What a DC board has to decide, and soon

The reserve provision offers two routes, and the choice is a real one.

Route one: budget 15 percent. Simple, requires no study, and is a large number. For an association with a $1.2 million operating budget, that is $180,000 a year to reserves — and where the current allocation is 10 percent, closing the gap means a five-percentage-point assessment increase or an equivalent cut elsewhere.

Route two: commission a reserve study and fund to its highest recommended tier. A study costs a few thousand dollars and may justify a lower allocation than 15 percent — or may justify considerably more. It must be updated within three years, and the baseline funding method it may previously have used is now off the table.

The second route is the better one for most buildings, and not only for the arithmetic. A current study is also what supports a hardship showing on energy compliance, what informs the private-roadway and hardscape decisions the District's lien statutes now make consequential, and what a buyer's lender will ask for anyway.

The review changes are the sharper edge

The reserve floor is a budget problem with a year's notice. The retirement of Limited Review already happened, and it changes which units can be sold.

Limited Review was the streamlined path that let a lender approve a loan in an established project without a full project questionnaire, budget review and insurance verification. Its retirement means every project of more than 10 units now goes through Full Review on every loan — and Full Review is where a thin budget, an underfunded reserve, deferred maintenance, litigation or an out-of-range deductible surfaces and stops the loan.

One District practitioner has estimated that Limited Review covered roughly 40 percent of condominium transactions and that a substantial share of older and smaller DC condominiums could become non-warrantable by January 2027. That is a practitioner's estimate rather than a measured figure, and it is offered here as an indication of scale, not a finding.

What to do in the next four months

Check the master-policy deductible against $50,000 per unit. This one is binary and it is already in force. A project above the cap is non-warrantable, which means units cannot be sold to buyers using conforming financing. If the deductible is above $50,000, that is a conversation with the broker now, not at renewal.

Get the reserve study current. Within three years, and not on a baseline funding method.

Model the 15 percent. Whichever route the board takes, the 2027 budget is the one that has to reflect it, and District associations adopt budgets in the autumn.

Fix the questionnaire answers before a buyer's lender asks. Under Full Review, the project questionnaire is answered on every transaction rather than occasionally. Inconsistent answers across transactions are their own problem.

What to watch next

Whether the District legislates. Six years after Surfside, a search of the current Council Period returns no bill on condominium reserve studies, structural or milestone inspections, or facade and balcony safety. If a District reserve mandate ever arrives, this is the standard it will be measured against — and by then most DC associations will already be funding to it.