Funded Is Not Fixed
An owner in a condo community is under contract to sell. Two weeks before closing, the buyer's lender comes back and says the project doesn't qualify. Not the buyer — the project. The deal dies. The owner is furious, the manager is fielding calls, and the board is genuinely baffled, because the thing the lender is asking about is a balcony repair the association already assessed for, already collected on, and already built.
Two years ago.
The board's reaction was exactly right, by the way: we fixed that. They did. They just never finished it.
The crew left. The paperwork never got created. And on a condominium project, those are two different events.
(A quick boundary before we go further: what follows applies to condominium and co-op projects. Standard single-family HOAs and most PUDs aren't reviewed this way.)
1. The Part That Isn't Mine, Stated Once
When someone buys or refinances a unit in a condo project with a conventional loan, the lender underwrites the association as well as the borrower. Fannie Mae uses the term critical repairs for work affecting the safety, soundness, structural integrity, or habitability of the buildings — and the examples in their own guide are waterproofing, balconies, stairwells, elevators, foundations, and parking structures. If a special assessment is tied to a critical repair and the condition has not been remediated, the project is ineligible. What clears it is an engineer's report, or substantially similar document, confirming the completed repairs actually resolved the problem.
That's the whole lending portion of this article, and it's as far as I'm qualified to take it. I'm not a lender and I'm not your attorney. I'm the guy who watches this paperwork not get created.
Confirm the financing details with your lender and your association counsel. The fix, though, is entirely on my side of the fence — so that's the rest of this.
One relief valve worth knowing: if a problem is isolated to one or a few units and doesn't affect the building overall, this isn't what we're talking about. Two bad balconies out of forty is a repair. Systemic deterioration is a different animal.
2. Funded Is Not Fixed
Here's what I think actually goes wrong, and it isn't negligence.
Boards experience a major repair as a funding problem. Get the engineer's report. Get the number. Get the assessment passed. That vote is brutal — months of meetings, angry owners, somebody threatening to sue. And when it finally passes, everyone in the room feels the crisis lift.
But the clock that matters isn't the funding clock. It's the construction clock. The condition is unresolved from the day it's identified until the day the completed work is documented — and the money moving has nothing to do with it.
Which means phasing a structural repair carries a cost nobody puts in the comparison. When a board splits balcony work across three budget years — a responsible-looking decision, and sometimes the right one — the interval between "we voted to fix it" and "it's documented as fixed" can run for years. That's a period where owners trying to sell or refinance may run into a wall, over a repair the association is actively paying for.
I've never once seen that appear in a phasing analysis. It should.
3. The Three Documents That Close the Loop
The completed-work engineer's report. Nearly every association I walk into has a report saying the balconies are bad. Almost none have the matching report saying the balconies are fixed. Put it in the engineer's scope at the start, when it's a line item. Commissioning it during a live escrow costs more and takes longer, and by then somebody's deal is already on the clock.
Closeout documentation that ties scope to completion. Final inspection sign-offs. Permits actually closed, not just pulled. Punch list resolved and signed. Warranties issued and registered. Regular readers know I beat this drum — here's another reason it matters.
A written record of what the repair addressed. If the engineer flagged twelve conditions and the project corrected nine, someone needs a document naming which nine, and what the plan is for the other three. "Substantially complete" doesn't answer that question two years later, when the person who knew the answer is off the board.
4. Your Minutes Are a Construction Record
This one surprises people.
Board meeting minutes are among the documents a lender may review. So the minutes that captured "the engineer says the decks are unsafe" sit in the association's permanent record indefinitely. If no later entry ever records that the work was completed and accepted, the file reads exactly like an open, unresolved condition — because on paper, it is one.
The answer is not to write vaguer minutes. Please don't.
The answer is to close the loop in the same record where you opened it. When a project reaches final acceptance, put it in the minutes: the date, what was accepted, and the document it references. That's sixty seconds of a secretary's time, and it's the cheapest insurance in this entire article.
Nobody failed here. It's simply that no one was ever assigned to connect construction acceptance to the association's permanent record. It sits between the contractor, the manager, and the board — which is to say, nowhere.
5. And While You're In the 2027 Budget
Two dates worth handing to your manager and your reserve professional:
August 3, 2026 — Fannie Mae retired the Limited Review process, and tightened how reserve studies can be used to demonstrate adequate reserves. The budget has to reflect the study's highest recommended allocation, and the baseline funding method — where the reserve balance approaches but never quite hits zero — is no longer accepted for that purpose.
January 4, 2027 — the minimum replacement reserve allocation rises from 10% to 15% of annual budgeted assessment income under a Full Review.
Ask your lender and your reserve provider how those apply to you. But here's the part that is mine: a reserve study that has never been reconciled against a real bid will give you false comfort no matter how well it's funded. If your last major project came in materially above the study, that gap didn't close by itself.
The Bigger Point
Boards treat closeout as administrative cleanup — the tidying up after the real work is done.
It isn't. Closeout is the part that makes the work count. A repair that everyone remembers happening, with nothing in the file to prove it, is a repair the association gets to pay for twice: once in the assessment, and again years later when it quietly reprices somebody's unit.
The work isn't finished when the crew leaves. It's finished when there's a document that says so.
I'm curious: has your community ever had a sale or refinance complicated by a project that was finished but not documented? I suspect this happens far more than it gets talked about, because the board is usually the last to hear about it.
Next week: if the city inspector isn't checking whether the work is any good — and mostly, they aren't — who is? Third-party testing and inspection, and when it's worth paying for.
For anyone who wants to read the source rather than take my word for it: the definitions of critical repairs and the documentation lenders review are in the Fannie Mae Selling Guide, Section B4-2.1-03, Ineligible Projects. The 2026 changes to reserve requirements and project review are in Lender Letter LL-2026-03. Both are public.
Sean Davis, PMP | Civil Engineer | Current HOA Board Member (12 years) | DHA Construction Management | Broomfield, CO
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