Wisconsin HOA Reserve Study Requirements & Condo Statutory Reserve Account Law

Overview: Wisconsin’s two different worlds - condos vs. non-condo HOAs

Wisconsin’s reserve rules are built around condominiums. Chapter 703 of the Wisconsin Statutes governs condo ownership and association operations. Within this chapter, sections 703.16, 703.161, and 703.163 set the framework for common expenses, budgets, and statutory reserve accounts.

Non-condominium HOAs (for example, single-family communities organized as planned unit developments) are not covered by Chapter 703, and there is no separate statewide HOA act that mandates reserves. These associations rely on their declarations, bylaws, and general nonprofit or corporate law. In practice, that means:

• Condominium associations must navigate statutory reserve account rules and related disclosure requirements.
• Non-condo HOAs have no specific reserve statute but still need reserves to manage long-term capital expenses and meet fiduciary expectations.

Statutory reserve accounts for Wisconsin condominiums

Wisconsin condominium law introduced the concept of a “statutory reserve account” in 2004. A statutory reserve account is defined as funds derived from assessments against unit owners that are deposited into a formally designated account, subject to statutory rules on investment and use.

Key points from Wis. Stat. § 703.163 include:

• Existing condominiums (created before November 1, 2004): The association was required to establish a statutory reserve account within a specified period unless, with the written consent of a majority of unit votes, the association elected not to establish one. (Justia Law)
• New condominiums (created on or after November 1, 2004): The declarant must decide whether the condominium will have a statutory reserve account and must execute a “statutory reserve account statement” indicating that choice, which is recorded with the register of deeds.
• Opting in or out: An association may, with the written consent of a majority of unit votes, later establish a statutory reserve account if it previously opted out, or terminate an existing statutory reserve account (after the period of declarant control, if initially established by the declarant).

Whichever decision is made-having or not having a statutory reserve account-it must be documented by a recorded statutory reserve account statement. 

This recorded decision is critical for purchasers, lenders, and regulators who need to understand how the association handles long-term capital reserves. (Bartelt Grob Wisconsin Attorneys)

Budget requirements when a statutory reserve account exists

If a condominium has a statutory reserve account, the annual budget adopted under Wis. Stat. § 703.161 must provide for “reserve funds.” The association must determine how much to assess owners for those reserves after considering:

• The age and remaining useful life of the common elements.
• The current condition of those elements.
• The estimated costs of repair and replacement.
• Any existing reserve balance and investment earnings.

The statute does not prescribe a specific contribution percentage or formula. It instead imposes a process obligation: boards must think deliberately about long-term needs and set reserve assessments with those factors in mind.

What if there is no statutory reserve account?

Many Wisconsin condominium associations choose not to operate a statutory reserve account but still maintain reserves on their books. In that case:

• The association can keep reserve funds either in commingled accounts (segregated in the accounting records) or in separate non-statutory reserve accounts.
• Those funds are not subject to the investment and use restrictions that apply to statutory reserve accounts, but the board still has fiduciary obligations to use them prudently.

For associations that opted out of a statutory reserve account early on, there may be legacy confusion: owners may assume “we don’t have a statutory reserve account” means “we do not need reserves at all.” That is incorrect. Whether statutory or not, reserves are the only realistic way to handle roof replacements, paving, siding, and other major components without serial special assessments.

No reserve study mandate - but strong reasons to have one

CAI’s most recent summaries and Wisconsin-focused guidance are clear on one point: there is no statutory requirement in Wisconsin for any association to conduct a reserve study.

However, a professional reserve study is still the most effective way to:

• Build a component inventory and realistic cost estimates.
• Quantify the association’s long-term funding needs.
• Demonstrate that the board based decisions on expert analysis rather than guesswork.
• Support lender and buyer confidence by showing a structured plan.

For condominiums with a statutory reserve account, a reserve study is the logical way to satisfy the requirement in § 703.163(7) to consider age, condition, and costs when setting reserve assessments. For non-condo HOAs, it is simply the best-practice tool to manage capital projects over 20-30 years.

Practical funding strategies for Wisconsin associations

Because Wisconsin does not set a numeric target, boards should adopt policies based on their own risk tolerance and the guidance of their reserve professional. Common approaches include:

• Targeting a “percent funded” range (for example, staying in at least the “fair” to “strong” range on standard reserve study scoring).
• Allocating 10-20 percent of the annual operating budget to reserves as a starting point, then refining based on the actual study.
• Phasing in contribution increases over several years to avoid dues shock while still moving toward sustainable funding.

Boards should also check their governing documents. Some declarations or bylaws require the association to maintain “adequate reserves” or avoid deficit budgeting. Those internal rules can be stricter than state law.

Fiduciary duty, disclosure, and market realities

Even without a reserve study mandate or fixed funding rule, Wisconsin directors must still act in good faith and with the care an ordinarily prudent person would exercise under similar circumstances. Courts and owners will judge board actions against that standard, not against the bare minimum in Chapter 703.(CAI)

In addition, Wisconsin condominium law contains disclosure obligations around budgets and association financials, including reserve-related information, in resale packages and other materials. Weak reserves, especially in the presence of obvious upcoming capital needs, are hard to hide and can:

• Depress sale prices and lengthen time on market.
• Trigger additional questions from lenders and appraisers.
• Increase owner dissatisfaction and the likelihood of conflicts.

A board that can show a current reserve study, a clear funding plan, and documented use of that plan in budgeting is far better positioned than one that simply points to the absence of a statutory mandate.

How PropFusion supports Wisconsin boards and managers

For both condominiums and non-condo HOAs in Wisconsin, PropFusion helps turn legal flexibility into practical planning:

• Connect with Wisconsin-savvy reserve study professionals who understand local construction costs and Chapter 703 nuances.
• Store reserve studies, project histories, and budgets in one place so future boards inherit a clear record.
• Run what-if funding scenarios to see how changes in contributions, project timing, or inflation affect reserves over time.
• Generate clean, easy-to-understand reports for owners, buyers, and lenders that support confidence in the association’s financial stewardship.

For a condo that already has a statutory reserve account, PropFusion helps ensure that the board’s budgeting process matches the statutory expectation to consider age, condition, and cost. For a non-condo HOA with no statutory framework, it provides the discipline that state law does not supply.