Montana HOA Reserve Study Requirements & Reserve Fund Laws

Montana’s reserve study landscape: what the law does and does not say

Montana is one of the states where the legislature has not yet stepped in with detailed rules around reserve studies or reserve funding. 

The Community Associations Institute’s most recent summary of state reserve fund laws explicitly notes that there is no statutory requirement in Montana either to conduct a reserve study or to fund reserves.

At the same time, Montana HOAs and condo associations are not operating in a vacuum. Most are formed as nonprofit corporations and are therefore governed by the Montana Nonprofit Corporation Act, which sets out board duties, corporate governance standards, and expectations around prudent financial management.

Condominium associations are also subject to the Montana Unit Ownership Act (Title 70, Chapter 23, MCA), which governs creation, declarations, bylaws, common expenses, and the association’s responsibility to maintain common elements. (Montana State Legislature)

None of these statutes specify formulas for reserve contributions, required study frequencies, or particular funding goals. That lack of detail means Montana boards must rely more heavily on their fiduciary duty, their governing documents, and industry standards when deciding how to plan for major repairs and replacements.

What “no reserve law” means in practice for Montana boards

Because there is no reserve-specific statute, some boards are tempted to treat reserves as optional. That is a mistake. Even in the absence of a legal mandate, failing to plan for predictable capital projects creates obvious financial and governance risks:

• Higher likelihood of surprise special assessments when roofs, roads, siding, or mechanical systems fail.
• Increased owner dissatisfaction and pushback due to sudden fee spikes.
• Potential challenges to the board’s decision-making if owners argue that the board ignored clear, foreseeable financial needs.
• Depressed property values if buyers or lenders see inadequate reserves or no evidence of long-term planning.

Legislative materials on HOA governance in Montana emphasize that the Code has historically been largely silent on HOAs but that boards still carry real responsibilities around budgeting, transparency, and compliance with broader property and nonprofit statutes. 

In other words, “no reserve law” does not mean “no standard.” A board that never reviews common-element lifecycles, never sets aside funds, and never communicates a plan is taking on avoidable risk.

How state statutes and governing documents fit together

In Montana, the legal framework for reserves is a combination of:

State statutes

• Montana Unit Ownership Act (Title 70, Chapter 23, MCA) for condo associations and some townhome projects that elect to submit to it.
• Montana Nonprofit Corporation Act (Title 35, Chapter 2, MCA) for most incorporated HOAs and condo associations.

Governing documents

• Declaration (or CC&Rs) often defines common elements and may set expectations around assessments and long-term maintenance.
• Bylaws may describe reserve policies, budgeting processes, and whether member approval is needed to change funding levels.
• Board-adopted policies and budgets, which show how the association is actually implementing its obligations year to year.

If your declaration or bylaws reference “replacement reserves,” “capital reserves,” or “reserve funds,” the board is expected to treat these provisions seriously, even without a state-level reserve statute. 

Ignoring clear language in the governing documents is likely to create more legal exposure than the absence of a statewide reserve law.

Why reserve studies still matter in Montana

The existing PropFusion Montana guide correctly highlights that reserve studies, while not required, are strongly recommended for effective financial management and long-term asset preservation. 

A well-prepared reserve study helps Montana communities:

• Identify which components (roofs, paving, siding, elevators, pools, clubhouses, etc.) are shared and therefore the association’s responsibility.
• Estimate remaining useful life and replacement costs based on local conditions and construction types.
• Build a funding plan that spreads those costs across current and future owners, rather than relying on last-minute special assessments.
• Provide a clear, defensible rationale for assessment levels when owners ask, “Why are our dues this high?”

Even small, rural Montana associations with modest common areas benefit from having a structured look at long-term repairs. A basic reserve study can be scaled to the size of the community while still giving the board a credible tool for planning.

Recommended reserve study practices for Montana communities

Because there is no statutory mandate, Montana associations should adopt a written reserve policy that references recognized industry standards. A practical approach for many boards is:

• Commission an initial “full” reserve study
  
  • For established communities that have never had a study done.
  • For new developments as common elements are completed and turned over from the developer.
  • This study should include a site visit, component inventory, and detailed funding scenarios.
• Update the study regularly
  
  • Light updates every 3-5 years are typical industry practice in states without formal laws, and many professionals recommend more frequent reviews if there are major projects or cost changes. (montanareservestudy.com)
  • Boards should document in minutes when a study is reviewed and how the funding recommendations were considered.
• Set a clear funding objective
  
  • Many Montana associations target 70-100 percent “percent funded” over time for major components, recognizing that reaching 100 percent immediately is often unrealistic.
  • At a minimum, boards should avoid patterns where no money is set aside until a failure is imminent.
• Tie reserves directly into the annual budget
  
  • Reserve contributions should appear as a recurring line item in the budget, not as whatever is “left over” after operating expenses.
  • The board should show owners how reserves stabilize assessments over a 10-20 year horizon compared with repeated special assessments.

How much should a Montana association contribute to reserves?

There is no one-size-fits-all formula. However, in the absence of statutory guidance, many boards use rules of thumb to sanity-check their funding:

• A starting point of 10-20 percent of the total annual budget allocated to reserves is common for associations with typical common elements.
• Communities with heavy infrastructure (roads, extensive roofs, elevators, garages) may need higher contributions, as documented by reserve professionals operating specifically in Montana.
• Rather than relying solely on a percentage, boards should lean on the funding projections in a professionally prepared reserve study; these projections reflect actual asset lifespans and costs.

Practical steps for Montana boards and managers

For a Montana HOA or condo board looking to tighten up its long-term planning without a state mandate, a pragmatic roadmap looks like this:

1. Gather your documents and data
   
   • Declaration, bylaws, articles, prior budgets, any existing reserve schedules, and major project history.
   • Current bank balances for operating and reserve accounts (if they exist).
2. Commission or update a reserve study
   
   • Engage a qualified reserve study professional with experience in Montana’s climate and construction types.
   • Provide full access to your common areas and historical cost information.
3. Adopt a reserve funding policy
   
   • Decide, by board resolution, how often you will update the study and what funding objective you will target.
   • Document any short-term constraints (for example, phased step-up contributions over a few years).
4. Integrate the funding plan into your budget
   
   • Align annual reserve contributions with the study recommendations as closely as possible.
   • If you cannot match the recommendation in year one, adopt a plan that gets you there over 3-5 budget cycles.
5. Communicate clearly with owners
   
   • Explain in plain language what is being funded, what the long-term outlook is, and how this reduces the risk of sudden special assessments.
   • Use summary charts and timelines where possible to make the information easy to understand.
6. Monitor, review, and adjust
   
   • Track major projects and compare actual costs against the reserve study.
   • Adjust assumptions and funding as costs, inflation, and community priorities change.

How PropFusion supports Montana associations

PropFusion already powers the Montana reserve study law guide and connects local associations with experienced reserve study professionals. For Montana HOAs, condo boards, and managers, the platform can help to:

• Request and compare proposals from vetted reserve study providers familiar with Montana properties.
• Store and organize reserve studies, budgets, and board decisions in one place.
• Build and compare funding scenarios based on different contribution levels and project timings.
• Track upcoming major projects and align them with reserve balances and contribution plans.

Even in a state with no formal reserve statute, using a structured tool like PropFusion signals that your board takes long-term planning seriously and is acting prudently on behalf of owners.