Michigan set a minimum reserve floor for condo associations by administrative rule. New York's equivalent bills never moved.

Michigan has required every condominium association to maintain a reserve fund for major repairs and replacement of common elements since its Condominium Act took effect in 1978. An administrative rule issued under that statute sets the floor: the fund must equal at least 10 percent of the association's current annual budget, on a noncumulative basis. New York's Condominium Act contains no reserve fund requirement, no administrative rule on the subject, and no minimum percentage. The bills that would have created one, S7600 and A8945, were referred to committee in January 2026 and received no floor vote before Albany adjourned June 5, 2026.

What Michigan's reserve requirement actually says.

Michigan Compiled Laws § 559.205 places the duty on the association of co-owners to maintain a reserve fund for major repairs and replacement of common elements. The statute also authorizes the state administrator to promulgate rules establishing minimum standards for that fund. The administrator used that authority. Michigan Administrative Code R. 559.511, titled "Reserve fund for major repairs and replacement of common elements," requires the fund to equal at a minimum 10 percent of the association's current annual budget on a noncumulative basis and restricts those funds to major repairs and replacement only. The reserve account must be kept separate from the association's operating account.

The 10 percent floor is weak by today's standards. Fannie Mae's Lender Letter LL-2026-03, effective January 4, 2027, sets a 15 percent floor for any building seeking conventional financing. Michigan's administrative rule predates modern reserve funding analysis by decades. It does not require a reserve study, a 30-year funding plan, or an independent preparer. It is a number on a page from the 1970s. It is also more than New York requires from any condo or co-op board in the state.

Michigan's legislature is now working to go further.

Michigan House Bill 5784, introduced April 14, 2026, by Representative John Fitzgerald and two co-sponsors, would amend MCL § 559.205 to require most condo associations to obtain a reserve study at least once every five years. The bill sits in the House Committee on Regulatory Reform. The Community Associations Institute's Michigan chapter supports it. If enacted, it would move Michigan from an administrative rule percentage floor to a fully statutory reserve study regime, the approach that 18 states have already adopted according to the CAI's June 2026 Condominium Safety Public Policy Report — the same report that recommended New York act on the same requirement.

The predecessor bill, House Bill 5019 from the 2023–24 session, applied to associations with a budget of $20,000 or more or at least 20 units. It carried over before the session ended. HB 5784 is its 2026 successor. The pattern at the Michigan legislature is not meaningfully different from Albany: a bill introduced, a committee referral, and no floor vote. The difference is that Michigan began this process with a statutory reserve duty and an administrative floor already in place since 1978. The legislature is working to strengthen an existing structure. New York has no structure to strengthen.

What New York has instead.

New York Real Property Law Article 9-B, the state Condominium Act, contains no section on reserves. The Business Corporation Law, which governs co-op corporations, contains no reserve funding requirement either. Most NYC condo and co-op boards fund capital work through a combination of special assessments, flip taxes, J-51 abatement proceeds, and, since 2026, C-PACE loans for LL97 retrofit work. None of those mechanisms require a board to carry any minimum balance before a repair becomes necessary. None require consultation with a reserve specialist. None require a funding plan at any time horizon. The person who makes reserve decisions at your building, the managing agent, holds no state license and faces no professional discipline for recommending underfunding.

Fannie Mae has partially filled this vacuum. Lender Letter LL-2026-03, effective January 4, 2027, requires buildings seeking conventional financing to demonstrate a 15 percent budgeted reserve allocation, either through a compliant reserve study or by passing a full project review. But Fannie Mae's standard runs through lenders and touches only buildings in the active conventional mortgage market. It does not create an obligation on the board that exists independently of a pending mortgage transaction. It does not reach the roughly 39 NYC condo and co-op buildings already on Fannie Mae's unavailable list, many of which are there precisely because of deferred maintenance and underfunded reserves. And it does not cover co-ops whose blanket mortgage is held by a portfolio lender outside the Fannie Mae guidelines.

Albany's record: two sessions of committee referrals.

Senate Bill S7600, sponsored by Senator Bynoe, and Assembly Bill A8945, sponsored by Assemblymember Jackson, were introduced in the 2025–26 legislative session and referred to committee in January 2026. S7600 would require condo and co-op associations with capital assets above $25,000 to obtain a reserve study prepared under national standards by a credentialed reserve specialist, with a 30-year funding plan, and to file the study with the Attorney General. A8945 carries substantially the same requirement and directs filings to the state Comptroller. Neither bill received a committee hearing. Albany adjourned June 5, 2026 without a floor vote on either.

This was at least the second consecutive session in which the legislation did not advance. The Community Associations Institute's June 2026 public policy report named New York as one of the states without a reserve study mandate and called on the Legislature to act. The Legislature adjourned without acting. The 2027 session opens without a named sponsor for S.71, the managing agent licensure bill. No session since the early 2010s has ended with a reserve study or managing agent license on the books. The mechanism in each case has been committee referral without a scheduled hearing.

What the gap costs owners in practice.

A board that carries no legal obligation to hold any reserve balance has no institutional pressure to maintain one. ATTOM Data Solutions counted 6,376 HOA-related foreclosure filings nationwide in the first quarter of 2026, a nearly 40 percent increase from two years earlier. Three quarters of associations in that dataset were less than 70 percent funded against their own estimates of needed reserves. New York has no state agency collecting reserve data from condo or co-op boards. There is no equivalent count for the 15,108 buildings in the CCNYC universe.

The costs arrive in two forms. The first is the special assessment: a charge to cover deferred work that the board did not budget. For owners with fixed incomes or thin cash reserves, a $15,000 to $30,000 assessment can force a sale. The second form is lender exit. When Fannie Mae marks a building unavailable for conventional financing, the pool of eligible buyers shrinks immediately and values follow. New York's business judgment rule (Levandusky v. One Fifth Avenue Apartment Corp., 75 N.Y.2d 530, 1990) places board financial decisions beyond owner challenge absent evidence of bad faith or self-dealing. There is no internal correction. The first actor to price a building's hidden fragility is the mortgage market, and its correction arrives as a default event.

Bottom line.

Michigan's 10 percent floor is not strong governance. A percentage set by administrative rule in the 1970s, without a reserve study or an independent preparer, falls well short of what Fannie Mae now requires from any building it finances. But Michigan's Condominium Act has contained a reserve funding obligation since 1978. Its legislature is actively working to add a reserve study requirement. New York's Condominium Act has never contained a reserve funding obligation of any kind, and the bills that would have added one received no floor vote in the most recent session. Albany's failure is not abstract. The 15,108 buildings in the CCNYC universe carry that gap into every future assessment, every lender review, and every board meeting where the reserve balance goes unexamined because no law requires it to come up.

Primary sources: Michigan Compiled Laws § 559.205 · Mich. Admin. Code R. 559.511 · Michigan HB 5784 (2026) · NY S7600 (2025–26) · NY A8945 (2025–26) · Fannie Mae Lender Letter LL-2026-03

Companion resources: The condo industry's own trade organization backs mandatory reserve studies. New York's bill didn't advance. · Fannie Mae's 15% reserve floor arrives in January. NYC condo boards need to act. · Nationwide, HOA reserves are running out. New York has no reserve requirement. · An untouchable board and no standard to hold it to: how NY law steers condos and co-ops toward default. · The bill that would license NYC managing agents has no Senate sponsor going into 2027.