Why this lands harder in Connecticut than in most states

Because Connecticut has left the space empty.

There is no statutory reserve study requirement. There is no reserve funding mandate. There is no condominium structural or milestone inspection programme — and no bill proposing one was introduced in either the 2025 or 2026 session. A 2025 bill requiring annual reserve studies, introduced by the Senate President Pro Tempore, died in committee without a hearing.³

Connecticut's only reserve obligation is a disclosure duty, and Public Act 26-31 adds one more disclosure at the point of sale from October 1, 2026: the residential condition report will advise buyers in communities of more than twelve units to request a reserve fund report. It tells the buyer to ask. It does not require the association to have anything to give.

Into that vacuum, a mortgage regulator has set a number. The practical effect is that the reserve standard binding most Connecticut associations in 2027 was written in Washington.

The distributional problem

A statute applies to everyone. A lending standard applies to associations whose owners want to sell or refinance — which is most of them eventually, and none of them evenly.

A community with an ageing owner base and few transactions may feel nothing for years, then discover at the first sale that its funding level makes units unsaleable to a conforming buyer. That is a worse failure mode than a statutory deadline, because it arrives without notice and lands on an individual seller rather than on the board that set the budget.

What changes for Connecticut boards

Work out your current percentage. The test is the replacement reserve contribution as a share of annual budgeted assessment income. Many Connecticut associations do not present their budget in a way that makes this immediately visible.

Find out whether you use baseline funding. If your reserve provider's recommendation is a baseline number, that method is no longer accepted, and the association must fund to the highest recommended level instead. This can be a substantial jump even for an association that believed itself compliant.

Check the master policy deductible against $50,000. CAI's Connecticut chapter flagged that “the new deductible cap may create compliance challenges for communities currently carrying higher deductibles” — and a high deductible is exactly the lever a board under premium pressure has been pulling.²

Budget for the questionnaire burden. With Limited Review gone, nearly every Connecticut condominium sale now requires full documentation of financials, insurance and maintenance records. Note that Connecticut declined to cap what an association may charge for completing a lender questionnaire — that provision was stripped from House Bill 5265 before it became Public Act 26-31.⁴

The insurance interaction is the one to think hardest about

A Connecticut lawyer writing for the state's community association audience set out the mechanism by which the investor-concentration loosening can raise costs even as it eases lending. Insurance underwriters treat high rental or investor concentration as elevated risk, with the result that “master policy premiums that are often 20–50% or more above those for comparable owner-occupied-heavy buildings. In some cases, premiums can double, deductibles balloon ($25,000–$100,000+), carrier choices shrink, or coverage becomes difficult to secure at all.”⁵

Read against the $50,000 deductible cap, that is a genuine squeeze: an association with heavy investor ownership may face both a premium the market prices upward and a deductible ceiling it cannot exceed without losing project eligibility.

CAI's chief executive, quoted in national coverage of the five-year Surfside anniversary, put the broader objection this way: “We all want to make sure people are safe in their buildings. But some of these requirements go well beyond condo safety and actually are making it more challenging for some of these buildings to fund maintenance.”⁶

What to watch next

No Connecticut outlet has yet reported which Connecticut condominium projects have become ineligible under the new standards. That list — and it will exist — is the story nobody has written.

The second is whether the reserve floor prompts a legislative response in the 2027 long session. A state that has declined to mandate reserve studies now has a federal lending standard doing the work, which is either a reason to legislate or a reason not to bother, depending on who is asked.