New York does not require condo boards to carry replacement-cost insurance. Fannie Mae does.

New York's Condominium Act has had a building insurance provision since 1964. Real Property Law §339-BB requires the board of managers to carry property insurance against fire and other hazards. The obligation is conditional: the board must insure only "if required by the declaration, the by-laws or by a majority of the unit owners." If a building's founding documents say nothing about insurance, the statute says nothing either. For more than sixty years the law deferred to private documents. On August 3, 2026, Fannie Mae set specific minimums that Albany has not. The floor only reaches buildings that need Fannie Mae for conventional financing. Thousands of NYC condominiums do not.

The statute that should set the floor.

Real Property Law §339-BB is the section of the New York Condominium Act that addresses building insurance. Its operative sentence reads: the board of managers "shall, if required by the declaration, the by-laws or by a majority of the unit owners, insure the building against loss or damage by fire and such other hazards as shall be required, and shall give written notice of such insurance and of any change therein or termination thereof to each unit owner."

Two conditional clauses appear in a single sentence. First, insurance is required only if the founding documents already require it. Second, the covered hazards are those that the documents specify. A declaration that says "insure against fire" creates a floor of fire coverage. A declaration that says nothing creates no floor. The statute does not override either silence.

There is one narrow carve-out. For qualified leasehold condominiums, buildings constructed on ground-leased land, §339-BB is unambiguous: "such insurance shall be required in any event, and shall be in an amount equal to full replacement cost of the building." The legislature knew how to write a mandatory insurance floor. It did so for leasehold condominiums. For fee-simple condominiums, which represent nearly all of New York City's 10,882 condo buildings, the equivalent protection does not exist in state law.

What your declaration probably says.

NYC condo declarations range from specific (some documents filed in the 1990s and 2000s include coverage minimums tied to replacement-cost appraisals) to vague (many documents filed in the 1970s and 1980s say something like "the board shall obtain and maintain adequate insurance"). The word "adequate" appears frequently. It is not defined in the statute, not defined in the declaration, and not defined by any rule of the New York Department of Financial Services.

The person who translates "adequate" into an actual dollar figure and policy structure is, in practice, the managing agent. In New York, a managing agent overseeing a $200 million residential building needs no state license, no errors-and-omissions coverage mandate, and no continuing-education requirement. The Senate bill that would change that, S.71, has not received a committee hearing in ten consecutive sessions. The entity making the insurance procurement decision for tens of thousands of NYC condo units carries no state credential and answers to no state regulator.

Underinsurance — carrying a master policy at 60 or 70 percent of replacement cost rather than 100 percent — is among the most common deficiencies in forensic building audits. It is also largely invisible to buyers. New York Real Property Law §461 explicitly excludes condominium units from the Property Condition Disclosure Act. No state law requires the board or the managing agent to tell a prospective buyer what coverage level the building carries, what the deductible is, or when the policy expires. The buyer typically discovers the building's insurance position only if the mortgage lender requests the master policy during underwriting.

What Fannie Mae now requires, as of August 3.

Fannie Mae Lender Letter LL-2026-03, published March 2026 and effective August 3, 2026, sets specific property insurance minimums for any condo project seeking conventional financing eligibility. To our knowledge, the requirements mark the first time in the history of NYC condo ownership that a binding insurance floor has existed for most buildings. The authority behind it is private, not statutory. A building that fails the standard loses access to Fannie Mae mortgages, not a license or a legal right.

The right column is the structural problem. New York's statute sets no dollar amount, no specific hazard list beyond "fire and such other hazards as shall be required," no deductible cap, and no enforcement mechanism. Fannie Mae's lender letter sets all four. A building that fails the Fannie standard goes onto its Condo Project Manager (CPM) eligibility database as "unavailable." At least 66 NYC condo and co-op buildings already appear there. That count is rising as the August 3 full-review requirement means every conventional loan application now triggers a complete insurance check that previously applied only to some projects.

The buildings outside Fannie's reach.

Fannie Mae's floor applies only when a buyer uses a conventional loan that will be sold to Fannie Mae. Several categories of NYC condo buildings operate entirely outside that orbit. Buildings where units routinely sell for cash. Buildings financed through portfolio lenders that hold loans on their own balance sheets. Buildings where all existing units are owned free and clear, with no active purchase transactions. Buildings concentrated enough with investors that Fannie's owner-occupancy ratio requirements already disqualify them from FNMA loans regardless of insurance.

For these buildings, state law is the only floor, and state law says "if required by the declaration." A lapsed, inadequate, or cancelled master policy in one of these buildings exposes unit owners to total loss, with no state minimum as a backstop. No state regulator monitors whether the board renewed the policy. No state agency requires the managing agent to notify owners if coverage lapses. The notice provision in §339-BB requires the board to notify owners of "any change therein or termination thereof," but the board that lets the policy lapse without notice has no state-mandated penalty for the failure.

Florida's version of the same provision.

Florida Statute §718.111(11) addresses association insurance for condominiums. Its operative sentence: "The association shall use its best efforts to obtain and maintain adequate property insurance to protect the association, the association property, the common elements, and the condominium property that must be insured by the association." The "shall" is unqualified. Florida's statute also specifies that coverage must reflect the replacement cost of the building as determined by an independent appraisal obtained at least once every 36 months.

After the Champlain Towers South collapse in Surfside in 2021, Florida enacted SB 4-D (2022) and SB 154 (2023), which added structural integrity reserve studies and tied their funding calculations to the same replacement-cost baseline as the insurance requirement. The insurance obligation and the reserve obligation now reference the same number. New York's reserve study bills, A8945 and S7600, did not receive a floor vote before Albany adjourned June 18, 2026. No revision to Real Property Law §339-BB is currently pending in either chamber. The Florida insurance provision has existed in some form since 1975. New York's conditional version has existed since 1964.

The disclosure gap layered on top.

Even when a building's master insurance falls short of Fannie Mae's standard, New York imposes no duty on the seller, the board, or the managing agent to tell a buyer before the contract is signed. The Property Condition Disclosure Act excludes condominiums at Real Property Law §461. When a building fails Fannie's insurance review and goes onto the unavailable list, no statute requires the seller to disclose that status before a buyer commits to a contract and puts down a deposit.

The sequence in a typical NYC condo transaction: the buyer signs the contract, pays 10 percent, applies for a mortgage, and the lender runs the CPM check three to five weeks later during underwriting. If the building shows "unavailable" because its master insurance does not meet replacement-cost requirements, the lender stops processing the Fannie loan. At that point the buyer faces portfolio financing at higher rates, a cash purchase, or a contract dispute over whether the mortgage contingency entitles them to walk. A buyer who signed without a contingency, common in competitive NYC markets, loses the deposit. The seller who knew the building's insurance status is not required to have said so.

Bottom line.

New York Real Property Law §339-BB has conditioned the condo building insurance obligation on what the declaration already requires since 1964. For leasehold condominiums, the statute fills the gap with a full-replacement-cost mandate. For fee-simple condominiums, the gap has remained open for six decades. August 3, 2026 gave Fannie Mae's insurance standards real enforcement weight for buildings that need conventional mortgages. For buildings outside that orbit, and for the unlicensed managing agents deciding what coverage to carry in both categories, the floor remains wherever the declaration left it. In many older NYC buildings, the declaration left it nowhere in particular.

Primary sources: NY Real Property Law §339-BB (conditional board insurance obligation; leasehold exception at third paragraph); Fannie Mae Lender Letter LL-2026-03 (August 3, 2026 insurance requirements, including 100% replacement cost and $50,000 per-unit deductible cap); Fannie Mae Selling Guide, Section B4-2.1-02 (property and liability insurance requirements for condo projects); Florida Statute §718.111(11) (mandatory insurance with replacement-cost appraisal requirement); NY Real Property Law §461 (Property Condition Disclosure Act, condo and co-op exclusion at §461(b)).

Companion resources: Every NYC condo loan goes to full review on August 3 · When your building loses conventional financing, NY doesn't require your seller to tell you · S.71: The NY managing-agent licensure bill nobody's talking about · Florida made structural condo reserves non-waivable in 2024. New York's equivalent bill never moved. · Issue: No mandatory financial disclosure to buyers · Issue: Managing-agent licensure gap · Write to your state representative →