State-by-State HOA Fidelity Bond Requirements: A Statutory Comparison (2026)

HOA fidelity bond requirements are set by statute in eleven states, and each state uses a different formula to fix the minimum. The comparison table below breaks those into fourteen separate condo and HOA entries, since several states cover the two under different statutory sections. A federal overlay from Fannie Mae, Freddie Mac, and FHA sits on top of every state rule. The number a board actually has to carry is whichever of those runs highest.

This HOA fidelity bond by state comparison lists every mandate with its statutory citation, groups the states by formula type, and adds the federal overlays that often exceed the state floor. It doubles as a condo fidelity bond statute comparison, since several states cover condos and HOAs under separate sections. In many associations, the lender requirement produces the highest minimum. For how this coverage fits the wider program, see HOA crime and fidelity coverage.

HOA fidelity bond requirements by state

Eleven states set HOA or condo fidelity bond requirements by statute, from a flat $500 per unit in Hawaii to the full fund balance in Illinois. The table below splits them into fourteen separate condo and HOA entries, since Florida, Illinois, and Virginia each set both a condo and an HOA rule. Everywhere else, the amount comes from the association's governing documents or the federal lending overlay. The table shows each statute, who it applies to, and how the minimum is calculated.

Formula families

The eleven states cluster into six formula families. Knowing which family your state uses lets a board estimate the number from its own budget in a few minutes. The states that require HOA crime coverage all land in one of these six groups.

1. Reserves plus 3 months of assessments: California and Nevada. Both track the Fannie Mae formula closely.
2. Reserves plus ¼ of annual assessments: Virginia, Louisiana, and Tennessee. This reserves-plus-a-quarter approach is the one most new state mandates now copy when they add a fidelity rule.
3. One-quarter of annual assessments, no reserves: Massachusetts. It is the lightest of the fractional formulas, and it leaves out special assessments.
4. Maximum funds in custody: Florida (both). This floats with the bank balances, so the required limit can jump right after a special assessment lands.
5. Per-unit dollar amount: Hawaii, at $500 per unit and capped at $200K. Simple to calculate, though the cap can leave a large association short of its real balances.
6. Full fund balance: Illinois condos, covering every operating and reserve dollar in custody. No cap applies, which makes it the most protective formula in the country and the most expensive to satisfy for a large association sitting on big reserves.

Colorado's two-months-plus-reserves rule sits between the first two families. Washington requires a bond under its uniform common-interest act (WUCIOA) but hands the amount to the declaration, so it mandates coverage without setting a statutory floor.

Federal overlays: Fannie Mae, Freddie Mac, and FHA

Every condo or HOA project with units financed by conventional or government-backed loans must also clear a federal fidelity requirement. The federal floor often beats the state minimum, especially in states with a light mandate or none at all. Fannie Mae, Freddie Mac, and FHA use similar formulas, with important differences in scope and exemptions.

Fannie Mae (Selling Guide B7-4-02)

Fannie Mae's fidelity bond requirement turns on whether the association keeps sound financial controls, meaning things like dual signatures, separate operating and reserve accounts, and bank statements sent straight to the board.

Projects of 20 units or fewer, and those granted a Waiver of Project Review (B4-2.1-02), are exempt. Coverage has to reach the directors, officers, employees, volunteers, and any management-company staff who handle association funds, per Selling Guide B7-4-02.

Freddie Mac

Freddie Mac sets a comparable fidelity requirement for condo and planned-unit-development projects. Its approach tracks the same three-months-of-assessments-or-maximum-funds logic Fannie Mae uses, so an association that satisfies one agency has usually satisfied the other.

FHA (HUD Handbook 4000.1)

For condo projects with more than 20 units, FHA requires fidelity coverage equal to the greater of two numbers: three months of aggregate assessments plus reserve funds, or the minimum the state sets. When a management company handles the money, its own coverage or a policy endorsement has to meet the same standard. The rule lives in HUD Handbook 4000.1.

Waivability and enforcement

Most state HOA fidelity bond requirements cannot be waived. Only two states let owners vote to change the rule, and the rest treat the bond as mandatory. Non-compliance carries real teeth.

• Florida HOAs (F.S. § 720.3033(5)): owners can waive the bond each year by a majority of the voting interests present at a properly called meeting. Florida condos get no such option.
• Massachusetts (Ch. 183A § 10(h)): a 67% vote in beneficial interest can modify the requirement, and a simple majority can undo that change. Condos of ten units or fewer are exempt to begin with.

Everywhere else among the mandating states, the bond stays non-waivable. Fall short and the fallout ranges from state agency fines (Florida condos answer to the DBPR) to a non-warrantable classification under the federal overlay to personal exposure for directors under fiduciary-duty statutes.

The higher-of rule

For any single association, the binding HOA fidelity bond amount is the highest of three numbers, not the state figure on its own:

1. The state statutory minimum from the table above
2. The federal lending overlay (Fannie Mae, Freddie Mac, or FHA)
3. The governing documents, since a declaration or CC&Rs can set a higher floor

Most boards ask what the state requires. The better question is what the lender requires, because the Fannie Mae formula routinely tops the state minimum. Falling below the lender standard can make the project non-warrantable, which restricts conventional financing on unit sales.

A broker who sizes the bond to the state number alone leaves the association exposed at the next lender questionnaire. Coverwatch shops the fidelity limit to the higher-of figure across its carrier network at every HOA master policy placement, and on a flat fee rather than commission it has no reason to push a bigger number than the math supports.

What to do with this table

Turning this into a real number takes three steps: find your state's formula, run the Fannie Mae math, and check your own governing documents. Carry whichever result is largest.

1. Find your state. If it mandates coverage, apply the formula using the assessment and reserve figures from the current budget.
2. Run the Fannie Mae number. Multiply the monthly assessment by the unit count, then by three. Take a 60-unit condo at a $400 monthly assessment: that is $400 × 60 × 3, or $72,000. If the state formula only lands at $50,000, the board should carry the higher $72,000 Fannie Mae figure.
3. Read the declaration. Some CC&Rs set a floor above both the state and Fannie Mae numbers.

If your current HOA fidelity bond trails any of the three, raise it before the next lender questionnaire arrives. A shortfall discovered mid-closing stalls the sale and lands squarely on the board.