How do you read a condo reserve study before buying in Arlington?
A reserve study estimates a condo building’s major future repair costs — roofs, elevators, garages, facades — and how much cash the association has set aside to cover them. The number that matters most is percent funded: the Community Associations Institute considers 70% or higher financially healthy, while a figure well below that signals a higher risk of special assessments or fee increases. In Virginia, the reserve study (or a summary) is part of the resale certificate the association delivers after your contract is ratified, and you get a review window to cancel based on what it shows — a negotiable contract term that defaults to three days if left blank.
When you buy a condo, you’re not just buying a unit. You’re buying a share of a building — the roof over it, the elevators inside it, the garage under it, and the balance sheet that pays to maintain all of it. The document that tells you whether that balance sheet is healthy is the reserve study, and most buyers either never read it or don’t know what they’re looking at when they do.
Here’s how to read one like someone who’s done it a few hundred times — and what it tells you about whether you’re walking into a surprise assessment.
What a Reserve Study Actually Is
A reserve study is a two-part financial forecast for the building’s shared components. The first part is a physical inventory: every major system the association is responsible for replacing over time — roof, elevators, boilers, garage membrane, hallway carpet, façade sealant, pool equipment — along with its remaining useful life and estimated replacement cost.
The second part is the money: how much the association currently has in its reserve fund, how much it’s contributing each year, and whether that’s enough to cover those replacements when they come due. A professional reserve study rolls all of that into a single, telling figure.
The One Number That Matters Most: Percent Funded
Percent funded compares what the association actually has in reserves against what it should have, given the age and condition of the building’s components. It’s the closest thing to a credit score for a condo building.
Here’s the benchmark the industry uses. The Community Associations Institute — the national body that sets reserve study standards — generally treats a fund that’s 70% funded or higher as strong. In that range, the association is very unlikely to need a special assessment for the ordinary, expected repairs the study anticipates.
As the percentage drops, risk climbs:
- 70% or higher — strong. The building is saving at a healthy pace for what’s coming.
- Roughly 30% to 70% — fair to weak, and it matters which end. A building at 65% and climbing is a different story than one at 35% and falling. Read the trend, not just the snapshot.
- Below 30% — weak. The odds that owners get hit with a special assessment or a steep fee increase go up sharply.
A quick reality check on Arlington specifically: buildings here generally carry healthier reserves than the national average, but that is a generalization, not a guarantee. A 1960s mid-rise in Virginia Square and a newer high-rise in Ballston can sit at completely different funding levels — and the only way to know is to read the actual study for the actual building. Never assume the building is fine because the neighborhood is desirable.
Red Flags That Don’t Show Up in the Percentage
Percent funded is the headline, but a careful read of the study and the association’s other documents surfaces problems the single number can hide:
- A stale study. If the reserve study is more than five years old — or hasn’t been updated since before the construction-cost run-up of the early 2020s — its cost estimates may badly understate today’s prices. In Virginia, associations are required to update the study at least every five years, so an out-of-date one is itself a warning sign.
- Hedging language. Watch for phrases like “deferred maintenance,” “pending engineering review,” “temporary repair,” “funding source to be determined,” or “future board decision.” None of these automatically mean the building is in trouble, but every one of them is a question you want answered before your rescission window closes.
- A big project with no funding plan. If the study lists a major near-term expense — a garage membrane, a façade project, an elevator modernization — and there’s no clear plan to pay for it, that gap tends to become a special assessment.
- Borrowing from reserves to cover operating costs, or repeated past assessments. Both show up in board meeting minutes and financial statements, and both suggest a budget that doesn’t quite work.
- A suspiciously low condo fee. A low monthly fee can be a genuine selling point — or it can be the reason the reserve fund is thin. Cross-check the fee against the percent funded before you treat a low fee as a win.
This is the same due-diligence discipline that protects you on the seller side of the equation too — it’s why I walk owners through their building’s reserve position before we ever list, in posts like selling an Arlington condo with a special assessment. A thin reserve is a problem whether you’re buying into it or trying to sell out of it.
When You’ll See It — and Your Review Window
Here’s the part that trips up buyers coming from other states. In Virginia, you generally do not get to review the association’s financials before you write your offer. Virginia is a caveat emptor state — the burden of due diligence falls squarely on you, the buyer.
The reserve study reaches you inside the resale certificate (sometimes still called the resale package), which the association delivers after your contract is ratified. Under Virginia’s Resale Disclosure Act, that certificate must include the current reserve study or a summary of it, along with the budget, insurance information, and any pending special assessments. Virginia moved to a standardized resale certificate form in mid-2023, so the contents are fairly consistent building to building.
What you control is what happens next. Virginia’s standard contract has a blank for this review period — the number of days you get, once the resale certificate arrives, to cancel without penalty. Leave it blank and it defaults to three days; negotiate it up or down and that number controls instead. One quirk worth knowing: even a contract that lists zero days still leaves you able to cancel until 9:00 PM the day you receive the documents. Whatever your window ends up being, it’s short — so the moment the certificate arrives:
- Go to the reserve study first. Find the percent funded and the date of the study before you read anything else.
- Read the last several months of board meeting minutes. Special assessments almost always appear as a discussion item in the minutes months before they’re formally levied. That’s your earliest warning, and it won’t be in the budget yet.
- Check the funding trend, not just the snapshot. Is the percent funded rising or falling year over year? A building actively rebuilding its reserve is a different risk than one drawing it down.
- Loop in your lender in parallel. Underfunded reserves don’t just cost you later — under the 2026 Fannie Mae and Freddie Mac condo rules, a weak reserve can make the unit harder to finance with a conventional loan. You want that flagged inside your window, not after.
Every building is different, and the reserve study is what actually tells you where a specific one stands — not its age, not its address, and not how nice the lobby looks. Whether you’re comparing high-rises in Crystal City or weighing a walk-to-Metro unit in Clarendon, the study is where the real financial story lives.
This is exactly the kind of document I read with my buyers, line by line, the moment it lands — because a thin reserve caught on day two of a three-day window is a negotiation or a walk-away, and the same reserve caught after your review period closes is your problem to inherit.
If you’re ready to buy smart — with building-level insight most buyers never get — let’s build your plan. Start your buying plan at ArlingtonCondo.com/buy.
Frequently Asked Questions
What is a good percent funded for a condo reserve study?
The Community Associations Institute generally considers a reserve fund that is 70% funded or higher to be in strong financial shape. Between roughly 30% and 70%, the risk of a special assessment or a fee increase rises as the percentage drops. Below 30% funded is considered weak, with a meaningfully higher chance the association will need to raise cash from owners for major repairs.
Does Virginia require condo associations to have a reserve study?
Yes. Under the Virginia Condominium Act, an association’s executive board must conduct a reserve study at least every five years, review it annually, and reflect the results in the annual budget. The current reserve study or a summary of it must also be included in the resale certificate you receive when buying a unit.
When do I get to see the reserve study when buying a condo in Arlington?
In Virginia, the association delivers the resale certificate — which includes the reserve study or a summary — after your contract is ratified, not before you write your offer. Once it arrives, you get a review period to cancel based on what you find; it’s a negotiable contract term that defaults to three days if left blank. Even if the contract sets that period to zero days, you still have until 9:00 PM the day you receive the documents to cancel.
Can a low condo fee be a bad sign?
It can be. An unusually low monthly fee sometimes means the association isn’t setting aside enough for future repairs, which shows up as a low percent funded in the reserve study. A building with a slightly higher fee but a well-funded reserve is often the safer financial bet than a cheaper-fee building that’s quietly underfunded.
Do underfunded reserves affect my mortgage?
They can. Under Fannie Mae and Freddie Mac condo rules taking effect in 2026, lenders scrutinize a building’s reserves and budget more closely, and a poorly funded association can make a unit harder to finance with a conventional loan. Ask your lender to review the building’s project eligibility as soon as you’re under contract.
If you’re ready to buy smart — with building-level insight most buyers never get — let’s build your plan. Start your buying plan at ArlingtonCondo.com/buy.
About Rick Bosl
Rick Bosl is Arlington’s condo specialist — with 23+ years of experience, 325+ transactions closed, and $165M+ in sales volume focused almost exclusively on Arlington’s condo market. As the founder of ArlingtonCondo.com and Managing Broker at KW Metro Center, Rick knows every building, every floor plan, and what buyers in each neighborhood are willing to pay. He holds the CRS and GRI designations and brings an electrical engineering degree and MBA to every transaction — because condo decisions should be driven by data, not guesswork. Licensed in Virginia, Maryland, and DC.