Condo Warrantability Checklist: Don't List Without It

Hey, I'm Scott Selleck. I've been a licensed real estate agent since 1993, 33 years of Bergen County experience. I specialize in condo sales across the GWB corridor and South Florida. With the condo cliff arriving today, I created a 5-point warrantability checklist that every condo owner needs to run before they list. This takes 5 minutes to explain, and it could save you months of headaches. Starting today, every condo project with 11 or more units faces full review from Fannie Mae and Freddie Mac. Full review scrutinizes the entire building, not just the unit you're selling. If the building doesn't meet warrantability standards, your buyer's mortgage may not be approved. This checklist gives you a quick, practical way to assess your building's readiness. If you check all 5 boxes, you're in good shape. If you don't, you need to know before you list, not after. Item 1: Reserve study current under 36 months and funding at the study's highest recommended level. Ask your condo association For the most recent reserve study, it should be less than 36 months old. The association should be funding reserves at or above the study's highest recommended level. If the study is stale or reserves are underfunded, that's a red flag. The association needs to update the study and adjust contributions before you list. Item 2: Master policy per unit deductible at or below $50,000. This is the big one. Review the building's master insurance policy. The per-unit deductible for hurricane and wind damage must be at or below $50,000. If the deductible exceeds $50,000 per unit, the buyer's lender may not approve the loan. I've seen deals fall through because of this. Contact your insurance agent about reducing the deductible if it's too high. Item 3: HOA delinquency rate under 15% of units, 60+ days past due. Ask your association for the delinquency report. The percentage of units that are 60 or more days past due on HOA dues must be under 15%. High delinquency rates signal financial instability. If delinquencies are high, the board needs to address collections before you list. This takes time. Start now. Item 4: Fidelity bond and adequate liability coverage in place. The building must have fidelity bond coverage—that's crime coverage—and adequate general liability insurance. These are standard requirements. That many associations overlook. Fannie and Freddie require proof of these coverages. Without them, the building fails full review. Most associations already have them. Just verify the amounts are adequate. Item 5: No pending structural litigation. There should be no pending lawsuits against the association related to structural issues, facade problems, concrete spalling, mold, or other building defects. Litigation is an automatic red flag under full review. Even a minor lawsuit can delay or derail a sale. If there's pending litigation, you need to disclose it to buyers and consult with a real estate attorney. Here's something most people don't know: if your building has 10 or fewer units, it now qualifies for a full waiver of project review from Fannie Mae. That means no reserve study requirement, no delinquency rate scrutiny, no master policy review—the building is essentially exempt from the condo cliff changes. This is a significant advantage for boutique buildings in Bergen and Hudson Counties. If you own a unit in a smaller building, a 6-unit walk-up in Edgewater, a townhome-style condo in Cliffside Park, a low-rise in Weehawken, you may have an easier time selling than owners in larger projects. This is an undercovered angle that most agents and buyers aren't aware of. If you're in a 10-unit or fewer building, make sure your agent knows it's a selling point. Here's what to do: 1. Request your association's financial documents, reserve study, insurance policy, delinquency report, litigation disclosure. 2. Check each item against the 5-point list. 3. If all 5 pass, you're in good shape to list. 4. If any fail, address the issue before listing, or price and market accordingly. 5. Consult with a real estate attorney if you're unsure about any item. The condo cliff is real, and it's here. But it doesn't have to be a death sentence for your sale. Buildings that are well-managed, well-funded, and well-maintained will pass full review. Buildings that aren't will struggle. The key is knowing where you stand before you list. This checklist gives you that clarity. I'm Scott Selleck, licensed since 1993, over 500 transactions. If you're not sure whether your building passes, let's talk. I'll review your situation and give you an honest assessment. Book a free consultation at njflconsultation.net/lifey.app or call and text me at 201-970-3960.