A lawyer's warning about defunct owners associations has 1.07 million views. New York gives you no way to check.

In a video that has passed 1.07 million views, a North Carolina real estate attorney lists five kinds of property she would never buy. The fifth is a condo or townhouse with a defunct owners association. Her advice to buyers is to request the association's financials, look at the reserve fund, and ask about pending special assessments. In North Carolina that advice sits on top of a statutory duty: the board must budget adequate reserves. In New York no such duty exists for any ownership form, no agency assesses whether any building's reserve is sufficient, and for a co-op or an HOA the association can be dissolved outright by the state without a single owner being notified.

What she said, and who she is.

The video is "NEVER Buy These 5 Types of Homes (I'm a Lawyer)", published May 12, 2026 on the channel The Real Estate Lawyer. Item five begins at 4:55 of a 6:39 runtime, which is worth stating precisely: a view count records plays, not people, and an unknown share of those 1.07 million plays ended before that timestamp. The speaker frames the structural point plainly. When you buy a condo or townhouse you are "not just buying your unit," you are buying into a shared ownership structure, and that if the association "has run out of money, is poorly managed, or has essentially stopped functioning, you are in trouble." She then walks the failure sequence. The roof needs replacing, nobody funded the reserves, the association cannot pay, and the cost that should have been saved over time arrives as a lump-sum assessment on every owner. Or the work simply does not happen, the building deteriorates, and the unit becomes hard to sell because the buyer's lender reads the association's financials and declines.

The speaker is Tiffany Webber, managing attorney and co-founder of Thomas & Webber, a real estate and estate planning firm with offices in Mooresville, Cornelius and Denver, North Carolina, serving the Lake Norman area. She was admitted to the North Carolina State Bar and to the U.S. District Court for the Western District of North Carolina in 2016, earned a J.D. cum laude from Charlotte School of Law, and was named a North Carolina Lawyers Weekly Rising Star in 2021 and a Super Lawyers Rising Star in 2023 (firm biography, Super Lawyers profile). She describes the list as drawn from closings she has handled rather than from theory.

Nothing here disputes the advice. The advice is correct. What follows is what happens when a New York buyer tries to act on it.

North Carolina has a statute behind that advice. New York does not.

North Carolina is not a heavily regulated state for community associations, and it still does more than New York does. Under the North Carolina Planned Community Act, N.C. Gen. Stat. § 47F-3-114 requires an association board to adopt a proposed annual budget that includes adequate reserves for maintenance, repair and replacement of the common elements. N.C. Gen. Stat. § 47C-3-114 imposes the same budgeting obligation on condominium associations under the North Carolina Condominium Act. North Carolina does not define "adequate," does not set a dollar floor, and does not require a reserve study. But a board that budgets nothing has failed a statutory duty, and an owner has a standard to point at.

New York's Condominium Act, Article 9-B of the Real Property Law, contains no counterpart. There is no provision requiring a board of managers to fund reserves, to budget for replacement of common elements, or to plan for capital expenditure at all. The Business Corporation Law, under which most New York cooperative housing corporations are organized, contains no such provision either. For homeowners associations the question does not arise, because New York has no homeowners association statute of any kind.

New York does have one reserve law, and almost nobody cites it correctly.

It is commonly said that New York has no reserve fund requirement at all. That is not accurate, and the inaccuracy matters, because it lets the industry answer a real criticism with a technical correction and move on.

New York City has the Reserve Fund Law, Local Law 70 of 1982, codified at NYC Administrative Code § 26-701 et seq. It requires an offeror converting a residential building to condominium or cooperative ownership to establish a reserve fund and transfer it to the board within thirty days after the first residential closing. The funding is either 3% of total price, or 1% initially with supplemental contributions reaching 3% of actual sales prices over five years. HPD has oversight, and violations carry civil and criminal sanctions. The Attorney General's Real Estate Finance Bureau issued guidance on May 4, 2015 that resolves the most common point of confusion: a working capital fund, which sponsors frequently present alongside a reserve, is not a reserve fund for purposes of this law.

So the honest statement of the gap is narrower and considerably sharper than "New York has nothing." Five limits do the work:

• The duty to fund binds the sponsor, not the board. Section 26-703(a) is a conversion-moment obligation on the offeror, and it does restrict what the money may be spent on: the fund is "to be used exclusively for making capital repairs, replacements and improvements necessary for the health and safety of the residents." What no provision of Chapter 8 requires is that the board ever put any of it back. There is no minimum balance, no cap on withdrawals, and no duty to replenish.
• The one continuing duty on the board is to disclose, not to fund. Section 26-704 requires the cooperative corporation or condominium board of managers to report to shareholders and unit owners semi-annually on all deposits into and withdrawals from the reserve fund. The statute plainly contemplates the fund being drawn down, and asks only that owners be told. A board may spend the reserve to zero and remain compliant so long as it reports having done so twice a year.
• It reaches conversions only. New construction condominiums, which is most of what has been built in New York City since 2000, fall outside the Reserve Fund Law entirely.
• It is a percentage of price, and it sets no annual rate. The percentages in § 26-703(b) track the sponsor's sell-down rather than a savings schedule: 3% of total price, or a 1% minimum initial contribution plus supplemental contributions at 3% of actual sales price for each sponsor-held unit sold within five years, trued up to 3% of total price at the five-year mark. Three percent of total price also bears no relationship to what a particular building's roof, elevators, risers and facade will cost across their remaining useful life. It is a transaction number rather than an engineering number, and after year five no rate replaces it.
• Compliance is not on any public record. HPD receives the obligation. Nothing published by building lets a purchaser, a board, or a lender confirm that a given sponsor actually funded and transferred the money.

Above that sits the state disclosure regime, which is candid about its own limits. 13 NYCRR § 20.3 requires every offering plan cover to carry the legend that filing with the Department of Law does not mean the Department or any other government agency has approved it. The Martin Act is a disclosure statute. Acceptance for filing is not review of the merits, and no agency at any level assesses whether any building's reserve is adequate. The disclaimers in a New York offering plan stating that no representation is made as to the adequacy of the reserve are accurate statements of law rather than lawyerly hedging.

"Defunct" means three different things in New York.

The video treats condos and townhouses as one category. New York has three distinct ownership forms, and an association fails differently in each. A buyer who does not know which one they are looking at cannot ask the right question.

A cooperative can be dissolved by the state. Most New York City co-ops are organized as business corporations under the Business Corporation Law, which makes them subject to franchise tax reporting. Under Tax Law § 203-a, the Tax Department may certify to the Secretary of State a list of corporations that have failed to file required reports for two consecutive years or have been delinquent in payment for two years. Upon publication of the proclamation, each corporation named "shall be deemed dissolved without further legal proceedings." No court hearing. No notice to shareholders. Under BCL § 1006, the dissolved corporation and its directors and officers may continue to function for the purpose of winding up affairs as if the dissolution had not taken place, which is why the building's day-to-day operations often carry on and nobody notices. Shareholders discover it when a purchaser's counsel runs an entity search during a sale and the corporation whose shares are being conveyed comes back inactive.

A condominium cannot be dissolved, so it goes quiet instead. A New York condominium is not a corporation. The board of managers is a creature of the declaration, the by-laws and Article 9-B. There is no charter for the state to forfeit, no franchise tax filing to miss, and correspondingly no state record that will ever show the association has stopped working. A condo goes defunct by attrition: seats go unfilled, the annual meeting does not draw a quorum, the managing agent resigns over unpaid invoices, and the by-laws' election machinery has no one left to run it. Article 9-B contains no provision addressing a board that has ceased to function, no receivership mechanism, and no petition an owner can file to have the association restarted. The remedy is a plenary action in Supreme Court seeking a court-appointed receiver under general equitable principles, which means retaining counsel and funding litigation against a body that by definition has no money.

A homeowners association operates in a statutory vacuum. New York has never enacted a Common Interest Ownership Act, a Planned Community Act, or any general HOA statute. New York HOAs are governed by whichever corporate statute they were formed under, usually the Not-for-Profit Corporation Law or the Business Corporation Law, plus their own declaration and covenants. The Attorney General regulates the initial offer and sale of HOA interests through the offering plan requirement, and nothing regulates the association afterward.

This is not a marginal population. A query of the New York State active corporations register (data.ny.gov, dataset n9v6-gdp6, run August 2, 2026) returns 3,249 active entities whose names contain "homeowners association," of which 1,446 sit in the five boroughs. Richmond County alone accounts for 972, more than any other county in the state and more than Westchester, Suffolk and Nassau combined. The same register returns 2,292 active entities containing "owners corp," 618 containing "tenants corp," 349 containing "apartment corp," and 984 containing "housing corp," the naming conventions of New York cooperative housing corporations. Because the dataset publishes active entities only, it cannot tell us how many housing corporations have already been dissolved by proclamation. That number is not published anywhere, and we have not measured it.

Three features of New York law make a failing association harder to rescue.

Underfunding is a national problem. An analysis of more than 100,000 reserve studies prepared between 1986 and 2025 under the Community Associations Institute's National Reserve Study Standards found 74% of associations funded below 70%, the threshold at which an association is considered underfunded, and the highest rate that firm has recorded. What is specific to New York is the set of tools available once a building crosses that line.

The common charge lien loses to the mortgage. Under RPL § 339-z, a condominium's lien for unpaid common charges is prior to all other liens except tax liens and "all sums unpaid on a first mortgage of record." New York has no super-lien giving the association a limited priority position ahead of the mortgage, which many states adopted precisely so that associations could survive a foreclosure wave. When a distressed owner stops paying both the mortgage and the common charges, the lender is made whole first and the association absorbs the shortfall, which is then redistributed to the owners who are still paying.

Collection runs through judicial foreclosure. Under RPL § 339-aa, the lien is foreclosed by suit brought in the name of the board of managers, in the same manner as a mortgage foreclosure under the RPAPL, after at least ninety days' notice to the unit owner in 14-point type. There is no nonjudicial route. The collection remedy available to a broke association is the slowest and most expensive one in the toolkit, and it requires the association to have a functioning board to authorize the suit in the first place.

The financial report goes to owners, not to buyers. RPL § 339-w requires the board to keep detailed, accurate, chronological records of receipts and expenditures, make them and the supporting vouchers available for examination by unit owners at convenient hours on weekdays, and render a written summary report to owners at least annually. This is a real transparency provision and it has two holes. It runs to existing unit owners, so a prospective purchaser has no statutory right to any of it, and the statute attaches no penalty for a board that simply does not comply. A board that has stopped functioning has, by definition, stopped rendering the report, and the only person entitled to demand it is someone who already owns.

New York's own Attorney General tells owners it cannot help.

The Real Estate Finance Bureau publishes a pamphlet titled "How to Handle Problems with a Condominium's Board of Managers". It is the state's official consumer guidance for exactly the situation the video describes, and it is unusually direct about the limits of the office.

Asked how the Attorney General's office can help, the pamphlet answers that the office "regulates the offer and sale of real estate securities" by the sponsor, and that if the sponsor still controls the board or is not keeping its offering plan commitments, the office may intervene. That is the whole of the jurisdiction. Once the sponsor has departed and the owners control the board, the conduct of that board is outside the bureau's authority. The pamphlet's recommended sequence for an owner facing a non-compliant board is to raise it tactfully, then write a letter that is "factual, brief and not hostile," then organize other unit owners, then retain a private attorney while bearing in mind that litigation is costly, lengthy, and "can also be very unpleasant." It closes with "Good luck!"

This is the structural point the site has documented across the AG incapacity work. The bureau is not declining to act. The Martin Act and Article 9-B do not give it post-sponsor governance authority to exercise. The advice to hire your own lawyer is not a brush-off. It is an accurate description of the only mechanism New York provides.

The binding reserve standard for New York condos is set in Washington, not Albany.

There is an authority that enforces reserve adequacy on New York City condominiums, and it is a federal secondary-market entity with no housing policy mandate for New York. Fannie Mae requires a lender reviewing a project to confirm a minimum replacement reserve allocation, currently 10% of what the project budgets in assessment income each year. Under Lender Letter LL-2026-03, that floor rises to 15% for mortgages dated January 4, 2027 or later, a change we covered in the reserve floor post. Separately, a project with identified critical repairs exceeding roughly $10,000 per unit that the association cannot fund becomes ineligible, and a project can be placed in unavailable status, at which point conforming financing disappears for every unit in the building simultaneously.

Fannie Mae's stated rationale is that it observed a direct correlation between underfunded reserves and projects needing critical repairs, and that inadequate reserves produce financial hardship for owners through unexpected special assessments. That is the identical diagnosis Webber gives buyers, arrived at from the lending side. The practical result is that a New York condominium's reserve discipline is policed by an underwriting guideline, enforced through a financing blackout that hits every owner at once, rather than by a state standard enforced against the board that made the decision. The penalty lands on the owners. The decision was the board's.

Two bills would change this. Both remain in committee.

S7600, sponsored by Senator Siela A. Bynoe, and A8945, sponsored by Assemblymember Jackson, would direct condominium and cooperative housing associations to complete capital reserve studies with a thirty-year funding plan. The study would have to be prepared or reviewed by a reserve specialist credentialed through the Association of Professional Reserve Analysts or by a licensed engineer or architect, and follow the Community Associations Institute's National Reserve Study Standards or similar. Existing associations would have one year from enactment, newly formed associations two years after the first board election. Deficiencies above 10% of prior assessments would have to be corrected within ten years, smaller ones within three. Associations with under $25,000 in total common area capital assets would be exempt.

S7600 was referred to the Senate Judiciary Committee on April 23, 2025, reported and committed to Finance on May 28, 2025, and re-referred to Judiciary on January 7, 2026 at the start of the second year of the session. A8945 was referred to the Assembly Housing Committee and re-referred on January 7, 2026. Neither has reached a floor vote. That is the record. S7600 did advance out of one committee, which distinguishes it from most of the reforms in the legislative graveyard.

Both bills address the measurement gap. Neither addresses the three New York specific enforcement problems above, and neither reaches homeowners associations, which remain outside every statute in the state.

What a New York buyer can actually do.

Webber's checklist is request the financials, look at the reserve, and ask about pending assessments. Here is the New York version, including the steps that have no counterpart in a state with an HOA statute.

1. Establish the ownership form first. Condominium, cooperative, or homeowners association. The failure mode, the records you can obtain, and the entity searches that are meaningful all differ.
2. For a co-op or an HOA, run the entity. Search the corporation in the New York Department of State's business entity database. An entity that is inactive, or dissolved by proclamation, is a material fact that will not appear in any board package.
3. Ask for the reserve balance and the annual report under RPL § 339-w. A condo board is required to render this to owners annually. A seller who is a current owner can obtain it. A board that cannot produce one has told you something.
4. Ask whether the building was a conversion, and if so, whether the Local Law 70 reserve was funded. Request the post-closing amendment evidencing the sponsor's transfer under § 26-703. There is no public register to check this against, which is itself the answer to how well the obligation is policed.
5. Check the building's Fannie Mae project status. An unavailable status, or critical repairs the association has not funded, will end conforming financing for the unit regardless of your own credit.
6. Read the last three years of minutes and the last two audited financials, not one. A single year hides a trend. Look for reserve draws used to close operating deficits.
7. Price the capital stack yourself. Facade work under the Facade Inspection Safety Program, Local Law 97 penalties, elevator and gas piping compliance, and boiler replacement are the four items that most often convert an underfunded reserve into an assessment. Our cost calculator and the local law stack set out the schedule.

Bottom line.

The warning that reached a million viewers is correct, and it is portable everywhere except in the one respect that matters most to New Yorkers: the verification step. North Carolina gives an owner a statutory duty to point at. Florida, New Jersey and California give a buyer a study to read. New York gives a sponsor a one-time percentage at conversion, a disclosure regime that states on its cover that nobody has approved anything, an Attorney General whose published guidance for a failed board ends with "Good luck!", and a lien that loses to the mortgage. The operative reserve standard for a New York City condominium is an underwriting guideline written by Fannie Mae, and the sanction for failing it is a financing blackout imposed on every owner at once. New York has not chosen a weaker standard than its neighbors. It has declined to set one, and left the consequence to be sorted out between an owner who cannot get the records and a board that no one can compel to keep them.

Related resources.

• Issue: no standard of reserve adequacy
• Issue: anyone can sign your reserve study
• New Jersey mandated reserve studies. New York still hasn't.
• Fannie Mae's 15% reserve floor arrives in January.
• Florida fixed condo transparency after Surfside. New York hasn't.
• Why the Attorney General cannot help with condo governance.
• How to write an AG Real Estate Finance Bureau complaint.