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Tennessee Reserve Study Requirements

Reserve Study and Funding Requirements for Tennessee Unit Owners' Associations

Introduced and signed into law in April of 2023, Tennessee SB863 establishes statewide reserve study requirements for unit owners’ associations that comprise of common elements with an aggregate replacement cost exceeding $10,000. The legislation is meant to provide board of directors with an understanding of the reserve funds required to minimize the need for special assessments. The legislative requirements are similar to legislation that has been passed in various other states in recent years.

What You Need to Know

Who is Required to Comply?

Any board of directors acting on behalf of a unit owners' association is required to comply with the new legislation if the association’s common components have a combined replacement cost exceeding $10,000.

Frequency of Reserve Studies?

A professional reserve study, conducted by a qualified individual, must be completed every five years.

Deadline to Comply with new Legislation

Deadlines to comply with the reserve study requirements are dependent on whether your association has an existing reserve study. Associations that have had a reserve study completed on or after January 1, 2020, are required to update their existing study within five years of the date of the most recently completed study. Associations that have not had a reserve study to date or their most recent reserve study was completed prior to January 1, 2020, are required to conduct a reserve study no later than 1/1/2025.

Scope of Work

The reserve study must conform to the latest edition of the Reserve Study Standards published by Community Associations Institute (CAI) or similar standards by another nationally recognized organization. Furthermore, the study must be completed by a reserve specialist who is credentialed through CAI or a similarly recognized organization, a licensed Professional Engineer or Architect.


Tennessee Senate Bill 863 Frequently Asked Questions

Reserve components vary by association. Large expenditures are typically funded through reserves whereas smaller and recurrent expenditures are funded through the general operating fund. We recommend you review your governing documents and historical practices to determine which components are maintained through reserves. If the purchase and installation cost or replacement cost is near or below $10,000, Reserve Advisors can help you evaluate the necessity of conducting a reserve study. Contact us Today.

Tennessee Senate Bill 863 establishes qualifications for those preparing a professional reserve study. To comply, a reserve study must be prepared by an individual who meets at least one of the following criteria: 1) is a reserve specialist who is credentialed through CAI or a similarly recognized organization, or, 2) is a licensed Architect or Professional Engineer.

The purpose of Tennessee Senate Bill 863 is to inform association members and its board of directors of the amount that should be set aside into reserves for future capital repairs and replacement, that would minimize the risk of special assessments. At this time, there are no statutory funding requirements.

Ready to Get in Touch?

Reserve Study Resources

Are You New to Reserve Studies?
Reserve Study Report Overview
What is a Reserve Study and Why is It Important?
On behalf of Sunset Bay, I wanted to personally thank you and your team for a job well done. Reserve Advisors did a great job listening to our concerns and providing the report data in a format that made it easy to understand. The data will be extremely helpful for years to come. I can honestly say your folks set the bar.
Mike Weidner, Board President
Sunset Bay Condominium | Ocean City, MD

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