Abstract: A heat pump system includes a compressor, a reversing valve, an outdoor heat exchanger and an indoor heat exchanger in a circuit, and a refrigerant-to-water heat exchanger. In the air cooling with water heating mode, the air heating with water heating mode and the water heating only mode, water from a water reservoir is passed through refrigerant-to-water heat exchanger. A refrigerant reservoir may be provided for use in refrigerant charge control. A refrigerant line (71) couples reservoir to the refrigerant circuit intermediate the outdoor and indoor heat exchangers for directing liquid refrigerant into the reservoir and a refrigerant line (73) couples the refrigerant circuit upstream of the suction inlet to the compressor for returning refrigerant to the refrigerant circuit. A controller controls flow into and from the refrigerant reservoir through selective opening and closing of control valve (72) in line (71) and control valve (74) in line (73).