Recently, there has been an increase in buyers asking how much is accumulated in the reserve fund. This is one of the most common questions during Boston condo consultations. A few years ago, buyers only compared the sale price and management fees, but now they are also considering the financial health of the building.

To start with the numbers, the median management fee for Boston condos is $420 per month as of 2025, which has risen by 29 percent in recent years. The range of management fees varies widely from $200 to $1,000 per month, and some buildings in East Boston charge more than $1.25 per square foot. It has been shown that management fees have increased at an average annual rate of 3.2 percent in recent years. What this number signifies is simple: the burden of management fees is increasing every year, and the rate of increase varies significantly from building to building.

One of the key variables creating this gap is the type of building. Boston has a mix of small buildings converted from wooden three-story structures, known as triple-deckers, built between the 1880s and 1930s, and large new condos in Seaport and downtown. Buildings with fewer units, like converted triple-deckers, may have a higher per-person burden due to fewer residents sharing the management fees, while large new buildings with many amenities tend to have higher base management fees. Both types have their pros and cons, but from a reserve fund perspective, it is worth remembering that fewer units mean weaker financial buffering.

This is where the reserve fund becomes important. Massachusetts law (Section 183A-10) requires all condo associations to maintain an appropriate reserve fund in a separate account from operating expenses. However, the definition of 'appropriate' is not specified in terms of a specific amount, so it is safer to assess it through a professional reserve study based on the building's age and future replacement costs. It is also good to note that Massachusetts does not legally mandate reserve studies. Property management companies are required to report the adjustments of the reserve account to the board in writing, so asking whether you can review this report is also a good approach.

Additionally, in recent years, rising insurance premiums have been cited as a factor pushing up management fees among Boston condo associations. When insurance premiums increase significantly at the time of master insurance renewal, associations often cover this through management fee increases, so reviewing the trends in management fee increases over the past 2-3 years can help understand the financial flow of the building. Here are the items to check when looking for a condo.

• Balance of the reserve fund and whether it is separated from the operating expense account
• Recent reserve reallocation report from the management office
• History of special assessments over the last 3-5 years
• Building age and major equipment replacement timelines

Buildings with thin reserves are more likely to incur special assessments for roof, boiler, or elevator replacements. In Boston, where winters are long, replacing boilers or heating pipes is considered a significant cost item, so it is also advisable to specifically ask about the reserve for this aspect. Mortgage lenders also review this financial status, so if it falls short, it may be classified as a non-warrantable condo, leading to less favorable loan conditions. For families moving from other states to Boston, it is also important to consider that property tax and insurance systems differ from their previous state of residence.

Additionally, management fees typically include maintenance of the building's exterior and roof, master insurance, landscaping, garbage collection, and management of common facilities like lobbies and elevators, with reserve fund contributions added on top. In the case of converted triple-decker buildings, the fewer units may simplify management fee items but could weaken reserve buffering, while large new buildings may have diverse management fee items but benefit from a larger number of units spreading the reserve. Keeping this in mind can help in comparing listings.

This article is not investment or legal advice, and it is recommended to check the reserve study with a real estate professional before making any actual contracts.