Buying a New Build? Developers May Soon Have to Pre-Fund Your HOA's Savings Account

What This Bill Actually Does

When a developer builds a new planned community or condo building, they eventually hand over control to the residents' Homeowners Association (HOA). Historically, some HOAs inherit these brand-new neighborhoods only to realize there is zero money in the bank to cover the inevitable millions needed for future roof replacements, road paving, or pool repairs. HB26-1099 targets this exact problem by forcing the declarant (the legal term for the builder or developer) to commission an independent, 30-year reserve study before selling a single unit. This study maps out exactly what the community's common elements will cost to maintain and replace over the next three decades.

But the bill doesn't stop at just identifying the future costs—it mandates that developers actually put skin in the game. Before handing the neighborhood over to the homeowners, the developer must deposit 1.5% of the fully funded reserve amount directly into the HOA's reserve account. For buyers, the developer is also required to hand over this financial study at least 24 hours before closing, ensuring folks know exactly what kind of financial obligations they are marrying into. The developer also has to update this study after every phase of building, so the math stays accurate as the neighborhood expands.

The second major half of this bill solves a massive headache for established HOAs: firing a terrible management company. Under current law, bitter or disorganized management companies can drag their feet returning neighborhood funds, passwords, and vendor contracts. This bill sets a strict 45-day deadline for the old company to hand over everything—keys, bank accounts, records—at no charge. If they miss the deadline, they get hit with a $250 per business day penalty, plus liability for any late fees the HOA incurs because they couldn't access their own money. If a court finds the company willfully withheld the files, they face treble damages (paying triple the actual financial harm) plus the HOA's attorney fees.

What It Means for You

If you live in an HOA, serve on an HOA board, or are looking to buy a new-construction condo, this bill provides a massive layer of financial armor. For prospective buyers, getting that 30-year reserve study at least 24 hours before closing means no more flying blind. You will know upfront if the developer built a lavish clubhouse that is going to cost you thousands in future special assessments to maintain. It forces transparency before you sign the mortgage, giving you a chance to walk away if the long-term math doesn't make sense for your family's budget.

For those already serving on an HOA board, the provisions regarding management companies are the real headline. We have all heard horror stories of a neighborhood firing a management company, only to have that company hold the accounting software and bank access hostage for months. If this bill passes, your board has a loaded statutory gun: a $250 daily fine and the threat of treble damages if the old company plays games. This ensures your neighborhood's bills get paid on time during a transition and saves your board hours of frustrating legal battles.

• Action Item 1: If you are currently shopping for a new-build home in a planned community, ask the sales office if they have a reserve study completed yet. Start making this a standard question before you put down earnest money.
• Action Item 2: If you sit on an HOA board that is unhappy with its management, consider timing your contract termination for late summer. If this bill passes, waiting until it takes effect will allow you to leverage these strict new 45-day transition protections.

What It Means for Your Business

If you are a real estate developer, homebuilder, or run an HOA management company, this bill fundamentally changes your standard operating procedures and your profit margins. Developers will now have a hard, statutory cost attached to spinning up a new community. You cannot just build, sell, and walk away; you have to hire an independent professional—who cannot be an affiliate or have a financial interest in your firm—to draft the 30-year reserve study. Most importantly, you have to write a check for 1.5% of the total fully funded reserve amount out of your own margins before handing the HOA over. For a large planned community with millions in projected future road and roof replacements, that 1.5% check could easily hit five or six figures. You will need to build this into your pro-forma immediately.

For HOA management companies, the transition rules are strict and unforgiving. When you lose a contract, you have exactly 45 days to completely offboard the client. That means turning over all financial records, passwords, keys, and proprietary data outputs. The bill specifically notes you do not have to hand over your proprietary software itself, as long as the HOA's data is fully exported and returned to them. Failing to prioritize offboarding could bankrupt a smaller management firm through the $250-per-day penalties and the liability for any late fees the HOA incurs because you held up their funds.

• Action Item 1 for Developers: Call your financial modeling team today and start calculating what 1.5% of a 30-year reserve looks like for your current pipeline projects. You may need to adjust your unit pricing now to absorb this new margin hit.
• Action Item 2 for Management Companies: Review your standard offboarding contracts and internal timelines this week. Ensure your team has the bandwidth to reliably complete a full data and fund transfer well within the new 45-day legal window.

Follow the Money

The beauty of this bill from a taxpayer perspective is that it shifts the financial burden entirely onto private developers and management companies, rather than the state. According to the official fiscal note drafted on February 12, 2026, the bill requires exactly $0 in state revenue and $0 in state expenditures.

The Division of Real Estate’s HOA Information and Resource Center will see a minimal workload increase to update their public FAQs and field phone calls, but they are expected to absorb this without asking for more taxpayer money. The state court system might see a slight uptick in civil lawsuits as HOAs sue management companies for those treble damages, but again, the state anticipates handling this within existing budgets. The real money moving here is the mandatory 1.5% developer contribution and the hefty civil fines, all of which stay strictly in the private sector.

Where This Bill Stands

Introduced in the House in early February 2026, HB26-1099 is moving with solid momentum. It successfully passed out of the House Committee on Transportation, Housing & Local Government on February 18, where it was amended and referred to the House Committee of the Whole.

Because this bill carries no state fiscal note and tackles a widely disliked issue—underfunded HOAs and stubborn management companies—it has strong appeal for everyday residents. It now awaits debate on the full House floor. If passed by both chambers and signed by the Governor, the law would take effect 90 days after the legislative session ends, roughly around August 12, 2026. Keep an eye on the House floor calendar to see how quickly it clears the chamber.