The short answer
The law asks even a three-unit condominium to keep an adequate replacement reserve in a separate account, though it does not require a study. For buildings this small, a short study with one site visit often costs less than a single porch repair and settles years of arguments about who pays for what.
Drive through Somerville, Dorchester, Cambridgeport or Worcester’s east side and you pass street after street of three-deckers. Many of them are now condominiums: three units, three owners, one roof. These tiny associations are where reserve planning is most often skipped, and where the lack of it causes the sharpest disputes.
What the law asks of a small association
Chapter 183A makes no exception for size. Section 10(i) says all condominiums must keep an adequate replacement reserve fund, collected with the common charges and deposited in an account separate from operating funds. A three-unit association is held to the same sentence as a 300-unit complex.
What the statute does not do is require a reserve study, define adequate, or set an amount. Owners can also modify the reserve requirement under section 10(m) by a 67 percent vote of beneficial interest, repeated each year, once the developer has handed over control. In a three-unit building that can mean two owners outvoting the third, which is one reason small boards benefit from having the numbers on paper first.
Why small buildings feel big bills more
In a large association a $90,000 roof is spread across a hundred owners. In a three-decker it might be $45,000 split three ways, and the building probably has no manager, no reserve policy and no habit of saving. The common outcomes are familiar:
- The seller problem. One owner sells two years before the roof fails. The buyer inherits a share of a bill the seller enjoyed the use of.
- The cash problem. One owner can pay a $15,000 special assessment; another cannot. Work gets delayed while the roof gets worse.
- The scope problem. Owners disagree about whether rear porches, a shared boiler or the foundation are common elements at all. Your master deed answers that, and a study forces the question early.
What a study for a three-decker covers
A reserve study for a small building is short. The firm walks the building, lists the common components with their condition, estimates how many years each has left and what replacement will cost, then sets out a yearly contribution. For a typical wood-frame two- or three-family, the list usually includes:
- Roof, often asphalt shingle on the pitched sections and a membrane on flat sections, plus gutters, downspouts and flashing.
- Rear porches and stairs, which on many three-deckers are the most expensive and most safety-critical item.
- Siding and trim, whether clapboard on a paint cycle or vinyl.
- Windows and doors in common areas, and sometimes all windows if the master deed makes them common.
- Foundation, basement drainage and chimneys.
- Shared systems: a common boiler or water heater, electrical service, a sewer line to the street.
Your documents decide which items are common. If the master deed says each owner maintains their own windows, they stay off the list.
What it costs
A full study with a site visit for a small association falls at the low end of the range on our cost page, from about $1,500. Updates in later years cost less, often under $1,000 without a site visit. Those figures are rounded typical ranges, a guide rather than a quote.
Put that against a single repair. Rebuilding one tier of rear porches can easily cost more than the study, and the study gives you a date and a figure for every tier.
Turning the study into a habit
A study only helps if the association acts on it. For a three-unit building, a workable routine is:
- Open a separate reserve account in the association’s name, as section 10(i) requires, with two signers.
- Set the monthly contribution from the study, split by each unit’s percentage interest, and collect it with the common charges.
- Review once a year at the annual meeting: what was spent, what is due next, whether prices have moved.
- Update the study every few years, or sooner after a big replacement.
Self-managed associations often worry that this is more paperwork than three neighbors need. In practice it is a spreadsheet, a bank account and one meeting a year.
Selling and refinancing
Small associations also feel lender rules. Fannie Mae’s project standards look for at least 10 percent of assessment income budgeted to reserves, with a qualifying study as an alternative. Very small projects can follow different review routes, so ask the buyer’s lender what it needs. Either way, a buyer who sees a funded reserve and a recent study has fewer reasons to walk away or ask for a price cut.
The bottom line
A three-unit condominium does not legally need a reserve study, but it does need an adequate reserve, and owners of small buildings have the most to lose from guessing. A short study turns the guess into a number all three owners can see. To have one priced for your building, get a quote.