- Community Associations, Legal Updates
- Wisconsin, Indiana, Illinois, Florida
The 21st Century ROAD to Housing Act (“Act”) became law on July 11, 2026, and is a comprehensive federal housing law intended to increase housing supply, improve affordability, and modernize housing policy across the United States. Among its many provisions are new restrictions on certain large institutional investors purchasing single-family homes.
Although directed at institutional investors, these new restrictions could indirectly affect condominium, homeowner, and townhome community associations by influencing housing development and ownership trends.
Understanding the Act’s Key Definitions
The legislation defines a large institutional investor as a for-profit entity engaged in investing in, owning, renting, managing, or holding single-family homes that, either independently or together with related entities, has direct or indirect investment control over 350 or more single-family homes. Government entities are excluded from the definition.
Section 1001(b)(1) of the Act is titled “Prohibition on Purchases by Large Institutional Investors” and states: “No large institutional investor may purchase, or enter into a contract to directly or indirectly purchase, any single-family home.”
The legislation establishes a general prohibition on certain acquisitions by large institutional investors, subject to numerous statutory exceptions.
For purposes of this provision, a “single-family home” includes a structure containing two or fewer dwelling units, each intended for occupancy by one household. Manufactured homes are excluded. The Act defines “purchase” broadly. The definition includes acquisitions through purchases, transfers, mergers, construction, foreclosures, and bulk purchases, regardless of whether cash consideration is involved.
New Federal Restrictions on Institutional Homebuyers
Importantly, Congress included numerous exceptions that preserve institutional investment in several types of residential transactions, such as:
- Newly constructed homes intended for sale
- Qualifying build-to-rent developments
- Certain renovate-to-rent programs involving substantial rehabilitation
- Homeownership and rent-to-own initiatives
- Foreclosure and mortgage enforcement activities
- Certain transfers between institutional investors
- Qualified age-restricted communities
The Act does not impose any new obligations on community associations themselves. Rather, it regulates certain institutional purchasers, and may indirectly affect future ownership patterns within association-governed communities.
Practical Implications for Community Associations
While these provisions are directed at large institutional investors, they may have several indirect implications for community associations.
If fewer large institutional investors acquire existing single-family homes, the legislation could result in a greater percentage of owner-occupied residences in some association-governed communities. This shift could influence community engagement, board participation, voting dynamics, and long-term neighborhood stability.
Conversely, because the Act includes exceptions for qualifying build-to-rent developments and other specified transactions, institutional investment in certain planned communities may continue under the law’s permitted framework.
The legislation also may influence future residential development patterns. Developers, builders, and investors may adjust acquisition and development strategies to comply with the new federal requirements, potentially affecting how new community associations are structured, marketed, and occupied. Over time, these changes could impact the mix of owner-occupied and investor-owned homes within association-governed communities.
Although the Act regulates institutional investors rather than community associations, boards should continue to review their governing documents regarding rental restrictions, occupancy requirements, and amendment procedures. Existing declaration provisions governing rentals remain independent of the federal legislation and will continue to play an important role in shaping owner occupancy within association-governed communities.
Legal Resource
Federal agencies will be responsible for interpreting and enforcing many of the provisions in the Act. Because implementation of the Act will depend on future federal regulations and agency guidance, many questions regarding the scope of the purchase restrictions and statutory exceptions remain unanswered. Depending on how the restrictions are implemented, the law may affect investor ownership trends, the development of build-to-rent communities, and the balance between owner-occupied and investor-owned properties in newly developed neighborhoods.
Community associations should continue monitoring federal guidance while periodically reviewing their governing documents and rental policies in light of changing ownership trends.
Questions about this new legislation, rental restrictions, owner disputes, or other community association legal issues? Do not hesitate to call 855-537-0500 or visit www.ksnlaw.com.
Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We represent thousands of clients and community associations throughout the U.S. with offices in several states, including Florida, Illinois, Indiana, and Wisconsin.
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