Florida law and Fannie Mae now define a "funded" condo reserve differently. The state's structural integrity reserve study, or SIRS, recommends a yearly savings schedule built on a baseline funding plan. According to the Florida Department of Business and Professional Regulation, that plan keeps the reserve account above zero. Since August 3, 2026, lenders can no longer use that same baseline method when they rely on a reserve study to approve a building for a Fannie Mae loan.
So an association can meet the state's reserve rules and still fall short of the standard your lender applies. Buyers financing a resale unit in one of West Palm Beach's older towers usually find this out in the middle of a contract, after the deposit is down and the documents have arrived.
Two definitions of "funded"
The gap is easiest to see when you set the two standards next to each other.
| Florida SIRS standard | Fannie Mae, applications dated on or after Aug. 3, 2026 | |
|---|---|---|
| Funding goal | Baseline plan that keeps the reserve balance above zero | When a reserve study is used, the budget must include the study's highest recommended allocation |
| Baseline method | The basis of the recommended schedule | No longer permitted |
| Minimum budget set-aside | Set by the SIRS schedule | 10% of budgeted assessment income, rising to 15% for applications dated on or after Jan. 4, 2027 |
Fannie Mae's Lender Letter LL-2026-03, issued March 18, 2026, described baseline funding as "the option that allows the reserve cash balance to approach but never fall below zero" and said lenders are "no longer permitted" to use it. The current Fannie Mae Selling Guide says the same thing. A reserve study using the baseline method "may not be used to waive" the reserve requirement.
The same letter retired Fannie's Limited Review process. That was the lighter review lenders used for established buildings, and its retirement also ended Fannie's remaining geographic restrictions for Florida. The Real Deal reported that Freddie Mac retired its own streamlined review as well. Most buildings now go through Full Review, where a lender examines the association's budget and reserves.
The dates that decide which rules apply to your purchase
Each of these dates changes what a buyer receives or what a lender checks.
- December 31, 2024. Florida resale contracts signed after this date must address the building's milestone inspection, turnover inspection report and SIRS.
- August 3, 2026. Limited Review ends, and baseline funding stops counting for Fannie Mae approval.
- December 31, 2026. An association whose milestone inspection is due by this date may complete its SIRS along with the inspection, but the SIRS must be done by this date.
- January 4, 2027. Fannie's minimum reserve set-aside rises from 10% to 15% of budgeted assessment income for Full Review applications.
The fourth date matters most this fall. A buyer who goes under contract in November could have a loan application dated after January 4 if the deal is slow or gets renegotiated. A building that meets the 10% standard today may not meet 15% when the lender reviews it.
Why older buildings keep selling anyway
Florida Realtors' September 2026 report for Palm Beach County townhouses and condos, released October 16, shows 61.1% of closed sales were cash. A cash buyer never goes through a lender's project review, so Fannie's reserve test never applies to most of these sales. Older buildings keep a market. It is mostly a cash market, though, and a financed buyer competes in it with conditions a cash buyer doesn't have.
Other figures from the same September 2026 report:
- Median sale price of $310,000, up 3.3% from September 2025
- 782 closed sales, down 4.3%
- 5,858 active listings, down 15.3%
- 6.8 months of supply
- Median of 53 days to contract
- Sellers received a median 93.2% of original list price
In September 2026, the median seller gave up close to 7% of the original asking price. In a building that may not pass Full Review, a seller who can only close with a cash buyer has fewer possible buyers, and that usually shows up in negotiation. A financed buyer who learns a building's lending status early can use that information to set an offer or decide to pass.
Statewide, The Real Deal's October 7 report said Fannie Mae had already blacklisted more than 1,400 Florida condo buildings before the latest tightening, with nearly half in South Florida. The same report found condo sales above $1 million in the first half of 2026 were 143% above the same period in 2019, while sales under $1 million were 27% below.
Where the split shows up in West Palm Beach
In West Palm Beach, the gap between old and new buildings appears in specific properties.
Green Terrace, 2800 Georgia Avenue. The Real Deal reported that this 84-unit complex, built in 1983 and spread across 13 buildings, sold through a bankruptcy auction for $13.5 million to an entity linked to Woodfield Development. The association had filed for bankruptcy in April 2025 after the city said it owed $1.4 million in unpaid water bills and $1.5 million in code enforcement violations. Its problems weren't reserve-study problems. It shows a different way out for an aging association, where the land ends up worth more to a developer than the units are to buyers.
Portofino South. The Palm Beach Post reported in February 2026 that owners of the 54-year-old building, across the Intracoastal Waterway from Mar-a-Lago, had received a $202 million offer to sell. Buyout offers like this are another sign that the waterfront land under older buildings is drawing developer interest.
The new towers on Flagler Drive. On the other side of the split, The Ritz-Carlton Residences, West Palm Beach is a 27-story, 138-residence tower from Related Group and BH Group with Marriott International. South Florida Agent Magazine reported in April 2026 that more than 70% of the residences had sold, with completion slated for 2028. Florida YIMBY reported in June that Penthouse A, listed at $16.95 million, had gone under contract. Farther up the street, Savanna's Olara at 1919 North Flagler Drive had reached the 15th of 26 floors, with completion expected in 2028, according to Haute Residence's buyer guide updated October 1.
A tower delivered in 2028 starts a long way from the milestone cycle. Florida requires the first milestone inspection at 30 years after the certificate of occupancy, or at 25 years where the local building official requires it. Part of what a pre-construction buyer is paying for is decades before the building faces its first milestone inspection. A resale buyer in a 1970s building is buying into a building that is going through that process now.
What a resale buyer receives, and what a lender reads
For a resale buyer, Florida's main protection is document delivery. Under the 2026 text of Florida Statute 718.503, a seller who is not the developer must provide the contracted buyer with, among other items:
- The declaration, articles, bylaws and rules
- The most recent annual financial statement and annual budget
- The inspector-prepared summary of the milestone inspection, if one applies
- The most recent SIRS, or a statement that none has been completed
- A qualifying turnover inspection report, where one exists
The standard resale clause gives the buyer seven days, not counting weekends and legal holidays, after the contract is signed and the documents are received to cancel in writing. The right ends at closing, and the statute says a waiver of it is ineffective. For contracts signed after December 31, 2024, a contract that leaves out the required inspection and SIRS disclosures can be voided by the buyer before closing.
The documents a resale buyer receives overlap with what a lender reviews under Fannie Mae's Full Review, including the budget's reserve allocation, the reserve study and any special assessments. The Selling Guide defines critical repairs to include failed mandatory safety or structural inspections and unfunded repairs over $10,000 per unit due within 12 months. A project with unaddressed critical repairs stays ineligible until the work is completed and documented. Freddie Mac's guide treats critical repairs the same way.
This is general information, not legal or financial advice. A real estate attorney can explain how the cancellation and voidability provisions apply to a specific contract, and a lender can confirm whether a specific building qualifies.
Questions buyers are asking this fall
Does a special assessment automatically make a building ineligible? No. Fannie Mae requires lenders to review the assessment's purpose, approval, original and remaining amounts, and payoff date. The building becomes ineligible when the assessment pays for a critical repair that hasn't been fixed yet.
Can an association lower its reserve contributions to pay for repairs? Florida allows associations to vote to pause or reduce reserve contributions for up to two consecutive years in budgets adopted on or before the end of 2028. According to The Real Deal, this applies only when the association completed its milestone inspection within the past two years and needs the money for structural repairs, and it is not available to developer-controlled associations. A pause may help the building with the state and hurt it with a lender, because a smaller reserve line makes the 15% test harder to meet.
If I'm selling an older unit, what should I prepare? Collect the SIRS, the milestone summary and the current budget before you list. Then find out whether your building is likely to pass Full Review. That tells you whether your likely buyers are financed, cash only, or both. A property-specific valuation should reflect that, since an online estimate won't account for it.
If you're weighing a resale unit on Flagler Drive against a 2028 delivery, or deciding when to list an older condo before the January 4 change, Brian Mahoney can help you work through the association documents and what they mean for your financing and price. Let's Connect.
