Before You Commit: Why Reserve Funds Must Be on a NYC Buyer’s Due Diligence List

When you fall in love with a co-op or condo apartment in NYC, it’s easy to focus on the kitchen finishes, the view, or the closet space. But if you’re serious about protecting your investment, there’s something just as important to look at before you make an offer: the building’s reserve fund.

What Exactly Is a Reserve Fund?

Think of the reserve fund as the building’s emergency savings account. It’s money set aside for big-ticket repairs and capital projects — like replacing elevators, doing Local Law 11 façade work, upgrading boilers, or renovating the lobby.

These are not day-to-day operating expenses. They’re the once-in-a-decade costs that can easily run into hundreds of thousands (or even millions) of dollars.

Why You Should Care as a Buyer

1. Fewer Surprise AssessmentsBuildings with healthy reserves can fund projects without hitting owners with large special assessments. In contrast, a building with a thin reserve may ask every owner for tens of thousands of dollars when an unexpected repair pops up.

2. Stronger Resale ValueBuyers (and their lenders) review building financials as part of due diligence. A strong reserve signals a well-managed building and can make your apartment easier to finance and sell later.

3. Predictable Monthly CostsStable reserves help keep maintenance/common charges more consistent over time — instead of spiking dramatically when the roof or elevator needs replacement.

What “Healthy” Looks Like

There’s no single number that fits every building, but here are some common benchmarks:

• 3–6 months of operating expenses in the reserve fund is a solid baseline.

• Regular contributions from maintenance/common charges, not just one-off funding.

• A recent reserve study (within the last 3–5 years) that maps out major projects and how they’ll be paid for.

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Questions to Ask Before You Make an Offer

You don’t need to be a CPA — just ask the right questions early:

• What is the current reserve balance?

• When was the last reserve study, and what did it recommend?

• Are there any upcoming capital projects or Local Law compliance work planned?

• How does the building fund its reserves — monthly contributions, flip tax, capital contributions?

  
  

Asking these questions before you make an offer can save you from an unpleasant surprise later — or give you leverage to negotiate.

Bottom Line

Buying in NYC means buying into a community — and its financial health matters. A building with a strong reserve fund is positioned to maintain property value, meet legal obligations, and protect owners from costly assessments.

Before you put pen to paper, make reserve funds part of your due diligence checklist. It’s one of the smartest moves you can make as a buyer.