A Guide to Delaware Reserve Study Laws: Understanding Your HOA's Financial Future
Find state-specific reserve study requirements and funding laws — choose your state to see what is legally required for reserve studies, updates, and funding levels.
For community association leaders, property managers, and reserve specialists operating in Delaware, compliance with the Delaware Uniform Common Interest Ownership Act (DUCIOA) is non-negotiable. This guide translates the complex statutory requirements into an actionable compliance strategy, highlighting the key differences between condominium (COA) and planned community (HOA) obligations.
Table of Contents
- Executive Summary
- Research Strategy
- Detailed Breakdown
- Forthcoming Changes
- HOA Board Checklist
- Property Manager Checklist
- Reserve Analyst Checklist
1. Executive Summary: The Core Compliance Mandate
Delaware law establishes a dual-compliance track, demanding rigorous reserve planning but treating condominiums (COAs) and planned communities (HOAs) differently.
Association Type
Reserve Study Status
Funding Standard
Critical Requirement
Condominiums & Cooperatives
Mandatory 1
Fully Funded (20-Year Positive Balance) 2
Must obtain a new study or update at least every 5 years 3, and the declaration must mandate the reserve.4
Planned Communities (HOAs)
Indirectly Required 5
Statutory Minimums (5%–15% of budget) 6
Failure to maintain a current study triggers high mandatory funding minimums to avoid financial risk.5
The Bottom Line: While HOAs can technically operate without a study, doing so forces them into an arbitrary and often more expensive statutory funding penalty. For financial prudence, a professional, current reserve study is essential for all common interest communities in Delaware.
2. Research Strategy: Your Roadmap to DUCIOA Compliance
Achieving and maintaining DUCIOA compliance requires a focused strategy that aligns financial planning with legal requirements. Association leaders should focus on the following four strategic pillars:
- Understand Your Status: Determine if your community is a Condominium/Cooperative (absolute requirement) or a Planned Community (conditional requirement).
- Verify Currency: Ensure the reserve study has been performed or updated within the last 5 years by an independent, qualified professional.
- Confirm 'Fully Funded' Status: If you are a COA, verify that your cash flow projections meet the stringent 20-year, never-negative balance rule, and plan to cover all costs without relying on special assessments.
- Integrate Structural Mandates: For communities in New Castle County (and potentially statewide soon), the reserve study must explicitly budget for the costs associated with new structural and façade inspections.7
3. Detailed Breakdown of Delaware Reserve Requirements
A. Frequency, Methodology, and Scope
Requirement
DUCIOA Mandate
Compliance Notes
Cadence/Frequency
Must be current, defined as performed or updated within the last 5 years.
Best practice: Perform an onsite inspection (Level III study) every 5 to 10 years, with a financial/no-site update (Level II study) in the intervening years.8
Projection Period
Must project budgeted contributions and expenditures for replacements no less than 20 years.
This is a highly strict mandate. The projection must show the fund balance never falling below zero.
Scope of Work
Analysis must cover the remaining useful life (RUL) and the estimated cost to replace (RC) each separate system and component of the common elements.
Component analysis must include all structural elements and systems, especially those now subject to county inspection mandates.7
B. Who Can Perform the Reserve Study?
DUCIOA requires the analysis to be performed by "1 or more independent engineering, architectural, or construction contractors or other qualified persons".
- Independence is Key: The preparer must be independent to ensure objectivity and prevent conflicts of interest.
- Qualifications: While specific state licensing (Engineer/Architect) or industry certification (Reserve Specialist - RS) is not explicitly mandated for "other qualified persons," choosing a certified professional (RS/PRA) is the strongest defense for a board fulfilling its fiduciary duty.8
C. Funding Policy and Financial Mandates
The definition of "Fully Funded" for COAs is exacting: the reserves must contain a balance that, when supplemented by fixed annual additions, will meet the full cost of all projected repairs and replacements without supplementation by borrowed funds or special assessments.9
Penalties for Missing a Current Study (All CICs):
If the association lacks a current reserve study, DUCIOA §81−315(a)(2) imposes mandatory minimum contributions based on the number of key components maintained :
Number of Key Common Components Maintained
Required Minimum Annual Budget Percentage
Four or More Components
15% of Annual Budget 6
Three Components
10% of Annual Budget 6
Two or Fewer Components
5% of Annual Budget 6
D. Disclosure and Risk Mitigation
- Mandatory Resale Disclosure: The association must provide a copy of the most recent reserve study and documentation regarding the reserve funding status in the Resale Certificate furnished to prospective purchasers.
- Segregation of Funds: Reserve funds must be maintained in a separate and distinct account used solely for common element repair and replacement. These funds cannot be used for operating budget shortfalls.
- Risk of Non-Compliance: DUCIOA does not impose state fines, but the primary risk is civil litigation. Unit owners can sue the executive board to compel compliance and force special assessments necessary to achieve the "Fully Funded" standard.6 Furthermore, non-compliance jeopardizes unit salability by impeding mortgage eligibility with lenders like Fannie Mae/Freddie Mac.
4. Forthcoming Changes: Structural Safety and Expanded Mandates
The future of Delaware reserve law is trending toward universal, mandated compliance, primarily driven by structural integrity concerns.
New Castle County (NCC) Ordinance Impact
New Castle County enacted Ordinance 23-09, which requires periodic structural and façade inspections for certain common interest community buildings (those with load-bearing systems of concrete, masonry, steel, or heavy timber).
Impact on Reserves: The costs of these mandatory inspections and any subsequent required repairs are scheduled expenses that must now be explicitly included and funded within the association’s DUCIOA-compliant reserve study.7
Proposed DUCIOA Amendments (Future Legislation)
Recommendations from the New Castle County Task Force foreshadow significant statewide changes 7:
Proposed Change
Status and Impact
Universal Reserve Study
Recommended to expand the study requirement to all Common Interest Communities, including Planned Communities (HOAs), eliminating the conditional compliance.7
Extended Projection
Recommended increasing the mandatory cash flow projection period from 20 years to 30 years.7
Declarant Funding
Recommended clarifying that declarants must obtain and fund reserves appropriately during the development and turnover phase.7
Inspection Budgeting
Explicitly requiring the reserve study to budget for ongoing structural and façade inspection costs.7
5. HOA Board Checklist
Cadence
Action Item
Statutory/Compliance Requirement
Annual
Review and Adopt Reserve Contribution Line Item
Must be included in the annual budget.10 Verify contributions meet DUCIOA (Condo/Coop) or Statutory Minimums (HOA/No Study).6
Annual
Verify Segregation of Funds
Ensure reserve funds are in a separate, distinct, non-operating account.
Multi-Year (Every 5 Years)
Commission/Update Reserve Study
Ensure the study is updated by an independent, qualified professional to maintain "current" status.
As Applicable
Fund Structural Inspections
Budget and fund for mandatory structural/façade inspections (e.g., NCC Ordinance 23-09).7
As Needed
Disclosure of Surplus
If the reserve is certified as being in surplus of the "Fully Funded" requirement, approve unit owner refunds or credits.5
6. Property Manager Checklist
Operational Step
Compliance Function
Statutory Requirement
Budget Preparation
Integrate Reserve Contribution
Ensure the annual budget clearly displays the mandated reserve contribution line item.10 If no study exists for an HOA, calculate and impose the appropriate statutory minimum (5%, 10%, or 15%).6
Vendor Management
Coordinate Reserve Specialist Engagement
Verify the specialist is independent and qualified, aligning scope with DUCIOA RUL and RC requirements.
Resale Disclosure
Prepare Resale Certificate
Ensure the most recent reserve study and funding status are included in all resale documents provided to prospective purchasers.
Recordkeeping
Document Retention
Retain reserve studies, annual financial updates, and supporting documentation for a minimum of 20 years to cover the DUCIOA projection period.
7. Reserve Analyst Checklist
Scope/Deliverable
DUCIOA Mandate and Standard
Key Concern for Delaware
Independence
Must be an independent professional (engineering, architectural, construction, or other qualified person).
Use professional credentials (RS/PRA or licensed professional) to justify qualification and mitigate board fiduciary risk.
Component Analysis
Analysis of Remaining Useful Life (RUL) and Estimated Cost to Replace (RC) for all common elements.
Mandatory Inclusion: Explicitly budget for NCC-required structural/façade inspection costs and anticipated repairs.7
Financial Projection
Minimum 20-year cash flow projection.
CRITICAL: Projection must show the reserve balance never falling below a positive number to meet the "Fully Funded" standard for COAs.
Deliverables
Provide a report suitable for inclusion in the Resale Certificate.
Ensure the report is clearly dated and verified as "current" (less than 5 years old) upon delivery.
