On Singer Island, a Condo Can Satisfy Florida's Reserve Law and Still Fail a Lender's Review

"WAIVING OF RESERVES, IN WHOLE OR IN PART, OR ALLOWING ALTERNATIVE USES OF EXISTING RESERVES MAY RESULT IN UNIT OWNER LIABILITY FOR PAYMENT OF UNANTICIPATED SPECIAL ASSESSMENTS REGARDING THOSE ITEMS."

Florida requires that sentence, in capital letters and bold type, on any condo proxy ballot that asks owners to cut their reserves. The rule is in section 718.112 of the Florida Statutes. For most of the past decade, Singer Island owners treated it as a warning about future assessments. Since August 3, 2026, it has also become a warning about who can get a mortgage to buy a unit.

On that date, Fannie Mae and Freddie Mac began holding condo reserves to a standard that is stricter than Florida's own. A tower whose budget meets every requirement of state law can still fail a lender's project review. A cash buyer never runs into that review. A financed buyer does, every time. Two buyers with the same budget, looking at the same stretch of A1A, may therefore be choosing from different lists of buildings.

Florida Sets One Reserve Minimum, the Lenders Set Another

Florida's post-Surfside reforms closed the old escape hatch. For budgets adopted on or after December 31, 2024, an owner-controlled association that must have a structural integrity reserve study, or SIRS, can no longer vote to fund less than the required reserves for structural items. Those items include the roof, the structure, fireproofing, plumbing, electrical, waterproofing, and windows and exterior doors.

The statute also sets a minimum standard for the study itself. A SIRS must recommend at least a baseline funding plan, which keeps the reserve cash balance above zero in every budget year. A building that funds to that baseline is complying with Florida law.

Fannie Mae's Lender Letter LL-2026-03, issued March 18, 2026, explicitly rejects that standard. Lenders often rely on a reserve study when a building's budget falls short of the agency's required reserve percentage. When they do, they must now confirm that the budget includes the study's highest recommended reserve allocation. They may no longer use the baseline funding method, which the letter describes as the option that "allows the reserve cash balance to approach but never fall below zero." That requirement applies to loan applications dated on or after August 3, 2026. Freddie Mac's current condo criteria likewise require the budget to carry the reserve study's highest recommended allocation.

The table's last row describes a provision from the 2025 reform. Under the Florida Senate's summary of HB 913, an association that has completed a milestone inspection within the previous two calendar years may vote to pause or reduce reserve contributions for up to two consecutive budgets so the money can go to the repairs the inspection recommended. That option eases the cash burden on owners. It also puts a smaller reserve line in the very budget a buyer's lender will read.

What August 3 Removed

Before August, many established condo buildings went through a lighter process: Limited Review at Fannie Mae and Streamlined Review at Freddie Mac. Fannie Mae's letter retires Limited Review and notes that the change "effectively retires the remaining geographic restrictions that apply to the state of Florida." Under Freddie Mac Bulletin 2026-C, Streamlined Review ends for applications received on or after August 3, 2026. Established projects now go through Freddie Mac's Established Condominium Project review, Reciprocal Review, or an exemption where one applies.

The exemptions are written for small buildings. Both agencies expanded them for projects of two to ten units, with extra conditions for projects of five to ten units. An oceanfront high-rise does not fit that profile.

In practice, the lender now looks much more closely at the association itself. CNBC described the shift as a closer review of association finances, reserves, insurance and building condition, with possible delays or denials when a project falls short. National Mortgage Professional listed the documents involved: budgets, reserve funding, insurance, inspection reports, litigation, assessments, owner delinquencies and critical repairs. It also reported that missing association paperwork can hold up a loan for a borrower who is otherwise fully qualified.

Why the County Median Looks Calm

If financing had become harder across the board, countywide condo prices would probably show it. They do not. According to MIAMI REALTORS® + RWorld's September 2026 report, Palm Beach County's condo median rose 3.33% year over year in September 2026, to $310,000. Condo inventory fell 15.27% to 5,858 listings, and the median time from listing to contract dropped to 53 days. These are countywide figures, not Singer Island figures. Still, they argue against the idea of a broad condo selloff.

Cash explains much of the calm. In September 2026, 61.1% of the county's townhome and condo sales closed in cash. The same report put mortgage rates at 7.46% as of October 13. A cash buyer's purchase never goes through a Fannie Mae or Freddie Mac project review, so the reserve rules above do not limit which towers that buyer can choose. A financed buyer chooses only among the buildings that pass. The FHA route is narrower still: of 2,397 condo buildings in Miami-Dade, Broward and Palm Beach counties, only 21 are approved for FHA loans.

So a stable median can sit on top of two very different situations. A tower that passes review can sell to financed and cash buyers alike, while one that fails depends mostly on the cash side of the market. Price alone will not tell a financed buyer which kind of building a listing is in.

Singer Island Has Already Seen the Inspections

Building condition on the island has made local news before these lender rules arrived. In October 2024, WPTV reported that Riviera Beach's inspector found visible damage at Ocean Edge Condominiums to be largely cosmetic, with no sign of corrosion or weakness in the main support columns. The 19-story building dates from 2008, and WPTV noted it was not subject to the new state inspection law at the time. Building age affects which state inspection deadlines apply. The lenders' reserve test, by contrast, applies to every tower that goes through full review.

The public response is still being worked out. A Palm Beach County status report shows that in January 2025, commissioners told staff to hold off on creating an assistance fund for milestone-related assessments until after the legislative session. On October 13, 2026, WPTV covered a panel organized by U.S. Rep. Lois Frankel on rising association fees and assessments. State Sen. Mack Bernard summed up the problem: "we don't want another Surfside, but at the same time what we want to do is create new affordable housing."

Four Dates That Shape 2027

The rules that decide whether a tower passes review next year are being applied now. Florida law requires a condo board to adopt its annual budget at least 14 days before its fiscal year begins. For an association whose fiscal year starts January 1, that deadline falls in mid-December. The budgets adopted this fall are the ones lenders will review in 2027.

1. August 3, 2026. Limited Review and Streamlined Review ended, and lenders stopped accepting baseline-funded reserve studies.
2. December 31, 2026. This is the latest date any SIRS can be completed. It applies to associations that existed by July 1, 2022 and are doing the study together with a milestone inspection due by the same date. For other associations in that group, the deadline was December 31, 2025.
3. January 4, 2027. Fannie Mae's minimum reserve allocation rises from 10% to 15% of budgeted assessment income for full-review loan applications dated on or after this date.
4. December 31, 2028. This is the last budget date that can use Florida's temporary reserve pause for milestone repairs.

A buyer who goes under contract in the spring will most likely have a loan application dated after January 4. That loan will be reviewed against the 15% floor and against a budget the board is setting right now.

What to Request Before Writing an Offer

Florida's disclosure rules make the key documents available. Within 45 days of receiving a SIRS, an association must give owners a copy or notice that the study is available. Within 45 days of receiving a milestone inspection report, it must distribute the inspector's summary and, if it is required to have a website, post the full report there. Any special assessment, line of credit or loan used to fund reserves must appear in the annual financial statement given to prospective buyers.

• The most recent SIRS, including the funding schedule the board adopted and whether it is baseline or something higher
• The milestone inspection summary and any phase two report
• The current budget and the proposed 2027 budget, with the reserve line expressed as a share of assessment income
• Any approved special assessments, lines of credit or loans, and the repair schedule they pay for
• A vote record showing whether the association has used the temporary reserve pause
• Confirmation from your lender, early in the process, of which project review the building will go through

This post is general information, not legal, lending or financial advice. Your lender, attorney and the association's own professionals can confirm how these rules apply to a specific building and loan.

Frequently Asked Questions

Does a building that complies with Florida law automatically qualify for a conventional loan?

No. Florida's minimum is a baseline funding plan. When a lender relies on a reserve study, Fannie Mae requires the budget to carry the study's highest recommended allocation and no longer accepts the baseline method for applications dated on or after August 3, 2026.

Do these lender rules affect a cash purchase?

The agency project review is part of conventional mortgage underwriting, so a cash purchase does not go through it. The building's reserves still affect a cash buyer, though, through future assessments and through the pool of financed buyers available when it is time to sell.

Is the 15% reserve floor in effect now?

Not yet. It applies to full-review loan applications dated on or after January 4, 2027. Until then, the 10% minimum applies.

For a seller, the building's SIRS and proposed 2027 budget determine whether financed buyers can be part of the offer pool. For a buyer, they determine whether the loan can close. Ann Cusa brings three decades of developer and condominium experience to reading those documents, from first showing to closing. Request a Private Consultation to review a specific building before you make an offer or set a list price.