Michigan HOA Reserve Studies
| Reserve study factor | Michigan treatment |
|---|---|
| Statutory reserve study required | No. Michigan does not require a formal reserve study on a fixed schedule, and it does not require a credentialed preparer. The administrative rules set a reserve-fund floor, not a study obligation.1,2 |
| Communities covered | The Condominium Act covers condominiums, including site condominiums. It does not reach true non-condominium HOAs — planned communities that run on recorded CC&Rs.3,4 |
| Initial study deadline | Not required by statute. No study mandate exists, so the bylaws and the board's judgment govern the timing of any voluntary study.1 |
| Study update interval | Not required by statute. No study mandate exists.1 |
| On-site / physical inspection interval | Not required by statute. No inspection mandate exists.1 |
| Preparer qualification | Not required by statute. With no study mandate, the state requires no credentialed preparer.1 |
| Reserve funding required | Yes for condominiums, including site condominiums — they must maintain a reserve fund for major repairs and replacement of common elements. The statute does not require it for non-condominium HOAs.1,4 |
| Funding standard | The association must keep a minimum reserve fund equal to at least 10% of its current annual budget, measured on a noncumulative basis, and the bylaws must warn that the minimum may fall short. This comes from administrative rule R 559.511 under the Condominium Act.2 |
| Component / useful-life scope | No statute sets a component inventory or a useful-life schedule. The rules restrict reserve funds to major repairs and replacement of common elements.2 |
| Annual member disclosure | The association must give each co-owner an annual financial statement, and it must open its books and records to co-owner examination. No statute requires a reserve-specific annual disclosure.5,6 |
| Resale / buyer disclosure | When a buyer asks at least five days before sale, the association must provide a written statement of unpaid assessments and related charges. No statute requires a reserve-balance disclosure at resale.7 |
| Reserve account protections | The association may use reserve funds only for major repairs and replacement of common elements, and the developer must cover any shortfall in the minimum at the transitional control date.2 |
| Waiver or underfunding mechanism | No statute lets an association waive the floor or vote to fund below it. The 10% minimum is mandatory and noncumulative.2 |
| Enforcement / penalty | No agency oversees HOA operations, and LARA does not enforce against associations. Co-owners and associations enforce their rights by suing in circuit court.8,9 |
| Primary statutory citation(s) | MCL 559.205; Mich. Admin. Code R 559.511; Condominium Act, MCL 559.101 et seq.1,2,10 |
Section 1: Overview — Reserve study requirements in Michigan
Michigan requires condominium associations to keep a minimum reserve fund for major repairs and replacement of common elements. It does not, however, require a formal reserve study on a fixed schedule, and it does not require a credentialed preparer. The Michigan Condominium Act, Act 59 of 1978, MCL 559.101 et seq., governs here — a Michigan-specific statute that does not follow the Uniform Common Interest Ownership Act.10 The statute states the reserve-fund obligation in bare form at MCL 559.205, and the administrative rules under the Act fill in the numbers, chiefly Michigan Administrative Code R 559.511. That rule sets a minimum funding level, not a study requirement.1,2 Michigan developers commonly build detached single-family neighborhoods as site condominiums under the Condominium Act, so many communities that act like traditional homeowner associations are in fact condominiums under the Act — and the reserve-fund requirement reaches them.3 Place Michigan in the national picture and it lands in the funding-mandate group: it requires associations to fund reserves to a floor, but unlike fixed-interval-study states such as California it prescribes no formal study, and unlike disclosure-mandate states it imposes no detailed reserve-disclosure regime.11 The sections that follow lay out the statutory and administrative framework, the treatment of site condominiums and non-condominium HOAs, the compliance obligations by community type, recent legislative and judicial activity, and where Michigan stands against other states.
Section 2: The reserve framework under Michigan law
2A. The Condominium Act and the reserve-fund requirement
The Michigan Condominium Act, MCL 559.101 et seq., governs how developers create and operate condominium projects in Michigan, and it supplies the budget and reserve framework for condominium associations.10 The Act states the reserve obligation in a single sentence at Section 105, MCL 559.205: "A reserve fund for major repairs and replacement of common elements shall be maintained by the associations of co-owners. The administrator may by rule establish minimum standards for reserve funds."1 So the statute requires a reserve fund to exist, but it names no dollar amount or percentage. It hands the numeric standard to the administrator to set by rule.
That number lives in the administrative rules, not in the statute. Michigan Administrative Code R 559.511(1) requires the bylaws to provide that the association maintain a reserve fund for major repairs and replacement of common elements, and it directs the association to "maintain a reserve fund which, at a minimum, shall be equal to 10% of the association's current annual budget on a noncumulative basis."2 Rule 559.511(2) limits the use of those funds to major repairs and replacement of common elements. Rule 559.511(3) requires the association to set the minimum aside by the transitional control date, and it makes the developer liable for any shortfall at that date. Rule 559.511(4) requires the bylaws to warn that the minimum "may prove to be inadequate for a particular project" and that the association should weigh whether it needs more.2
Two points deserve precision. First, this is a funding requirement — a reserve floor — not a study mandate. Nothing in MCL 559.205 or R 559.511 requires a condominium to commission a reserve study, to update one on a set schedule, to run a physical inspection, or to hire a credentialed preparer.1,2 Second, "noncumulative" means the rule measures the 10% floor against a single year's budget, not against amounts accumulated across years. The rule sets a minimum balance to hit, not an escalating annual contribution.12 The rule lets associations hold more than the minimum, and it tells them to consider doing so, but it gives them no way to vote to fund below the 10% floor.2 Michigan courts have long read the budgeting duty to require boards to fund an adequate reserve for the depreciation of capital assets such as roofs, sidewalks, and driveways (Newport West Condominium Ass'n v Veniar, 134 Mich App 1 (1984)).13
2B. Site condominiums and community coverage
One feature sets Michigan practice apart: the site condominium. The Condominium Act does not define the term, but it describes a condominium development built from single-family detached homes rather than attached units, and developers organize and operate these projects under the Condominium Act.3 Site condominiums are common in Michigan because the condominium form has long given developers a more direct path to approval than platting under the Land Division Act.14 So many communities that look and behave like conventional subdivisions — each home on its own lot, shared elements limited to roads, entryways, and stormwater facilities — are condominiums under the Act.14
That matters for reserves. Because a site condominium is a condominium under the Act, it is an "association of co-owners" subject to MCL 559.205 and R 559.511, and the reserve-fund floor reaches it just as it reaches a high-rise or townhouse condominium.3,1 The requirement does not stop at attached condominiums — it reaches detached-home site condominiums too.
Communities that organize as true planned communities under recorded covenants, conditions, and restrictions — rather than as site condominiums — sit outside the Condominium Act. Their reserve obligations, if they have any, come from the recorded declaration and bylaws, from the Michigan Nonprofit Corporation Act, MCL 450.2101 et seq. (when the association incorporates as a nonprofit), and from common-law fiduciary duties.4 No statewide statute imposes a reserve-fund floor on these non-condominium HOAs.4
The recorded documents decide which framework applies. A community governed by a master deed and condominium bylaws, with a condominium subdivision plan, is a condominium — including a site condominium — and the reserve requirement reaches it. A community governed by a declaration of CC&Rs and nonprofit bylaws, with no master deed, is a non-condominium HOA, and it is not reached.3,4
2C. Document review, the declaration, and the fiduciary backstop
The Condominium Act names the Michigan Department of Licensing and Regulatory Affairs (LARA) as the "administrator," and LARA once reviewed the condominium documents developers submitted. The Legislature later repealed the department's broader regulatory role, so LARA's condominium work is now limited. It publishes the Condominium Buyer's Handbook for developers to distribute, it sends out copies of the Act and rules on request, and it maintains informational resources.8 LARA says plainly that it has no authority to take complaints against condominium associations or to enforce the Act against them. Only a court can order an association to comply with the Act, the rules, or the bylaws.9 In short, no agency polices HOA operations in Michigan, and the state does not require community association managers to hold a license.9
For a single condominium, the reserve-fund floor works alongside the recorded master deed and bylaws and the board's fiduciary duty. The administrative rule requires the reserve provision to appear in the bylaws, so the obligation is at once regulatory and contractual. Where the bylaws set a higher reserve standard than the 10% floor, the higher standard controls, because the rule sets only a minimum.2 Behind both stands the board's fiduciary duty to fund the association's foreseeable repair and replacement obligations — a duty Michigan courts tie to the budgeting process.13
The result is a split by community type. For Michigan condominiums and site condominiums, the reserve floor is a regulatory obligation that co-owners can enforce in court. For non-condominium HOAs, reserve practice rests on the declaration and the board's judgment rather than on any state floor.4,9
Section 3: Compliance obligations
A. Study and inspection obligations
Michigan imposes no statutory or administrative duty on any community to commission a reserve study, to update one on a schedule, or to run a periodic on-site physical inspection. Neither MCL 559.205 nor R 559.511 sets a study or inspection mandate — the requirement is a reserve-fund floor, not a study.1,2 That holds for condominiums and site condominiums alike, and no study mandate reaches non-condominium HOAs either.4 A reserve study is still a sound best practice, and a board may need one to meet its fiduciary duty, but the law does not compel it.
B. Funding obligations
Condominiums, including site condominiums, must maintain a reserve fund for major repairs and replacement of common elements (MCL 559.205), and it must equal at least 10% of the association's current annual budget on a noncumulative basis (R 559.511(1)).1,2 The association may use the funds only for major repairs and replacement of common elements (R 559.511(2)), and it must have the minimum in place by the transitional control date, with the developer covering any shortfall (R 559.511(3)).2 No statute lets the members waive the floor or vote to fund below it; the rule treats 10% as a minimum and tells associations to consider funding more.2 Non-condominium HOAs have no state funding floor — their reserve obligations come from the declaration and fiduciary duty.4
C. Disclosure obligations
When a condominium unit changes hands, MCL 559.211 entitles a buyer who asks — at least five days before sale — to a written statement of unpaid assessments, interest, late charges, fines, costs, and attorney fees against the seller. A buyer who does not ask takes on liability for the unpaid amounts.7 This is a payoff disclosure, not a reserve-balance or reserve-study disclosure, and the Act does not require the association to disclose the reserve balance to buyers. Separately, the association must give each co-owner an annual financial statement (MCL 559.154), and it must make its books, records, and financial statements available for co-owners to examine (MCL 559.157).5,6 These duties apply to condominiums and site condominiums; for non-condominium HOAs, the declaration and the Nonprofit Corporation Act govern disclosure.4
D. Account and governance obligations
In a condominium, the rules restrict reserve funds to major repairs and replacement of common elements (R 559.511(2)), and that restriction keeps the fund from being drained into operating costs.2 The board owes a fiduciary duty to the association and its members, and it must build the annual budget on actual anticipated expenses, reserves included.13 Enforcement runs through the courts, not an agency: a co-owner or the association may sue in circuit court to compel compliance with the Act, the rules, or the condominium documents (MCL 559.207), and anyone — person or association — hurt by a violation may seek relief, including costs (MCL 559.215).9 These duties apply to condominiums and site condominiums; in non-condominium HOAs, the equivalent duties arise under the declaration, the Nonprofit Corporation Act, and common law.4
Section 4: Recent legislative and judicial activity
A. Recent bills
The most relevant recent legislative item is House Bill 5019 of the 2023-2024 session. It would have amended Section 105 of the Condominium Act (MCL 559.205) to require a reserve study and a reserve funding plan.
HB 5019 · 2023-2024 Session
House Bill 5019 would have required condominium associations with annual budgets over $20,000, or with more than 20 units, to obtain an initial professional reserve study within three years — or, for new projects, no later than 30 days before the transitional control date. It would have required an update at least every five years, a reserve funding plan, and an annual reserve notice to co-owners. It also would have required a qualified preparer: someone who has completed at least 30 reserve studies in the past three calendar years, holds a current license from the Michigan board of architects or the Michigan board of professional engineers, or carries the reserve-specialist designation from the Community Associations Institute or the professional-reserve-analyst designation from the Association of Professional Reserve Analysts.15,16
| Property managers | If a similar bill passes, you would have to schedule reserve studies, track five-year update cycles, and add reserve notices to annual budget mailings. For now, no study is required. |
| HOA board members | Boards of condominiums and site condominiums should watch for reintroduction, but for now you need only maintain the reserve-fund floor, not a study. |
| Community association attorneys | Track reintroduction and advise clients on bylaw amendments, preparer qualifications, and funding-plan language a future statute would require. |
| Homeowners | A study mandate would give you clearer information about future repair costs; today you are entitled to the reserve fund and an annual financial statement. |
The bill did not advance, and it is not law. The Community Associations Institute's Michigan Legislative Action Committee, through co-chairs Matthew W. Heron and Todd Skowronski, reports that it is seeking a sponsor to reintroduce a measure requiring most condominium associations to conduct a reserve study every five years.17
B. Recent appellate rulings
No Michigan Court of Appeals or Supreme Court decision in the past 36 months — published or unpublished — has squarely construed the reserve-fund requirement of MCL 559.205 or R 559.511. Newport West Condominium Ass'n v Veniar, 134 Mich App 1 (1984), still controls the interpretation of the reserve-budgeting duty.13 The most recent appellate decision to touch board financial duties is Farmington Square Condominium Ass'n v Mitan, an unpublished per curiam opinion the Court of Appeals issued on August 11, 2025 (Docket No. 366035). It addressed assessment collection and the recovery of attorney fees, not reserves.18
Farmington Square Condominium Ass'n v Mitan
In Mitan, the court upheld a $24,086.10 attorney-fee award under MCL 559.206(b). It held that the community association manager could authorize filing the suit, and that the association did not have to evict the co-owner's tenants to pursue collection. But it denied the paralegal fees, because the association did not show that the paralegal time met the requirements of MCR 2.626.18
| Property managers | A community association manager can authorize filing a collection action, but fee recovery demands proper documentation, and paralegal time must meet court-rule proof requirements. |
| HOA board members | You may pursue delinquent assessments without first evicting tenants, and you may recover attorney fees and costs when the bylaws and Act allow — support for the funding that feeds reserves. |
| Community association attorneys | Confirm the bylaw and statutory fee-shifting bases, and document attorney and paralegal time to MCR 2.626 standards to preserve fee awards. |
| Homeowners | Delinquent owners who lose collection litigation may owe the association's attorney fees and costs. |
C. Active legislative debates
Reserve-study legislation modeled on HB 5019 remains an active advocacy priority, and the Community Associations Institute's Michigan committee is still looking for a sponsor.17 If a reintroduced bill became law, it would layer a fixed-interval study mandate on top of the reserve-fund floor Michigan already has.
Section 5: National positioning and related coverage
Michigan sits in the funding-mandate tier of the national reserve landscape. It stands apart from the hard-mandate states that set fixed study intervals — California, which requires a reserve study with visual inspection at least every three years under Civil Code § 5550,11 Florida, which requires Structural Integrity Reserve Studies every 10 years for condominium and cooperative buildings three stories or taller under Senate Bill 4-D,19 and Maryland, which imposes a statewide reserve-study mandate with updates at least every five years under House Bill 107 of 2022.20 It also differs from disclosure-mandate states such as Colorado and from no-mandate states such as Missouri and Maine. Michigan instead requires associations to fund reserves to a floor without prescribing a formal study — a position it shares with Illinois.11 Two things set Michigan apart even within the funding-mandate group: its 10% floor rests on an administrative rule, and its site-condominium structure pulls many detached-home communities into the condominium reserve regime.2,3 For a multi-state operator, the practical point is this: Michigan condominium and site-condominium portfolios must fund to the R 559.511 floor and run to fiduciary standards, even though no Michigan study, inspection, or preparer-credential box needs checking.
HOA Weekly's Michigan Reserve Studies coverage updates quarterly as the Legislature, the agency rules, and the Michigan appellate courts act. Federal frameworks — including the FHA, ADA, FDCPA, SCRA, and OTARD — also apply to Michigan associations regardless of the state framework.
- Michigan Condominium Act, MCL 559.205 (Reserve fund), Michigan Legislature ↩
- Mich. Admin. Code R 559.511 (Reserve fund for major repairs and replacement of common elements), Michigan Administrative Rules (LARA / Office of Administrative Hearings and Rules) ↩
- The Condominium Buyer's Handbook (site condominium described as a development of single-family detached housing that must comply with the Condominium Act), Michigan Department of Licensing and Regulatory Affairs ↩
- Michigan Nonprofit Corporation Act, MCL 450.2101 et seq., Michigan Legislature ↩
- Michigan Condominium Act, MCL 559.154 (bylaws; books and records; annual financial statement), Michigan Legislature ↩
- Michigan Condominium Act, MCL 559.157 (books, records, contracts, and financial statements; examination), Michigan Legislature ↩
- Michigan Condominium Act, MCL 559.211 (sale or conveyance of condominium unit; statement of unpaid assessments), Michigan Legislature ↩
- Condominium Act FAQ (role of LARA's Office of Policy & Legislative Affairs; Condominium Buyer's Handbook; distribution of Act and rules), Michigan Department of Licensing and Regulatory Affairs ↩
- Condominium Act FAQ ("LARA has no authority to take complaints or enforce any requirements of the Condominium Act regarding the actions of condominium associations … Only a court can order an association to comply"; Section 107 / MCL 559.207 circuit-court action), Michigan Department of Licensing and Regulatory Affairs ↩
- Condominium Act, Act 59 of 1978, MCL 559.101 et seq., Michigan Legislature ↩
- California Civil Code § 5550 (reserve study; visual inspection at least once every three years), California Legislative Information ↩
- Tilchin & Hall, P.C., "Budgeting and Assessments for Community Associations" ("'Noncumulative' means only for a single year"), cross-reference to R 559.511(1) ↩
- Newport West Condominium Ass'n v Veniar, 134 Mich App 1, 6-7; 350 NW2d 818 (1984) (board must provide for an adequate reserve fund to cover depreciation of capital assets), discussed in connection with MCL 559.205, Michigan Legislature ↩
- Institute of Continuing Legal Education, "Chapter 10: Condominiums" (site condominiums; all Michigan condominium projects under jurisdiction of LARA; deregulation of the department's regulatory role) ↩
- House Bill No. 5019 (2023-2024), text amending Section 105 of 1978 PA 59 (MCL 559.205), Michigan Legislature ↩
- House Bill 5019 of 2023, bill status and history, Michigan Legislature ↩
- CAI Michigan, "Updates from the MI LAC" (LAC seeking a sponsor to reintroduce legislation amending MCL 559.205 to require a reserve study every five years; co-chairs Matthew W. Heron and Todd Skowronski) ↩
- Farmington Square Condominium Ass'n v Mitan, unpublished per curiam opinion of the Court of Appeals, issued August 11, 2025 (Docket No. 366035), Michigan Courts ↩
- Florida Senate Bill 4-D (2022 Special Session) (Structural Integrity Reserve Studies; milestone inspections for condominium and cooperative buildings three stories or more), Florida Senate ↩
- Maryland House Bill 107 (2022) (reserve study requirement; updates at least every five years), Maryland General Assembly ↩