Buying a Condo in Litigation in South Florida: What Fannie Mae’s Unavailable List Means for Buyers in 2026
In most cases, a pending lawsuit naming the condo association makes the building ineligible for a conventional mortgage that Fannie Mae will buy, so buyers usually need cash or a portfolio loan. Fannie Mae’s Selling Guide exempts minor matters, such as insurer-defended claims or damages under 10% of funded reserves. Your lender must verify which applies.
Key takeaways
- Fannie Mae treats a project as ineligible when the association is a party to pending litigation, unless a lender documents that the case is minor under the Selling Guide’s listed exceptions (Selling Guide B4-2.1-03, as of Oct 20, 2026).
- An “Unavailable” status in Fannie Mae’s Condo Project Manager makes loans in that project ineligible for purchase. Fannie Mae does not publish the list for buyers.
- For loan applications dated on or after Aug. 3, 2026, Fannie Mae’s Limited Review and Freddie Mac’s Streamlined Review are retired, so established Florida condos get a Full Review or a waiver.
- Florida’s milestone inspection and structural integrity reserve study (SIRS) rules give buyers documents that often show what a lawsuit or repair is about.
What does “condo in litigation” actually mean?
“In litigation” covers very different situations. Fannie Mae’s rule turns on who is a party and what the case is about. The Selling Guide makes a project ineligible when the association is named in pending litigation, or when the developer or sponsor is named in litigation about the project’s “safety, structural soundness, habitability, or functional use.” Pre-litigation steps such as arbitration or mediation that are reasonably expected to become a lawsuit are treated the same way.
| Type of case | How Fannie Mae’s Selling Guide treats it | What a buyer should ask |
|---|---|---|
| Association sues to collect past-due assessments or forecloses on a unit | Listed as minor | How many owners are delinquent? |
| Neighbor dispute or other non-monetary claim | Listed as minor | Is any money at stake? |
| Claim defended and covered by the association’s insurer | Can be minor | Is there a written defense letter from the carrier? |
| Damages and legal costs expected not to exceed 10% of funded reserves | Can be minor | What are the funded reserves and the claim amount? |
| Association sues over construction defects | Not minor, unless the defects were already repaired and losing the case would not materially affect the association | Who pays for the repair if the case is lost? |
| Personal injury or death claim | Not minor unless the amount is known, the insurer is defending and coverage applies | What are the policy limits? |
| Developer named in a suit about safety or structure | Ineligible | What is the repair scope and timeline? |
Source: Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects, “Litigation or Pre-litigation Activity” (accessed Oct 20, 2026): selling-guide.fanniemae.com/sel/b4-2.1-03/ineligible-projects
What is Fannie Mae’s “unavailable” list?
Fannie Mae’s lenders check condo projects in a system called Condo Project Manager (CPM). The Selling Guide states that loans secured by units in projects with an “Unavailable” status in CPM, or on the Desktop Underwriter findings report, are ineligible for purchase by Fannie Mae. A lender can request an exception for a project it believes has merit, but that is a separate process. (Selling Guide B4-2.1-03, accessed Oct 20, 2026.)
Why do buildings land on it?
Fannie Mae’s Condo Status Finder page lists the main characteristics that make a project ineligible: critical repairs and significant deferred maintenance, inadequate insurance, pending significant litigation, and hotel-style or short-term rental operations. Fannie Mae says the two most common reasons are insufficient master property insurance and critical repair issues, including failure to meet state or local inspection requirements. Litigation is also a common reason. (Fannie Mae, Condo Status Finder, accessed Oct 20, 2026: singlefamily.fanniemae.com/condo-status-finder)
The Selling Guide’s critical-repair rules link directly to Florida’s inspection law. A project is ineligible if it failed a mandatory state, county or local structural inspection, or if it has unfunded repairs costing more than $10,000 per unit that should be done within 12 months.
How many buildings are on it?
Fannie Mae publishes only a national figure: as of August 2025, 3.6% of condo projects nationwide had an “ineligible” status, according to its Condo Status Finder page (accessed Oct 20, 2026). That is a national share, not a Florida or South Florida figure. Fannie Mae does not publish a state or county count, so this guide does not use one.
Can a buyer see the list?
No. Fannie Mae’s Condo Status Finder is built for homeowner associations, their management companies and authorized advisors. A search needs the project’s legal name, address, unit count, tax ID and project style. Buyers usually learn a building’s status from their lender. Ask your lender to run the project before you sign, or make the contract contingent on project approval.
What changed for condo lending in 2026?
Fannie Mae’s Lender Letter LL-2026-03 (March 18, 2026) and Freddie Mac’s Bulletin 2026-C (March 18, 2026) changed condo review rules:
| Change | Effective | Source |
|---|---|---|
| Fannie Mae Limited Review retired; established projects use Full Review or Waiver of Project Review | Required for applications dated on or after Aug. 3, 2026 | Fannie Mae LL-2026-03 |
| Remaining Florida-specific geographic restrictions retired with Limited Review | Aug. 3, 2026 | Fannie Mae LL-2026-03 |
| PERS review no longer required for new or newly converted Florida projects with attached units | Immediately (March 18, 2026) | Fannie Mae LL-2026-03 |
| Waiver of Project Review expanded to projects with 10 or fewer units, but not if the project is “Unavailable” in CPM | Immediately (March 18, 2026) | Fannie Mae LL-2026-03 |
| Freddie Mac Streamlined Review retired | Applications received on or after Aug. 3, 2026 | Freddie Mac Bulletin 2026-C |
| Budget must include the reserve study’s highest recommended reserve allocation, not based on a baseline funding method | Applications received on or after Aug. 3, 2026 | Freddie Mac Bulletin 2026-C |
Sources: Fannie Mae LL-2026-03, March 18, 2026: singlefamily.fanniemae.com/media/44986/display ; Freddie Mac Bulletin 2026-C, March 18, 2026: guide.freddiemac.com/ci/okcsFattach/get/1010529_7 (both accessed Oct 20, 2026).
For buyers, the result is that a lender reviewing an established Florida building now does a fuller review. That review is more likely to turn up a lawsuit, a weak reserve budget or an open repair.
Which financing options remain?
- Conventional (Fannie Mae or Freddie Mac): Possible only if the project is not “Unavailable” and any litigation qualifies as minor under the lender’s documented review.
- Portfolio or non-agency loan: Some lenders keep loans on their own books and set their own condo rules. Expect different terms and ask for them in writing.
- Cash: No project review, but also no lender double-checking the building. Your own due diligence has to replace it.
Our 2026 pre-construction financing guide covers rate locks and cash-at-closing structures in more detail.
How do SIRS and milestone inspections affect a building in litigation?
Florida’s post-Surfside laws (SB 4-D, ch. 2022-269, and SB 154, ch. 2023-203, as later amended in 2024 and 2025) create two documents buyers should read alongside any lawsuit:
- Milestone inspection (§553.899): Required for condo buildings three habitable stories or higher by Dec. 31 of the year the building turns 30, and every 10 years after that. Local agencies can require it at 25 years for reasons such as proximity to salt water. Within 45 days of receiving the report, the association must distribute a copy of the inspector-prepared summary to each unit owner. (Florida Statutes 2026, §553.899: flsenate.gov/Laws/Statutes/2026/553.899, accessed Oct 20, 2026.)
- Structural integrity reserve study (§718.112(2)(g)): Required at least every 10 years for each building three habitable stories or higher. It covers roof, structure, fireproofing, plumbing, electrical, waterproofing and windows, and sets a reserve funding schedule. (Florida Statutes 2026, §718.112: flsenate.gov/Laws/Statutes/2026/718.112, accessed Oct 20, 2026.) Florida’s condo regulator says unit-owner-controlled associations existing on or before July 1, 2022 had to complete a SIRS by Dec. 31, 2025, or by Dec. 31, 2026 if done together with a milestone inspection due by then. (DBPR Division of Condominiums, Inspections FAQ: condos.myfloridalicense.com/inspections/, accessed Oct 20, 2026.)
When a lawsuit concerns construction defects or repair costs, the milestone report and SIRS usually show the scale of the work. A gap between the SIRS funding plan and the current budget is a signal that a special assessment may follow. See our explainer, Reserve Studies, SIRS and Milestone Inspections: How They Apply to New South Florida Condos.
Buyer due-diligence checklist
- Ask your lender to check project eligibility first, before inspections and appraisals.
- Request the association’s condo questionnaire and read the litigation answer word for word.
- Read 12 to 24 months of board minutes for lawsuits, settlements, insurer correspondence and assessment votes.
- Get the milestone inspection summary and full report, and the latest SIRS,and compare the SIRS funding plan to the adopted budget.
- Ask for the insurer’s defense letter if the association says a claim is covered.
- Have a Florida real estate attorney pull the court docket and explain the claims, the parties and the possible exposure.
- List every current or approved special assessment, with amount, purpose and payoff date, the same items the Selling Guide tells lenders to review.
- Check the master insurance policy, since Fannie Mae names insufficient master property insurance as one of the two most common reasons projects are ineligible.
Our South Florida luxury condo due-diligence checklist and 2026 Florida property insurance guide go deeper on both.
What can a buyer negotiate when a building is in litigation?
A lawsuit narrows the buyer pool to cash and portfolio buyers, which can give those buyers room to negotiate. Use the documents, not the headline. Ask for a price adjustment or seller credit tied to a known assessment. Ask for a contract contingency for financing approval and attorney review of the case. Ask who pays any assessment voted on before closing. A Florida real estate attorney should review the case, the association’s documents and the contract before you sign.
New construction is not free of risk. It carries its own, including delivery timing, deposit protection and, as buildings age, the same association and repair questions covered above. Our guides on pre-construction deposits in Florida: escrow, draw schedules and protecting your money and deposit structures compared: 20% vs 30% vs 50% explain how deposits are held and how 20%, 30% and 50% deposit schedules differ. Browse projects on our new-developments board, or by area: Brickell, Edgewater, Sunny Isles Beach, Bal Harbour and Fort Lauderdale. Linking to an area or project is not a statement about any building’s legal status.
Projects named above: The Residences at Six Fisher Island, Rivage Bal Harbour, The Perigon Miami Beach, The Shore Club Private Collection.
FAQ
Does Fannie Mae allow loans in a condo with pending litigation?
Sometimes. Fannie Mae’s Selling Guide makes a project ineligible when the association is a party to pending litigation, but it lists exceptions for minor matters, such as claims the insurer is defending and covering, collection suits, or damages expected not to exceed 10% of funded reserves. The lender must document that the case qualifies.
What is Fannie Mae’s unavailable list?
It is the set of condo projects with an “Unavailable” status in Fannie Mae’s Condo Project Manager system. Loans secured by units in those projects are ineligible for purchase by Fannie Mae. Common reasons include inadequate insurance, critical repairs, pending litigation and hotel-style operations.
Is the unavailable list public?
No. Fannie Mae does not publish it for buyers. Its Condo Status Finder is designed for associations, management companies and authorized advisors and requires details such as the project’s legal name, tax ID and unit count. Buyers usually learn the status through their lender.
Where does litigation show up in a condo’s documents?
Read the litigation answer on the condo questionnaire, review recent board minutes, and have a Florida real estate attorney search the court docket. Ask your lender to check project eligibility before you spend money on inspections and appraisals.
What changed for Florida condo financing on Aug. 3, 2026?
Under Fannie Mae Lender Letter LL-2026-03 and Freddie Mac Bulletin 2026-C, both dated March 18, 2026, Limited Review and Streamlined Review are retired for applications dated or received on or after Aug. 3, 2026. Established projects now get a Full Review or qualify for a waiver.
Should I expect a special assessment?
It depends on the case and the building’s reserves. Compare the latest structural integrity reserve study with the adopted budget, read the milestone inspection report, and ask the association for every current or approved special assessment with its amount, purpose and payoff date.
Should I talk to an attorney before buying a condo in litigation?
Yes. Consult a Florida real estate attorney before you sign. They can review the court docket, the association’s documents and the contract, and explain how the case could affect assessments, financing and resale. This guide is general information, not legal advice.
Does paying cash remove the litigation risk?
No. Cash removes the financing hurdle, but the building’s exposure, assessments and repairs stay the same, no lender reviews the building for you, and a later buyer may need financing. Base any offer on the inspection reports, reserve study, insurance and a Florida real estate attorney’s review of the case.