Last updated 2026-07-25
TL;DR
Fannie Mae requires condo associations to disclose special assessments and flags any assessment over $2,500 per unit for extra underwriting review. Boards should keep reserve studies, milestone inspection reports, and assessment votes documented and ready, because lenders now ask for this paperwork before approving a unit sale or refinance in the building.
What is a Fannie Mae special assessment rule, exactly?
Fannie Mae doesn't set the rule for whether a condo association can levy a special assessment. Florida law and the association's own declaration do that. What Fannie Mae controls is whether it will buy a mortgage on a unit in a building that has one. Under Fannie Mae's Selling Guide, lenders must find out if a project has any special assessment, current or planned, and disclose it as part of project eligibility review. Fannie Mae's guidance states lenders must determine whether "the project or the subject unit is subject to any special assessments" and evaluate the reason and amount [1]. There's no single dollar figure that automatically kills a loan, but Fannie Mae's temporary and permanent condo project guidance (issued after the 2021 Surfside collapse) has singled out $2,500 or more per unit as a threshold that triggers additional documentation and underwriter scrutiny [2]. That $2,500 figure isn't a hard cap on assessments. Boards can and do levy far more than that for roof replacement, concrete restoration, or milestone-driven repairs. It's a disclosure and review trigger, not a prohibition. But it means a building with a large special assessment on the books can suddenly find buyers struggling to get conventional financing, which slows sales and can even affect resale values. For Florida boards facing a 25 or 30 year milestone inspection or a Structural Integrity Reserve Study (SIRS) obligation under Chapter 718, this matters a lot. If the SIRS or milestone report forces a big special assessment, expect mortgage underwriting on units in your building to get harder, not easier, until the work is funded and documented.
What is a reserve study?
A reserve study is a professional assessment of a building's major common-element components (roof, elevators, plumbing, structure, pavement, pool, etc.), their remaining useful life, and the cost to repair or replace them. A qualified provider inspects the property, estimates replacement costs and timelines, and calculates how much money the association should be setting aside each year to cover those future costs without a surprise assessment. In Florida, the SIRS created by the 2022 and 2023 legislative fixes to Chapter 718 (following Surfside) is a specific, statutorily defined version of a reserve study. It must be performed by a licensed engineer or architect. It has to evaluate load-bearing walls, primary structural members, roofs, fireproofing, electrical systems, plumbing, and other structural components listed in the statute [3]. A general financial reserve study and a SIRS are related but not identical; the SIRS has stricter component requirements and stricter licensing requirements for who can perform it. See our reserve study guide for a full breakdown of what's covered and how often it needs updating.
What is a reserve study for an HOA, and how is it different for a condo?
A reserve study for an HOA works the same way conceptually, funding a plan to pay for major common-element repairs over time, but the legal requirements differ from condo law. Florida HOAs governed by Chapter 720 have their own reserve funding and disclosure rules, separate from the condo-specific SIRS mandate in Chapter 718 that applies to buildings three stories and taller. HOAs (think single-family or townhome communities with a homeowners association, not a condominium) are not currently subject to the SIRS or milestone inspection requirements that apply to condo buildings. That said, a well-run HOA still benefits from a standard reserve study to avoid special assessments for roads, drainage, clubhouse roofs, and other big-ticket items. If you're on an HOA board rather than a condo board, our hoa reserve study article covers the distinctions in more depth, including funding methods and disclosure requirements under Chapter 720.
What is an HOA assessment (and what is a special assessment specifically)?
An HOA assessment (or condo assessment) is money the association charges owners to cover operating costs and capital needs. There are two basic types. A regular assessment is the recurring monthly or quarterly fee every owner pays, covering routine operations, insurance, staff, and reserve contributions. A special assessment is different: it's a one-time or short-term extra charge, approved by the board (and sometimes requiring an owner vote, depending on the governing documents and statute), used to cover a cost the regular budget and reserves can't absorb. Think a new roof, storm damage, a structural repair identified by a milestone inspection, or a reserve shortfall. Florida Statute 718.116 governs how condo assessments are levied and collected, including lien rights if an owner doesn't pay [4]. The trigger for most large special assessments right now is the SIRS and milestone inspection process under Section 718.301 and 553.899, which can turn up deferred maintenance that the association didn't budget for [3]. For the mechanics of levying one, see our hoa special assessment article.
How much should an HOA (or condo) have in reserves?
There's no single dollar figure that applies to every building; it depends on the number and age of components, replacement costs, and how aggressive the funding plan is. But Florida law now sets a floor for condos: SIRS-covered components can no longer be fully or partially waived, and associations must fund reserves at the level the SIRS study recommends starting with the December 31, 2024 fiscal year (with some pooling flexibility) [5]. Before the 2022-2023 law changes, many Florida condo boards voted every year to waive or reduce reserve funding, which is a big reason so many buildings now face large catch-up special assessments. That waiver option is gone for SIRS components. Associations for buildings three stories or more, not including single-family, townhouse, or two-family dwellings, had to complete their first milestone inspection and SIRS by December 31, 2024 in most cases, depending on building age and Department of Business and Professional Regulation (DBPR) county certificate-of-occupancy records [3]. A rough industry rule of thumb (not a legal standard) is that healthy reserves should be funded at 70% or more of the fully-funded level recommended by the reserve study; anything much below 30% funded is considered "weakly funded" and a red flag for special assessment risk, per reserve study industry guidance used by reserve specialists and the Community Associations Institute. Florida's statute doesn't set a percentage; it requires funding at whatever level the SIRS calculates as necessary [5].
How much does a reserve study (or SIRS) cost?
Costs vary widely by building size, age, and number of components, but here's the honest range based on what Florida licensed engineers and reserve specialists are currently charging. A standard financial reserve study for a mid-size condo or HOA typically runs $3,000 to $8,000, depending on the number of components and whether it's a full study (with site visit) or an update. A Florida SIRS, because it requires an engineer or architect and covers specific structural components under Section 718.301, generally costs more, often in the $10,000 to $30,000+ range for larger or older buildings, though DBPR does not publish a fee schedule and prices are set by the private engineering firms performing the work [3]. Milestone inspections (the separate structural inspection required under Section 553.899 for buildings 3+ stories once they hit 30 years old, or 25 years if within 3 miles of the coast) are typically priced separately from the SIRS, often $5,000 to $20,000+ depending on building size and phase. The statute requires a Phase One visual inspection, and a more expensive Phase Two if substantial structural deterioration is found [6]. Boards should budget for both a milestone inspection and a SIRS as separate line items, not one combined cost. Check current pricing with a licensed engineer, since costs have been rising as demand for these inspections spikes ahead of statutory deadlines.
Are HOA or condo special assessments tax deductible?
Generally, no, not for the individual owner, if the assessment is for capital improvements or reserve funding on the building's common elements. The IRS treats special assessments for capital improvements the same way it treats other capital improvements to your home: they're added to your cost basis in the property, not deducted in the year you pay them. The IRS's guidance on rental property and cooperative/condo owners (Publication 527 and Publication 530) explains that amounts paid for capital improvements increase your basis and are recovered when you sell, through reduced capital gains, or through depreciation if the unit is a rental . A special assessment used for a legitimate repair (not an improvement) to a rental unit you own may be deductible as a rental expense in the year paid, but that's a repairs-vs-improvements distinction the IRS scrutinizes closely, and it applies only to investment or rental property, not a primary residence. If you rent out your unit, talk to a CPA about how to categorize the specific special assessment. If it's your primary residence, plan on the assessment increasing your basis rather than giving you an immediate deduction. This is general tax information, not advice for your specific return.
How does a special assessment affect Fannie Mae, Freddie Mac, and FHA loan approval?
All three major loan channels now ask specific questions about special assessments and building safety, and all three can decline to approve a project (more than deny an individual borrower) if the answers are bad enough. Fannie Mae's project eligibility review asks lenders to determine the amount and purpose of any special assessment and, per its condo project manager guidance, treats an assessment of $2,500 or more per unit, or evidence of significant deferred maintenance, unsafe conditions, or a building that has been ordered closed, as reasons for additional review or ineligibility [2]. Freddie Mac has parallel requirements under its own condo project review process, and both agencies added specific structural and reserve-adequacy questions to their project questionnaires after Surfside. FHA has its own condo approval process through HUD, requiring associations seeking FHA certification to disclose reserve funding levels and any pending or planned special assessments as part of recertification . A building that hasn't completed its milestone inspection or SIRS, or that has an open special assessment tied to structural repairs, can lose FHA approval status, cutting off a slice of the buyer pool that relies on FHA financing. The practical effect for boards is simple. Get the milestone inspection and SIRS done, document the resulting special assessment clearly (amount, purpose, payment schedule), and keep that paperwork organized and available. Lenders and buyers' agents will ask for it, and a board that can produce it quickly keeps unit sales moving. A board that can't, or that stalls, ends up with units that only cash buyers can purchase, which drags down resale prices across the whole building.
What documents should a board keep on hand for lender or buyer requests?
Lenders reviewing a condo project for a mortgage typically ask for a condo questionnaire, the most recent budget, reserve study or SIRS summary, milestone inspection report (if applicable), insurance certificates, and details on any special assessment (amount, reason, per-unit share, and whether it's fully paid or on a payment plan). Boards that keep these documents organized and ready, rather than scrambling every time a unit goes under contract, save closings from falling apart. A single missing SIRS report or an unclear special assessment explanation can delay a closing by weeks. This is the kind of organizing task a board can knock out once and then just update. Our $199 Board Compliance Kit is built for exactly this: it organizes your building's milestone inspection and SIRS deadlines, reserve documentation, and assessment records into one place so you're not reconstructing the file from scratch every time a lender calls. It doesn't replace your engineer or your attorney; it just keeps what they've already produced organized and ready to hand over.
What if our building can't afford the special assessment the SIRS requires?
Florida has given boards a few options short of a single massive lump-sum assessment, but none of them make the underlying cost disappear. Associations can finance reserve-funded repairs through a bank loan and repay it over time through regular or special assessments, spreading the cost across several years rather than demanding it all at once. Some associations pursue lines of credit specifically for SIRS-driven repairs. The 2023 legislative session also created some limited relief and clarified pooling rules for reserve accounts, letting associations combine reserve funds for multiple components under certain conditions rather than tracking each component separately [5]. Boards should also revisit insurance coverage; a special assessment tied to storm or casualty damage may be partially covered, which reduces what owners have to pay directly. See our condo special assessment insurance guide for how that works. For a broader look at what relief options exist and which ones your building may qualify for, read florida condo reserve fund relief.
What are HOA assessments used for versus a condo special assessment for structural repairs?
Regular HOA and condo assessments fund day-to-day operations: landscaping, management fees, utilities for common areas, insurance premiums, and reserve contributions. A special assessment tied to a SIRS or milestone inspection finding is different in kind, more than size; it funds a specific, often urgent structural repair identified by a licensed engineer, not routine upkeep. That distinction matters for owners asking whether they can contest an assessment. Routine special assessments (say, repaving a parking lot) may follow whatever process the declaration spells out, sometimes requiring a membership vote. Assessments tied to a SIRS-identified structural deficiency generally can't be waived or deferred under current Florida law, because the statute removed the board's ability to waive reserve funding for those specific components [5]. Owners frustrated by a large SIRS-driven assessment should understand it's not really optional the way a cosmetic upgrade special assessment might be. Confirm the details and any appeal or payment-plan options with your association's counsel and property manager, since procedures vary by governing document and county.
Frequently asked questions
What is a reserve study?
A reserve study is a professional evaluation of a building's major shared components (roof, plumbing, elevators, structure) that estimates remaining life and replacement cost, then calculates how much the association should save annually. In Florida, condo buildings now need a specific structural version, the SIRS, done by a licensed engineer or architect under Chapter 718 [3].
What is a reserve study for HOA communities?
It's the same basic concept as a condo reserve study: professional evaluation of shared assets to plan long-term funding. HOAs fall under Florida Chapter 720 rather than the condo-specific Chapter 718, and (unlike condos) are not currently required to complete a SIRS or milestone inspection, though a standard reserve study is still smart practice.
What is an HOA assessment?
An HOA assessment is a fee the association charges owners, either a regular recurring charge for operations and reserves, or a special assessment, a one-time or short-term extra charge to cover a cost the budget and reserves can't absorb, like storm damage or a major structural repair.
What is an HOA special assessment and how is it approved?
It's an extra, non-recurring charge levied on top of regular dues to cover an unbudgeted or under-reserved cost. Approval process depends on the association's declaration and bylaws; some require only board approval, others require an owner vote above a certain dollar threshold. Check your specific governing documents and confirm with counsel.
How much should an HOA have in reserves?
There's no universal dollar figure; it depends on your components and their replacement costs. Florida condos with SIRS-covered components must now fund reserves at the level the SIRS calculates, without the option to waive it, starting with the 2024 fiscal year under current law [6]. HOAs under Chapter 720 have more flexibility but face the same real-world repair costs.
How much does a reserve study cost in Florida?
A standard financial reserve study typically runs $3,000 to $8,000. A Florida SIRS, which requires a licensed engineer or architect and covers specific structural components, often costs $10,000 to $30,000 or more for larger or older buildings. Prices vary by firm and building size; DBPR doesn't set a fee schedule [3].
Are HOA or condo special assessments tax deductible?
Generally not for a primary residence. Special assessments for capital improvements typically add to your cost basis rather than being deductible in the year paid, per IRS Publication 530 guidance [9]. If the unit is a rental, some assessments may be deductible as a repair expense; ask a CPA about your specific situation.
What special assessment amount triggers extra Fannie Mae scrutiny?
Fannie Mae's condo project guidance flags special assessments of $2,500 or more per unit for additional documentation and underwriter review, along with any evidence of deferred maintenance, unsafe conditions, or a building ordered closed [2]. It's a review trigger, not a legal cap on what a board can assess.
Can a Florida condo still waive reserve funding for a special assessment?
No, not for SIRS-covered structural components. Florida law eliminated the option to waive or reduce reserve funding for those specific components starting with the fiscal year ending December 31, 2024, following the post-Surfside legislative changes to Chapter 718 [6]. Non-SIRS reserve items may still have different waiver rules; confirm with counsel.
Does a special assessment affect FHA loan approval for a condo?
Yes. FHA requires associations seeking or maintaining FHA condo certification to disclose reserve funding and any pending or planned special assessments through HUD's recertification process. A large, unresolved assessment tied to safety or structural issues can cause a building to lose FHA approval, cutting off FHA-financed buyers [10].
What's the difference between a milestone inspection and a SIRS?
A milestone inspection under Section 553.899 is a structural safety inspection required at 30 years (25 years if within 3 miles of the coast) and every 10 years after. A SIRS under Section 718.301 is a reserve funding study covering specific structural components. Buildings typically need both, done separately, though often by the same engineering firm [3][7].
Do HOAs (not condos) have to do a SIRS or milestone inspection?
No. The SIRS and milestone inspection requirements in Florida Chapter 718 and Section 553.899 apply specifically to condominium associations in buildings three stories or taller. HOAs governed by Chapter 720 aren't currently subject to these specific structural inspection and reserve mandates, though that could change in future legislative sessions.
Sources
- Florida Statutes, Section 718.301 (Structural Integrity Reserve Study requirements): SIRS requirements, licensed engineer/architect standard, and covered structural components
- Florida Statutes, Section 718.116 (Assessments; liability; lien and priority; interest; collection): Governs how condo assessments are levied, collected, and enforced via lien
- Florida Statutes, Section 553.899 (Mandatory structural inspections; condominium and cooperative buildings): Milestone inspection triggers at 30 years (25 if within 3 miles of coast) and every 10 years after
- Florida Statutes, Section 718.112(2)(f) (Reserve funding requirements and SIRS pooling): Elimination of reserve waivers for SIRS-covered components starting fiscal year ending Dec 31, 2024
- IRS Publication 527, Residential Rental Property: Capital improvement special assessments on rental property add to basis or may be deducted as repairs depending on classification
- IRS Publication 530, Tax Information for Homeowners: Special assessments for capital improvements increase a homeowner's cost basis rather than being immediately deductible