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 applies too, though Fannie and Freddie accept a state statute in place of their own formula. In a mandating state, the numbers that can still push the limit higher are FHA's and the governing documents'.

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 set the floor where no statute applies. It doubles as a condo fidelity bond statute comparison, since several states cover condos and HOAs under separate sections. In states without a mandate, the lender requirement usually sets the 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 FHA 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. Where a state has no mandate, the federal floor is the one that counts. Where a state does have one, Fannie Mae and Freddie Mac accept it in place of their own formula, while FHA takes the greater of its formula or the state minimum. The three programs 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 follows at least one of three financial controls: separate operating and reserve accounts with bank statements sent straight to the association, a manager who keeps separate accounts and cannot draw on reserves, or two board signatures on reserve checks.

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's Guide Section 4703.6 sets a parallel requirement for condo and co-op projects: coverage of at least the maximum funds in custody of the association or its management firm at any one time, or three months of assessments on all units when the project documents require at least one of the same three financial controls. Freddie exempts projects of 20 units or fewer, projects where the required coverage would be $5,000 or less, and Exempt From Review loans. In a state with its own fidelity statute, it treats compliance with that statute as compliance with its rule. An association that satisfies one agency has usually satisfied the other, with one difference on the manager: Freddie accepts the management firm's own evidence of coverage, while Fannie requires the association's policy to cover the manager.

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 the numbers that actually apply, not the state figure on its own:

1. The state statutory minimum from the table above
2. The federal lending overlay: FHA always, and Fannie Mae or Freddie Mac only where no state statute applies
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 in a state without a statute the Fannie Mae formula sets the floor, and FHA's formula can top the state minimum anywhere. 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 the largest result that applies, remembering that Fannie and Freddie accept a state statute in place of their own math.

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 has no statute, that $72,000 Fannie Mae figure is the floor. If a state statute lands at $50,000, Fannie and Freddie accept the $50,000, though an FHA loan would still need three months of assessments plus reserves.
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.