When your building loses conventional financing, New York doesn't require your seller to tell you.

On August 3, 2026, Fannie Mae eliminates the limited-review pathway for established condominiums under Lender Letter LL-2026-03. That change will accelerate the rate at which NYC buildings land on the agency's "unavailable" designation, which already covers at least 66 New York City condo and co-op buildings. New York Real Property Law §461 requires the seller of a unit in any of those buildings to disclose exactly nothing about it.

What Fannie Mae's unavailable designation means.

Fannie Mae's Condo Project Manager (CPM) system assigns one of three statuses to every condominium or cooperative project in its database: approved, expired, or unavailable. An "unavailable" status means the project does not currently meet Fannie Mae eligibility criteria. When a lender runs a loan application through CPM and the building shows "unavailable," the lender cannot sell that mortgage to Fannie Mae. No conventional financing goes through.

Buildings land on the unavailable list for several reasons, all connected to the structural and financial health standards Fannie Mae tightened after the 2021 Surfside collapse. Deficiencies in structural integrity flag a building. So do unfunded critical-component repairs exceeding $10,000 per unit, reserve allocations below Fannie Mae's threshold, pending litigation against the association, a pattern of deferred maintenance, or more than 15 percent of units 60 days or more in arrears on common charges. A building can also lose eligibility because more than 35 percent of the project's total space is commercial in use.

The CPM system is not a public registry. Before Fannie Mae agreed in late 2023 to share designation status directly with association boards, boards often had no mechanism to learn a building was on the list until a buyer's lender ran the check and declined the loan. The list has grown since 2022: nationally, over 2,000 condo and co-op buildings carry an adverse designation, to our knowledge as of mid-2026. In New York City, the count stands at roughly 66, a number that will increase as the August 3 changes take effect and more projects go through full lender review for the first time.

What New York actually requires sellers to disclose.

New York's Property Condition Disclosure Act is codified at Real Property Law Article 14. The statute's definitions section, §461, defines "residential real property" as "real property improved by a one to four family dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons." It then states that the term "shall not refer to... (b) condominium units or cooperative apartments."

Those words have been in the statute since its 2002 enactment. The March 2024 amendment, which added seven flood-risk questions to the disclosure form, left the condo and co-op exemption in place. Every legal guide published since confirms the same point: sellers of condominiums and cooperatives are not required to deliver a Property Condition Disclosure Statement to buyers before signing a contract.

The documents that do change hands at a condo resale in New York are governed by custom and contract negotiation, not statute. A buyer's attorney typically requests the building's declaration, by-laws, house rules, and two years of financial statements. Pending special assessments are often disclosed in attorney-to-attorney communications because a careful buyer's attorney asks. In some transactions the seller provides a recent engineering report; in others, nothing beyond the governing documents. New York Real Property Law Article 9-B, the state's Condominium Act, contains no provision requiring a seller to disclose the building's Fannie Mae CPM designation status. The absence is not an oversight in the 2024 flood-risk update. It is a gap in the original architecture of the law, now acute in a way it was not in 2002.

What the standard resale package covers, and what it does not:

Where a buyer usually finds out, and when it is too late.

A buyer of a condo unit in New York signs the contract first and applies for a mortgage afterward. The standard sequence: attorney review runs three to five business days, the buyer signs and puts down 10 percent, then the mortgage application goes in. The lender runs the CPM check during underwriting, typically three to five weeks after contract signing. If the building shows "unavailable," the lender stops processing the Fannie Mae loan.

At that point the buyer has several paths, all worse than the one they expected. A portfolio lender, an institution that holds loans on its own balance sheet rather than selling to Fannie Mae or Freddie Mac, may lend in an unavailable building. Portfolio rates are higher because the lender assumes concentration risk the agency would otherwise absorb. If the buyer cannot qualify at the portfolio rate, or if no portfolio lender will take the building at all, the options narrow to paying cash or canceling the contract. Whether the contract allows cancellation and deposit return depends entirely on how the mortgage contingency was written, and sellers in competitive NYC markets often negotiate short or absent contingencies. Buyers who signed without a contingency lose their deposit.

The seller, who lived in the building, may not know the CPM status. The board, which Fannie Mae has offered status access to since 2023, may know and may not have told anyone. The managing agent has no legal duty to volunteer it. No law creates a chain of disclosure from building status to seller to buyer before contract.

Why the gap predates the problem it now creates.

The PCDA condo and co-op exemption was written in 2002 for a specific reason: condo sales were already governed by the AG's offering-plan disclosure requirements under the Martin Act, and co-op sales involve a proprietary lease transfer rather than a deed. Those rationales had logic in 2002. The Surfside collapse was nineteen years in the future. Fannie Mae's post-Surfside structural integrity standards did not exist. The idea that a building's reserve funding percentage could determine whether any buyer in the building could get a conventional loan was not a risk the PCDA was designed to address.

The Legislature has had multiple opportunities to update the disclosure framework. Florida's HB 913 (2025) requires condo associations to make structural integrity reserve studies available to prospective purchasers before contract signing. New York's Senate Bill S7541, which passed the full Senate 58-1 in June 2025, would have required boards to disclose engineering reports and inspection records to buyers at contract signing. The Assembly companion bill did not advance. Albany adjourned June 5, 2026 without action. The 2024 PCDA amendment, which could have removed the condo and co-op exemption, did not do so.

The result is a disclosure framework calibrated to 2002 operating against a financing risk that came into existence in 2022. The gap is structural, not accidental. Every session in which the Legislature has not addressed it is a session in which the gap has been reaffirmed by inaction.

What buyers can do before they sign.

Because no law fills the gap, buyers must. Before signing the contract, a buyer's attorney can ask for a representation from the seller that the building carries no current adverse Fannie Mae or Freddie Mac designation. That representation, if it turns out to be false, gives the buyer a contract remedy against the seller. Sellers are not required to give it, but some will when asked. A seller who declines to make any representation about the building's financing status has told you something useful.

Buyers can also ask their mortgage broker to run a preliminary CPM check before contract signing. The check is a lender function and not every broker will do it pre-contract, but some will. Knowing the building's status costs nothing except the ask. If the building is unavailable, the buyer finds out before the 10 percent is at risk.

A buyer's attorney can request a letter from the building's board or managing agent confirming no adverse Fannie Mae or Freddie Mac designation is in effect and that no structural deficiency notice has been received. Boards have no legal duty to provide such a letter. A refusal to provide it is not evidence of a problem, but it shifts the risk calculus and warrants further inquiry before signing.

The financial statements in the standard resale package will show the reserve fund balance. A buyer who knows that Fannie Mae's January 2027 threshold requires reserves to be funded at 15 percent of annual assessment income can check the math before signing, rather than learning at underwriting that the building fails. The information is in the package. The legal duty to flag what it means is not.

Bottom line.

New York Real Property Law §461 exempted condominium and cooperative sales from the Property Condition Disclosure Act in 2002, and that exemption has not been reconsidered as the risk landscape changed around it. At least 66 NYC buildings sit on Fannie Mae's unavailable list today. That count rises on August 3, 2026 when the limited-review elimination forces full underwriting scrutiny on buildings that have never faced it. No state law requires sellers to disclose that their building carries an adverse designation before a buyer commits to a contract and a deposit. The due diligence burden falls entirely on buyers who are usually not told to look.

Primary sources: NY Real Property Law §461 (PCDA definition of "residential real property," condo/co-op exclusion at §461(b)); Fannie Mae Lender Letter LL-2026-03 (August 3, 2026 full-review and reserve changes); Fannie Mae Selling Guide, Section B4-2.1-01 (condo project eligibility and CPM system); NY Real Property Law Article 9-B (NY Condominium Act, absence of Fannie Mae disclosure provision).

Companion resources: Every NYC condo loan goes to full review on August 3 · What your reserve study's funding method means after August 3 · An untouchable board and no standard to hold it to · New York mandates flood disclosure. Co-op and condo buyers are exempt. · NY's condo transparency bill: 58-1 Senate, Assembly sponsor withdrew it · All regulatory gaps →