In 2019, owners in a 340-unit HOA community in the Austin area got a letter nobody wants to open. A parking lot needed emergency repair, and the board's response was a special assessment of $8,500 per unit. The declaration had required a reserve study every five years. The board had not commissioned one in nine. When members sued, the underlying number that came out in the case was almost as startling as the bill itself: reserves were funded at roughly 35 percent of what the community's age and construction actually required.
That story is not a scare tactic. It is the plainest illustration available of a gap in Texas law that shapes what you are actually buying when you put an offer on a condo here in 2026, and it explains something about the current Austin condo market that the median price alone does not.
The discount hiding in the price gap
Look at the numbers side by side and a pattern emerges that has nothing to do with square footage. Austin condos have been trading around a median of $390,000 in early 2026, down roughly 6.5 percent from a year earlier, while single-family homes in the same metro have held closer to $582,500. Price per square foot for resale condos has slipped to around $272, down from above $310 in mid-2023. Condo inventory has been sitting near 7.4 to 7.5 months of supply, deep into buyer's market territory, and the average condo has been taking well over 100 days to sell.
Compare that to the broader Austin metro, where Unlock MLS data reported through KXAN showed 4.7 months of housing inventory and a median sale price of $435,000 as of July 2026, up about 1 percent year over year. The overall market is basically flat to slightly firmer. The condo segment specifically is where the real softness lives.
Some of that gap is legitimate: different buyer pool, different financing rules, HOA dues stacked on top of the mortgage payment. But a meaningful piece of it is a reserve-fund discount that buyers are pricing in instinctively without necessarily naming it. Buildings with thin reserves carry the shadow of a future Willowbrook-style bill, and shadows show up in resale value even before an assessment is ever voted on.
What Texas does not require, and why that matters more than what it does
Here is the mechanism most out-of-state buyers, and plenty of longtime Austinites, do not expect. Texas Property Code Chapter 82 governs condominium associations, and it requires an association to adopt an annual budget and fund reserves for major components. What it does not do is set a minimum reserve study frequency or a minimum funding percentage. There is no statutory floor. A board can be doing everything technically legal and still be sitting on reserves that would strike a structural engineer as dangerously thin.
That silence is where the Willowbrook case did its damage. The board was not violating state law. It was violating its own declaration's five-year reserve study requirement, and by the time owners noticed, the shortfall had compounded for nearly a decade.
Industry practice fills some of the gap state law leaves open. Reserve professionals generally treat 70 percent funding or better as healthy, the point where an association is genuinely ahead of its capital plan rather than catching up to it. Funding below 25 to 30 percent is where special assessments tend to arrive within two to three years. Those are not legal thresholds. They are the numbers experienced buyers and their agents use because the law does not hand them one.
What the resale certificate actually has to disclose
Every Austin condo transaction runs through a document called the resale certificate, required under Property Code Section 82.157. It has to include the current amount of assessments, any past-due balances, the coming assessment schedule, any special assessment the board has already approved but not yet collected, the current operating budget and balance sheet, a statement of the reserve balance and whether a reserve study exists, current or pending litigation, known code violations tied to the unit, and any use or rental restrictions.
That is a long list, and it is easy to assume it covers everything you would want to know before writing an offer. It does not.
| What the certificate must show | What it commonly leaves out |
|---|---|
| Current reserve balance | Whether that balance matches what a reserve study says it should be |
| Approved special assessments | Assessments discussed at board meetings but not yet formally voted |
| Filed litigation | Association disputes still at the demand-letter stage |
| Recorded rental restrictions | Board-adopted rules not yet folded into the recorded documents |
A board can disclose a reserve balance of $400,000 in perfectly good faith and never mention that the building's own engineer flagged a $1.2 million roof and elevator replacement five years out. The certificate answers the question the statute asks. It does not always answer the question a buyer actually has.
What changed in 2025, and what still hasn't
Texas lawmakers did tighten part of this picture last year. A 2025 update to the Property Code, effective September 1, 2025, codified the $375 cap on what an association can charge to prepare a resale certificate, with a $75 cap on any update to that certificate. A companion bill moving through the same session addressed the same fee structure and made clear associations cannot tack on extra charges for inspections or gathering the underlying information. For larger condo associations, those with 60 or more units, the update also added a requirement to publish governing documents, budgets, and recent financials on a public website.
Those are real, useful changes. They stop the fee-padding that used to happen around resale certificates and they make document access easier for buyers doing due diligence on bigger buildings. What they do not do is create a minimum reserve funding requirement or mandate a reserve study on any set schedule. The core gap that let Willowbrook's board go nine years without one is still there in 2026.
A short list before you write an offer
Before you go under contract on an Austin condo, request and actually read:
- The resale certificate itself, and confirm the fee charged does not exceed $375
- The most recent reserve study, if one exists, and how it compares to the disclosed reserve balance
- Board meeting minutes from the last 12 to 24 months, looking for any assessment discussion that hasn't reached a formal vote yet
- The rental and short-term rental rules in the recorded declaration, since most Austin condo buildings prohibit short-term rentals outright, unlike a small number of buildings such as Natiivo at 48 East Avenue that were built with STR use in mind
- Whether the building carries current FHA approval, relevant if you or a future buyer will need FHA financing, since roughly 51 Austin condo projects currently carry that approval out of the metro's total inventory
The one edge condo buyers have that single-family buyers don't
There is a piece of this that actually favors condo buyers over anyone buying a single-family home with an HOA. Under Property Code Section 82.156, a condo purchaser has the right to cancel the contract within five days of receiving the resale certificate, no questions asked. Buyers of a single-family home in a standard homeowners association do not get that statutory right. Their only protection is the standard TREC option period written into the contract.
That five-day window only works if you actually open the certificate the day it arrives instead of letting it sit in an inbox until closing week. Read the reserve numbers first. Everything else in the packet matters, but that number is the one that tells you whether you are buying into a building that is planning ahead or one that is one repair away from its own Willowbrook letter.
A few questions that come up often
Does the five-day cancellation right apply to townhomes with an HOA instead of a condo association? No. Section 82.156 applies specifically to condominium purchases under Chapter 82. Buyers of a single-family home or townhome governed by a property owners association under Chapter 207 rely on the negotiated option period in the purchase contract rather than a statutory cancellation right.
Is a 70 percent funded reserve a legal requirement in Texas? No. There is no statutory percentage. Seventy percent or better is an industry benchmark reserve professionals use to describe a well-funded association, not a legal floor.
Do I need to check FHA approval even if I'm using a conventional loan? It is still worth checking. FHA approval status is often a proxy for how organized a building's paperwork and finances are, and it matters a great deal to future resale if your eventual buyer wants FHA financing.
Numbers on a listing sheet tell you what a unit costs. They do not tell you whether the association behind it is funding its future or borrowing against it. If you are weighing an Austin condo purchase and want a second set of eyes on a resale certificate before your option period runs out, Kasey Fagan is glad to walk through it with you. Let's Connect.
