Hawaii's new reserve rules put a formula and a 30-year floor in the code
Hawaii's new reserve rules put a formula and a 30-year floor in the code
2026-09-10 · Hawaii · Regulation
Hawaii’s reserve requirements now have arithmetic attached. HAR chapter 16-119.6, “Requirements for Replacement Reserves,” took effect March 26, 2026 as part of the wholesale replacement of the state’s condominium rules.1
The definitions that change budgets
“Statutory replacement reserves” = 50% of a full replacement reserve, or 100% of estimated replacement reserves under a cash flow plan. That tracks HRS § 514B-148(b), which requires an association to assess owners to fund “a minimum of fifty per cent of the estimated replacement reserves assessments or… one hundred per cent… when using a cash flow plan.”
“Full replacement reserve” now has a formula: projected capital expenditure × (estimated age ÷ estimated useful life). The rule’s own worked example: a $100,000 roof with a 10-year life is fully reserved at $70,000 in year 7.
“Exempt association property” = any asset whose end-of-life cost is under $1,000 or under 0.1% of the annual operating budget, whichever is greater, or that has more than thirty years of remaining life.
The three prohibitions
A cash flow plan must run a minimum thirty-year projection and may not “disproportionately and unreasonably defer” funding into the last five years of that period. That closes the obvious way to make a thirty-year plan look funded while collecting almost nothing for twenty-five.
Borrowed funds may not be counted as reserves — except loans under § 16-119.6-12, and then only in the loan’s first year.
A managing-agent-prepared reserve study must be reviewed by an independent reserve study preparer at least every three years, unless the managing agent is itself an independent reserve study preparer.
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Related Hawaii HOA Topics
- HAR chapter 16-119.6, Requirements for Replacement Reserves (effective March 26, 2026) ↩
- HRS § 514B-148, Association fiscal matters; budgets and reserves ↩
- Fannie Mae Selling Guide B4-2.2-02, Full Review Process (reserve and delinquency tests) ↩
- Hawaii Condominium Bulletin, March 2026 (CB2603), “Artificial Intelligence & The Condominium Community” ↩
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