What is HB 5784?
House Bill 5784, introduced on April 14, 2026, would amend Section 105 of the Michigan Condominium Act (MCL 559.205) to require many condominium associations to commission a professional reserve study, update it at least every five years, adopt a written funding plan, and disclose the results to co-owners each year.
Michigan Condo Reserve Study Requirements Under HB 5784
Which Associations Would Be Covered
Associations that maintain common elements and either have a budget of over $20,000 or more than 20 units.
When the First Study Would Be Due
New projects – complete a study 30 days before the transitional control date; developer must require it.
Existing projects – either complete a study within 3 years if one does not exist or has not been updated within the past 5 years, or execute a contract within 3 years with a qualified professional and complete study within 1 year of contract execution.
How Often It Would Be Updated
After the initial study, the association would have to conduct a new study or update at least every 5 years.
Who Could Prepare It
- Participation in at least 30 reserve studies in the past three calendar years while employed by a firm that prepares reserve studies;
- Personal preparation of at least 30 reserve studies in the past three calendar years;
- A current Michigan license as an architect or professional engineer; or
- A current Reserve Specialist designation from the Community Associations Institute or Professional Reserve Analyst designation from the Association of Professional Reserve Analysts.
What a Reserve Study Must Include
HB 5784 defines a reserve study as a document that does four things:
- Identify each structural, mechanical, electrical, and plumbing component of the common elements, and any other components the association must repair or replace under the condominium documents;
- State the normal useful life and estimated remaining useful life of each component;
- State the estimated current cost to repair or replace each component; and
- State the estimated annual reserve contribution necessary to accomplish each future repair or replacement.
What the Board Would Have to Do After the Study
Adopt a written funding plan. HB 5784 links the technical study to financial action. On completion of a reserve study or update, the board must establish a reserve funding plan in accordance with the study and communicate that plan, and any changes, to the association in writing.
Review the study every budget cycle. The board must review the reserve study each year when preparing the annual proposed budget.
Maintain the reserve fund in a separate account. HB 5784 requires that a reserve fund for major repairs and replacements be established and maintained in a separate account, distinct from the association’s operating fund account.
Budget enough to fund the plan. The amount annually budgeted for the reserve fund must be adequate to fund, according to the board’s reserve study funding plan, the repair or replacement of common elements the association is obligated to address due to ordinary wear and tear or discontinuance.
Transparency and Owner Notice Requirements
Reserve studies, updates, and the written notice required under HB 5784 must be available for inspection and copying by unit owners, prospective purchasers, and mortgagees.
When distributing the annual budget, the board must send a written notice to co-owners regarding the reserve fund balance which includes the following specific capitalized language:
“THIS BUDGET WAS PREPARED ON CONSIDERATION OF THE ASSOCIATION OF CO-OWNERS’ MOST RECENT RESERVE FUNDING PLAN THAT WAS CONDUCTED ON _________, 20__, AND RECENTLY UPDATED ON _________, 20__. COPIES OF THE RESERVE STUDY AND THE ASSOCIATION OF CO- OWNERS’ RESERVE FUNDING PLAN ARE AVAILABLE TO ANY OWNER OF A CONDOMINIUM UNIT, ON REQUEST. IF THERE IS A NEED FOR A MAJOR REPAIR OR REPLACEMENT OF COMMON ELEMENTS, THE COST OF WHICH EXCEEDS THE AMOUNT OF THE RESERVE FUND, THE ASSOCIATION OF CO- OWNERS MAY NEED TO FUND THE REPAIR OR REPLACEMENT OF THE COMMON ELEMENTS THROUGH INCREASED OR ADDITIONAL ASSESSMENTS, SPECIAL ASSESSMENTS, OR BORROWING.”
Administrative rulemaking authority. HB 5784 preserves the administrator’s authority to issue rules establishing minimum standards for reserve funds, provided those rules are consistent with MCL 559.205 as amended.
Current Law vs. HB 5784: What Would Change
Michigan condominium associations have long been required to maintain reserve funds for major repairs and replacement of common elements under Mich. Admin. Code R. 559.511 and MCL 559.205, and many boards already commission reserve studies as a matter of prudent governance. What has been missing under current law is a clear statutory requirement to conduct reserve studies on a prescribed schedule and to integrate those studies into budgeting and owner disclosures.
Board Recommendations: Core Takeaways
Use this checklist to prepare:
- Confirm coverage. Determine whether condominium association maintains common elements and has either an annual budget of over $20,000 or more than 20 units.
- Establish the deadline. For a new project, complete initial study no later than 30 days before transitional control date. For an existing project without a study or update in the past 5 years, complete one within 3 years or contract within 3 years and finish within 1 year after contracting, and calendar updates at least every 5 years.
- Engage a qualified professional. Use an experienced reserve professional, Michigan architect or professional engineer, or designated CAI or APRA reserve specialist/analyst, and verify applicable qualification before signing an agreement.
- Demand a complete study. Ensure report identifies covered components, useful lives, remaining useful lives, current repair/replacement costs, and recommended annual contributions.
- Adopt a workable funding plan. Translate study into annual contribution targets, project timing, and a documented approach for addressing any funding gap.
- Integrate reserves into every budget cycle. Review assumptions and project costs annually rather than waiting for next formal update.
- Keep reserve funds separate. Maintain distinct reserve account separate from association’s operating fund account.
- Communicate clearly with owners. Provide mandated annual notice, including required capitalized language about funding plan and possible assessments or borrowing if reserves are insufficient. Make reserve study and funding plan available to owners, prospective purchasers, and mortgagees.
- Document the board’s process. Record information reviewed, alternatives considered, decisions reached, and reasons for any phased funding approach.
- Update sooner when conditions change. Do not wait 5 years after major damage, unexpected deterioration, substantial construction, or material cost changes.
Reserve studies are not merely reports; they are governance tools. HB 5784 would require associations to commission those tools on a defined schedule, rely on qualified preparers, convert findings into funding plans, maintain reserves in separate accounts, and provide transparent, standardized information to owners. With measured implementation, boards can improve financial stability, reduce the risk of surprise assessments, and protect property values while meeting their statutory obligations under the Condominium Act.
We assist boards in determining applicability, coordinating with qualified reserve professionals, aligning funding plans with budgets, drafting compliant annual notices, and updating governing documents and policies to reflect the new requirements. If your association is preparing for HB 5784 or evaluating its current reserves strategy, we can help you build a roadmap that is both compliant and practical.
Frequently Asked Questions About the Michigan Condo Reserve Study Bill
Does HB 5784 apply to every condominium association?
No. It generally applies when an association is responsible for common-element maintenance, repair, and replacement and has either an annual budget of over $20,000 or more than 20 units.
When must a new condominium project complete its first reserve study?
Not later than 30 days before the transitional control date.
What is the deadline for an existing project?
If no study was completed or updated within the prior 5 years, the association generally must complete one within 3 years. Alternatively, it may contract with a qualified professional within 3 years and complete the study within 1 year after contracting.
How often must the reserve study be updated?
At least once every 5 years, through either a new study or an update of the most recent study.
Who may prepare the study?
A preparer must satisfy at least one statutory qualification based on recent reserve-study experience, Michigan licensure as an architect or professional engineer, or designation as a Reserve Specialist or Professional Reserve Analyst.
What must a compliant reserve study include?
It must identify covered components, their normal and remaining useful lives, current repair or replacement costs, and the estimated annual reserve contribution needed for future work.
What must the board do after receiving the study?
Adopt a reserve funding plan based on the study, communicate the plan and changes in writing, and review the study during each annual budgeting process.
Must reserve funds be kept separate from operating funds?
Yes. The reserve fund must be maintained in a separate account.
Who may inspect or copy the reserve study and funding plan?
Unit owners, prospective purchasers, and mortgagees must have access to the study, updates, and required written notice.
What must the annual owner notice explain?
Using the specific capitalized language quoted above, it must address the reserve balance, identify the most recent funding plan and update, explain that copies are available, and warn that assessments or borrowing may be needed if reserves are insufficient.
What if current reserves are below the funding plan?
The board should document a realistic path toward adequate funding, which may include phased contribution increases, while clearly communicating the risk of special assessments or borrowing.
Should the board wait 5 years if conditions or costs change?
No. Major damage, unexpected deterioration, substantial construction, or material cost changes may justify an earlier update.
Why are reserve studies important beyond compliance?
They support safer and more timely maintenance, predictable budgeting, informed board decisions, owner transparency, fair allocation of long-term costs, and protection of property values.
Do we need a brand-new study, or can we update an existing one?
HB 5784 mandates either a new reserve study or an update to an existing reserve study at least once every 5 years. If your last study is well-documented and recent (i.e., less than 5 years old), a formal update may be sufficient. If your community has had significant component changes or lacks a robust component inventory, a fresh study may be more reliable.
Are there penalties for noncompliance?
HB 5784, as drafted, focuses on obligations and processes: conducting studies, qualifying preparers, adopting a funding plan, maintaining a separate account, and providing owner notices. While it does not specify a penalty schedule, associations should assume that failing to meet statutory duties could increase litigation risk, complicate real estate transactions, and attract regulatory scrutiny, particularly given the bill’s explicit owner-access and disclosure provisions.
How much detail must the study include?
The definition section is prescriptive: component identification, useful lives, current costs, and annual reserve contribution estimates must all be included. This level of detail is vital for a defensible funding plan and transparent owner communications.
