There are times when a Manhattan condo contract suddenly comes to a halt just before finalization. Even if the buyer's credit or income is not an issue, the bank may delay loan approval due to concerns about the building's financial status. The main reasons usually relate to the HOA (commonly referred to as common charges in New York) reserve fund ratio or delinquency rate.

The monthly common charges for Manhattan condos vary significantly from building to building. According to StreetEasy, the average is around $1,050, which translates to about $3.20 per square foot, with monthly fees ranging from $300 to $1,500 for 1-2 bedroom units (brickunderground.com). For full-service buildings with doormen, concierges, and gyms, the fees can rise to over $500 to $5,000 a month. If you have the same budget, it's advisable to compare how the fees differ between smaller buildings with fewer services and large full-service buildings.

This fee includes salaries for doormen and maintenance staff, master insurance, lobby and elevator maintenance, and contributions to the reserve fund. In some buildings, salary expenses account for 30-40 percent of the operating budget, which is one reason why Manhattan's fees are higher than in other areas.

The bank closely examines the reserve fund ratio. Fannie Mae has required that the reserve allocation ratio be at least 10 percent of the common charge income for condo purchase loans to be approved, but starting January 4, 2027, this requirement will increase to 15 percent (governingdocs.dev). Additionally, they review delinquency rates, ongoing lawsuits, and the proportion of commercial space, and if the criteria are not met, the condo may be classified as non-warrantable, leading to loan denial or unfavorable interest rates.

New York State does not have specific state-level mandatory regulations regarding condo reserve funds. There is an exception in New York City's ordinance (Local Law 70), which requires that 3 percent of the sale price be set aside as a reserve fund at the time of conversion, and a bill (A8945/S7600) to mandate a 30-year reserve fund plan is currently stalled in committee as of mid-2026 (propfusion.com). Ultimately, whether the reserve fund is sufficient can only be determined by directly checking the building's financial statements, not by law.

Nationally, HOA fees average between $200 and $400, but buildings in Manhattan with doormen and full-service amenities often exceed this range (nar.realtor). Areas like the Upper West Side or Tribeca, which are preferred by Korean families due to their school districts, tend to have particularly high fees, as properties in higher-rated school districts are scarcer, leading to increased fees. School district boundaries change frequently, so it's advisable to verify the assigned school for a specific address before purchasing.

Families moving from other states to New York often budget based on their previous residence's HOA fees or property taxes, only to be surprised by the high fees in Manhattan. Investors looking for rental income should check not only the proportion of commercial space but also any rental restrictions under CC&Rs, as some buildings limit the number of units available for rent to a certain percentage of the total, which is crucial to consider before signing a contract for investment purposes.

Here are some items to check before signing a contract:

• What percentage of the budget is allocated to the reserve fund according to the latest financial statements
• Whether a reserve study has been conducted
• The percentage of units that are delinquent
• Any lawsuits or defect history related to the building
• The rental proportion of commercial space

In a market like Manhattan, where fees are high, the actual accumulation of those funds can be a determining factor for loan approval and future resale potential, rather than just the amount itself. Taxes and loan conditions can vary depending on the building and financial institution, so it's advisable to consult with real estate professionals and loan officers regarding individual situations. This article does not constitute investment or legal advice, and consulting with experts before finalizing any contracts is recommended.