The third change: owner occupancy

“We have retired the 50% owner occupancy requirement in Section 5701.5(b) for investment properties. Sellers are no longer required to determine if the project complies with the owner occupancy requirement when reviewing an Established Condominium Project.”

Presale requirements continue to apply to new condominium projects. But for an established Rhode Island project with a high proportion of rented units — common in Providence and in the seasonal coastal communities — an owner-occupancy test that used to block investment-property financing is gone.

Read alongside the exemption expansion, the direction is clear: the secondary market has decided that small and rental-heavy established projects were being screened for the wrong things.

What it does not relax

The same bulletin is explicit that the loosening is paired with a tightening, and the bulletin says why:

“Since then, we have seen a correlation between Condominium Projects with underfunded reserves for capital expenditures and those in need of Critical Repair. Condominium Projects with inadequate reserves typically do not have the requisite resources to maintain the physical condition of the project or to fund unexpected operating expenses. As a result, unit owners can experience substantial financial hardship through unexpected special assessments or higher HOA assessments, leading to Mortgage default or foreclosure.”

So the financial-condition requirements move the other way. From August 3, 2026, a project's budget must include “the highest recommended reserve allocation amount in the reserve study”, and that amount “must not be based on a baseline funding method where the reserve cash balance approaches but never falls below zero.” From January 4, 2027, the replacement-reserve floor rises “from a minimum of 10% to a minimum of 15% of the annual budgeted assessment income.”

And the bulletin adds a reminder that catches associations mid-cycle: “If a Seller has an unexpired project review completed prior to the effective dates listed above, the Seller must still confirm that the project complies with these new Guide requirements for applications received on or after the effective date of such requirements.” An existing approval is not a shelter.

Why the Master Association condition matters in Rhode Island

The five-to-ten-unit exemption is unavailable where the project “must not be part of a Master Association”. Rhode Island has a statutory concept for this: § 34-36.1-2.20 permits a condominium to be made subject to a master association, and § 34-36.1-1.03 defines a master association accordingly.

That is a question a small association can answer from its own declaration, and the answer changes which underwriting path its owners' lenders use. A five-unit building inside a master association gets neither the exemption nor, after August 3, Streamlined Review.

What a small Rhode Island association can do

Count your units and check for a master association. Those two facts determine everything above. Two to four units: exemption available. Five to ten and free-standing: exemption available. Five to ten inside a master association, or eleven and up: full review.

If you are in the exemption, do not conclude that nothing is required. The exemption governs how the lender reviews the project. It does not relieve the association of insurance requirements, and it does not make an underfunded reserve safe — it makes it invisible for longer, which is worse for the owner who eventually sells into a special assessment.

If you are above the threshold, treat August 3 as the date your paperwork started mattering more. A reserve study with a baseline figure and a higher recommended figure now needs the higher figure in the budget. A project without a study has nothing to put in the budget.

Expect the questions to arrive from buyers' lenders, not from anyone official. Rhode Island requires no reserve study and no structural inspection — the word “inspection” does not appear in the seventy-four sections of the Condominium Act. Our Rhode Island condo safety inspections page covers that gap. The consequence is that the effective inspection regime for a Rhode Island condominium is the mortgage underwriting process, and it just changed.

What to watch next

Whether the sixteen-member condominium law commission, reporting by December 31, 2027, addresses small condominiums as a category. Rhode Island's failed 2026 reserve bill S 2692 Substitute A applied to “any condominium twenty (20) years old or older” with no size floor, which would have caught every three-unit conversion in the state; H 7609 used a $20,000 common-element cost threshold instead. How a future bill draws that line decides whether the small buildings the secondary market just exempted get regulated by the state instead.