other reserve items it considers appropriate without a vote of the owners. That power is subject to the funding limits described below.
The maintenance plan
ORS 94.595(4) requires a separate maintenance plan for all property the association must maintain, repair or replace. The plan must describe the work, include a schedule, be appropriate for the size and complexity of the association's responsibilities, and address warranties and useful lives. The board reviews and updates it as needed.
Think of the reserve study as the money side and the maintenance plan as the work side. A paint cycle in the study should match a paint schedule in the plan.
Borrowing from reserves
ORS 94.595(6) says reserves can be used only for the purposes they were set aside for and must be kept separate from other funds. There's one exception. After owners take over administration from the declarant, the board can borrow from the reserve account to cover high seasonal demands on operating funds or unexpected expense increases, if it has adopted a resolution authorizing the borrowing. The resolution can be an annual continuing one.
If the board borrows, it must adopt a written repayment plan by resolution no later than when it adopts the next year's budget, with repayment within a reasonable period. Record both resolutions in the minutes. HOA Board Minutes explains how in how to record a motion and vote in HOA board minutes.
ORS 94.595(7) also makes the reserve account subject to ORS 94.670 and to any added rules in your declaration, bylaws or association rules. Read those before moving reserve money.
Can the board stop funding reserves?
Usually not. Under ORS 94.595(8), neither the board nor the owners can vote to eliminate funding for a required reserve account unless the board's annual study or update shows the account will be adequately funded for the following year.
There's a narrow exception. After the turnover meeting, the board can elect not to fund reserves for the following year, but only with the approval of all owners, and only one year at a time. In a community of any size, getting every owner to approve is rare, so plan on funding reserves every year.
How reserves flow into the Oregon budget
ORS 94.645 requires the board to adopt a budget at least once a year that includes money for the reserve account under ORS 94.595, and to send owners a summary within 30 days after adopting it. If the board doesn't adopt a budget, the last adopted budget stays in effect.
A practical calendar for a calendar-year association:
- August to September: update the reserve study with current balances, costs, inflation and interest.
- September to October: set the reserve contribution and draft the operating budget. Our HOA master budget guide walks through the line items.
- November: adopt the budget at an open board meeting, and adopt any reserve borrowing repayment plan.
- Within 30 days of adoption: send owners the budget summary.
Check that your operating account holds enough cash that you aren't tempted to borrow from reserves. See how much cash your HOA should keep in its operating account.
How Oregon compares
Oregon's annual update requirement is stricter than many states. For comparison, see our posts on Washington's RCW 64.90.545 reserve study, Nevada's NRS 116.31152 reserve study and Colorado's HB26-1099 reserve study law. HOA Fiscal keeps a side-by-side table in HOA reserve study requirements by state.
How Dynamite Management helps Oregon boards
Dynamite Management handles the financial side for associations in any state, including Oregon: reconciled reserve and operating accounts, a budget that ties to your reserve study, and the association's tax return. If your board is volunteer-run and the annual reserve update keeps slipping, talk to us about financial management.
This is not legal advice. This post paraphrases ORS 94.550, 94.570, 94.572, 94.595 and 94.645 as published by the Oregon Legislature. Confirm with the statute and your attorney, and read your declaration and bylaws, which can add requirements.
FAQ
Does an Oregon HOA have to do a reserve study every year?
For communities covered by ORS 94.595(3), yes. The board must conduct a reserve study or review and update the existing one every year.
Does the reserve study have to be done by a professional?
ORS 94.595 doesn't require an outside professional. Check your governing documents and any lender or insurer requirements.
Can an Oregon HOA borrow from its reserve account?
After turnover, yes, if the board has adopted a resolution authorizing it. The money can cover high seasonal demands or unexpected expense increases, and the board must adopt a written repayment plan by the time it adopts the next budget.
Can owners vote to stop funding reserves?
Not unless the annual study shows reserves will be adequately funded for the next year. The only other exception, after turnover, needs approval from all owners for one year at a time.
Do Oregon condominiums follow ORS 94.595?
No. Oregon condominiums follow ORS chapter 100, and ORS 100.175 covers condominium reserves. Confirm with that statute.