Big changes are coming to condo communities, and they’re worth paying attention to. Whether you own a condo, sit on a board, or are thinking about buying or selling, these updates could affect you.
On March 18, Fannie Mae and Freddie Mac issued policy updates to condo project standards and property insurance requirements, which may impact everything from your community’s budget to how smoothly a sale or purchase goes.
That means communities will need to be more prepared, organized, and proactive than ever. Condos have long been an accessible entry point into homeownership. With these new rules, getting a condo loan may involve more steps and scrutiny, while placing greater responsibility on associations to keep their affairs in order.
Let’s break down what’s changing and why it matters to you
A Big Shift Toward Detailed Project Reviews for Condo Sales
Starting August 3, 2026, the “limited review” process for condo sales is going away. In the past, some sales could breeze through with a quicker, simplified review—but those days are over.
From now on, nearly all condo sales will face a full review, meaning lenders will dig into the association’s finances, insurance, and overall health more closely. Boards and managers will need to provide more documentation and coordination, and residents may notice sales taking a bit longer than before.
There is a bit of flexibility for smaller communities. Those with fewer than 10 units may qualify for a waiver, but for most associations, this change marks a clear shift toward more thorough oversight.
Additionally, the long-standing investor and regional rules have been removed. The 50% investor limit is gone, and Florida no longer requires special reviews for new attached condos, making compliance easier for new projects in the state.
Stronger Reserve Requirements
Another major update focuses on planning for the future. Starting January 4, 2027, associations must dedicate at least 15% of their annual budgets to reserves and follow the highest recommended levels in their reserve studies. Baseline or minimum funding methods are no longer permitted.
In practical terms, this may require boards, managers, and reserve providers to revisit budgets and evaluate funding plans now. Communities could see:
- Increased assessments.
- Adjustments to long-term financial planning.
- Greater scrutiny during the lending process.
If your community is managed by RealManage, our team can partner with your board to review reserve studies, adjust budgets, and create a plan that keeps your association compliant.
Insurance Rules Are Evolving Too
If insurance has been keeping you up at night—you’re not alone. It’s been one of the biggest pain points for condo communities, and these new changes bring a mix of relief and new expectations.
The good news? There’s finally some breathing room. Communities that have struggled with rising premiums or limited coverage options now have more flexibility. Requirements around strict replacement cost documentation are being eased, insuring roofs at full replacement cost is no longer mandatory, and there’s more leeway in how coverage is evaluated. In short, it may actually get a little easier to meet eligibility requirements, especially in tougher insurance markets.
At the same time, certain standards remain. A new maximum deductible of $50,000 per unit will apply starting July 1. Associations should review their policies carefully to meet these guidelines while maintaining strong protection for the property.
Additionally, members of the community are required to carry insurance on their property to address any gaps in the association’s master policy, including covering the $50,000 deductible and any losses specific to their unit. Homeowners must ensure their coverage aligns with the master policy and complies with these new federal requirements.
If you’re with RealManage, you don’t have to figure this out on your own. Our insurance specialists work directly with boards to review coverage, identify gaps, and make sure your community is set up for both compliance and long-term protection. Reach out to our RealManage Insurance Services team at RMIS@RealManage.com or request a quote to get started.
What Community Associations Should Do Now
The most important step right now is to be proactive and start the conversation. Boards and managers should:
- Review reserve studies and funding plans. Convene with your community manager and reserve study provider to ensure budgets and reserve funding align with new minimum requirements and reflect the highest recommended funding levels.
- Evaluate insurance coverage and deductibles. Identify potential compliance gaps and prepare for evolving requirements.
- Prepare for increased lender scrutiny. Ensure your community is ready to provide detailed information in lender questionnaires for upcoming condominium sales.
- Engage key partners. Work closely with your community management team, insurance professionals, reserve specialists, and legal advisors.
- Communicate with homeowners. Make sure they understand their responsibility to carry insurance that covers gaps in the association’s master policy, including applicable deductibles, and complies with new federal requirements.
These changes aren’t just policy updates, they’re a shift in how condo communities are evaluated and managed. If you’re looking for a management partner who truly understands your community’s unique needs and helps ease the administrative burden, reach out to RealManage today.
Disclaimer: The information provided here is for general informational purposes only and is not intended as legal, financial, or professional advice.
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