Hawaii HOA Reserve Study Requirements and Reserve Fund Laws (2025 Guide)

Hawaii’s framework for reserve studies and reserve funding is centered on the condominium statute, HRS Chapter 514B. Within that chapter, §514B-148 sets out detailed requirements for association budgets, replacement reserves, and the reserve study that underpins them. The result is that condominium boards cannot simply guess at their reserve contributions. They must rely on a structured, data driven reserve study and maintain funding at legally defined levels.

Who is covered: condominiums versus HOAs

HRS Chapter 514B governs condominiums created under Hawaii law and obligates boards to adopt an annual budget and establish adequate replacement reserves based on a reserve study.

Other community structures in Hawaii, such as planned community associations and many traditional “HOAs,” are generally organized under HRS Chapter 421J. These associations do not have explicit statutory replacement reserve or reserve study mandates that mirror §514B-148.

That does not mean reserves are optional. It means that for non condominium HOAs, long term funding is a governance decision, not a codified formula. 

Many boards still adopt reserve policies that track condominium standards because lenders, auditors, and owners expect disciplined reserve planning.

Is a reserve study mandatory in Hawaii?

For condominiums, the answer is yes. The association’s annual budget must include “the estimated replacement reserves that the association will require to maintain the property, based on a reserve study performed by or on behalf of the association.” 

In practical terms, that means a written reserve study that inventories major common elements, estimates remaining useful lives, and projects future repair and replacement costs. Without this study, a condominium board cannot satisfy the statute’s budgeting requirements.

Act 62 tightened this framework further. If the reserve study is not prepared by an independent reserve study preparer, the law now requires it to be reviewed by such a preparer at least once every three years. 

An independent preparer must hold recognized reserve study certifications from an industry organization, which prevents boards from using unqualified internal estimates to justify underfunding. 

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Minimum reserve funding levels

Hawaii stands out by imposing clear minimum funding standards. As summarized by Hawaii counsel and industry guidance, condominium associations must either collect at least 50 percent of the replacement reserves estimated in their reserve study or 100 percent of the amount required under a cash flow plan. 

Boards therefore cannot formally waive replacement reserves for covered components. Attempting to keep assessments low by starving reserves will put the association out of compliance and typically leads to special assessments, deferred maintenance, and unhappy owners. 

Lenders and buyers increasingly scrutinize whether Hawaii condominium reserve fund calculations follow the statutory formula and funding thresholds.

How reserve fund calculations work in Hawaii

HRS §514B-148 requires associations to compute estimated replacement reserves based on the remaining useful life and estimated replacement cost of each property component. It also distinguishes between larger items with capital expenditures over a statutory dollar threshold and smaller components. 

• In practice, a Hawaii condominium reserve study for a condo association will:
• List each major common element that will require capital expenditure.
• Identify those components with replacement costs over the statutory threshold (for example, roofs, elevators, major mechanical systems, parking structures) and assign them separate designated reserves.
• Group lower cost components into an aggregated reserve.
• For every component, estimate useful life, remaining life, and current replacement cost, then calculate the annual reserve contribution needed to be ready when each item is due.

This is the structured condo association reserve fund calculation that owners, auditors, and regulators expect to see, rather than a rough percentage of the operating budget.

Thirty year cash flow plans and funding strategies

When an association uses a cash flow funding plan, Act 62 now requires the reserve study to be based on a minimum thirty year projection of the association’s future income and expense requirements to fund its replacement reserves. 

That means the reserve preparer must model reserve contributions, interest, and expenditures year by year across at least three decades, and demonstrate that the plan meets or exceeds the statutory funding targets.

Two main funding approaches dominate in Hawaii:

• Percent funded approach: The association targets a percentage of the fully funded balance. Under Hawaii law, that percentage cannot drop below 50 percent of the estimated replacement reserves. 
• Cash flow plan: Contributions are set so that projected cash never falls below required levels over a 30 year horizon. Because the cash flow plan is more dynamic, Hawaii requires that reserves be funded to 100 percent of the amount needed under the plan.

The key in Hawaii is not which method you choose but whether the numbers meet or exceed the legal minimums while keeping contributions stable enough to be politically acceptable.

Frequency of updates and the role of the independent preparer

The association must update its reserve study at least every three years, and the law requires that, where the original study was not prepared by an independent reserve study preparer, that independent professional must review the study on that three year cycle.

In between formal updates, boards should still revisit their reserve assumptions annually when preparing the budget. Construction inflation, unanticipated repairs, and scope changes can quickly make an older reserve study unrealistic. 

Many Hawaii associations use a three year cycle with a full site visit and comprehensive update in year one, followed by lighter internal updates in years two and three to keep contribution levels aligned with reality.

What about non condominium HOAs under Chapter 421J?

Planned community associations and many traditional HOAs in Hawaii fall under HRS Chapter 421J. Current guidance from practitioners notes that there are no explicit statutory replacement reserve funding or reserve study requirements for these associations, unlike condominiums under Chapter 514B. 

However, owners in these communities face the same real world risks: aging infrastructure, rising construction costs, and the possibility of large special assessments if reserves are not built up steadily over time. 

Lenders, insurers, and buyers are increasingly asking HOA boards the same questions they ask condo boards about reserve planning. 

That is why many 421J associations voluntarily commission reserve studies and adopt contribution policies patterned on the condominium rules, even though the statute does not force them to do so.

Practical compliance checklist for Hawaii boards and managers

For condominium boards looking for a concrete workflow, the core steps are:

1. Confirm that your association is a condominium governed by HRS Chapter 514B and that your governing documents have been updated in line with Act 62.
2. Commission a reserve study prepared or reviewed by an independent reserve study preparer with recognized industry certifications.
3. Ensure the study covers at least a 30 year horizon when using a cash flow plan and clearly documents your component list, useful lives, and cost assumptions.
   Set contributions so that you fund at least 50 percent of estimated replacement reserves, or 100 percent under your cash flow plan, and confirm this in your condo budget reserve requirements summary.
4. Disclose in the annual budget all items required by §514B-148, including current reserve balances, how the reserve study was prepared, and any components omitted from the study.
5. Schedule a formal update or independent review at least every three years, with lighter annual adjustments in between.

Non condominium HOAs should follow a similar pattern as best practice, even without a direct statutory mandate.

How PropFusion and its Hawaii network can help

Hawaii’s statutory complexity makes it easy for boards to miss a key detail, such as the three year review rule, the 30 year projection requirement, or the funding thresholds tied to the condo association reserve fund calculation. 

PropFusion’s reserve study platform and network of independent reserve study professionals can help Hawaii condominiums and HOAs standardize their data, document a component list that matches statutory expectations, and generate funding plans that align with the fifty percent or 100 percent rules.

PropFusion provides the tools and professional connections to turn the legal framework described above into a working, auditable reserve planning process that owners can understand and trust.

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