When perplexity.ai ($20/month version) was asked if reserve studies were required by law to be done and if there were a level of reserves that HOAs in Connecticut needed to set aside before a declarant has turned over the running of association to a board of unit owners it came out with:
No, Connecticut has no statute requiring a reserve study, and no statutory minimum reserve balance an association (or a declarant) must have on hand at turnover. The only hard “reserve” mandates are for conversion condominiums, and even those use the vague standard “adequate reserves.”
Reserve studies
Nothing in the Common Interest Ownership Act, Chapter 828, uses the phrase “reserve study” or requires one. The closest requirements are disclosure-based:cga.ct
- §47-261e(a): within 30 days of adopting a proposed budget, the board must give owners a summary “including a statement of the amount of any reserves, and a statement of the basis on which such reserves are calculated and funded.” That forces a board to articulate a methodology, but it does not require a professional study or any particular funding.
- §47-260(a)(1): records of reserve accounts must be retained — “if any” (added by P.A. 13-289).
- §47-270(a)(5): resale certificates must state the amount of reserves for capital expenditures.
- §47-264(a)(5): a declarant’s public offering statement budget must state the reserve for repairs and replacement “or a statement that there is no amount” — express legislative acknowledgment that zero is permissible.
For a conversion building under CIOA, §47-267 requires an architect’s or engineer’s report on the condition of structural, mechanical and electrical components, their expected remaining useful life, and current-dollar replacement cost. That is substantively the data half of a reserve study, but it carries no funding obligation.
Required reserve levels
CIOA never sets a percentage or dollar floor. Reserves are treated as permissive: “common expenses” means expenditures or liabilities “together with any allocations to reserves” (§47-202(7)), and surplus funds are returned to owners after “provision for common expenses and any prepayment of reserves” (§47-256).
The exception is the older Condominium Act, Chapter 825, for conversions:
- §47-88e: “Any declarant of a conversion condominium shall provide in the proposed budget for the condominium adequate reserves for capital expenditures.”
- §47-79(c)(10): bylaws may provide for reserves generally, “except that for a conversion condominium, provisions for reserves for capital expenditures shall be required.”
- §47-88b(a)(3): the conversion notice/offering material must describe the budget’s reserve provisions and explain the basis for them.
“Adequate” is undefined, which is where the litigation is.
What the declarant actually owes before turnover
There is no statutory reserve balance a declarant must hand over, but several duties bear directly on underfunding claims:
- §47-245(a): board members and officers appointed by the declarant must exercise “the degree of care and loyalty to the association required of a trustee” — a higher standard than the corporate business-judgment standard applied to owner-elected directors. A declarant board that set artificially low budgets with no reserve allocation to keep sales-period assessments attractive is attacked under this provision, not under a reserve statute.
- §47-257(a): the declarant pays all common expenses until the association makes its first assessment.
- §47-245(i)(3): during declarant control, the declarant must give owners a financial statement at least every six months disclosing “the amount of any funded replacement reserves.”
- §47-245(h): within 30 days after owners elect a board majority, the declarant must deliver association funds and control of them, plus an accounting and financial statements from inception through the end of declarant control, audited by an independent CPA at the declarant’s expense (not the association’s).
- Remedies: misrepresentation liability on the public offering statement (§47-263), express and implied warranties of quality (§§47-274 to 47-277), and the general enforcement action with attorney’s fees under §47-278.
Applicability note: for communities created before January 1, 1984, §47-216 makes §§47-244, 47-245(f), 47-257, 47-260, 47-261e, 47-270 and 47-278 apply prospectively — so the budget/reserve-disclosure duty reaches older associations too, but the trustee standard in §47-245(a) is not on that list.
Practical gap
Because the statutes are disclosure-only, the enforceable reserve obligation in most Connecticut communities comes from the declaration or bylaws, or from secondary-market underwriting — Fannie Mae, Freddie Mac and FHA project eligibility effectively pressure boards to budget a reserve line and, for larger projects, to obtain a reserve study. Connecticut has not followed the post-Surfside states that legislated mandatory studies and funding, so if you are evaluating a turnover dispute, the theories are fiduciary/trustee breach, POS misrepresentation, and warranty — not violation of a reserve mandate, unless it is a conversion condominium under §47-88e.