July 20, 2011
In our last blog post we discussed FHA rules on condo units that affect their eligibility for FHA mortgages.
The FHA does not approve condo loans for any property that features deed restrictions which penalize the borrower for selling or transferring ownership of the condo to someone else. FHA regulations state that any property purchased with an FHA mortgage must be freely transferable without penalty.
But those aren’t the only requirements on FHA condo loans.
FHA rules include provisions for proper documentation (in conjunction with applicable state law) of homeowner’s agreements, and statements of understanding between condo owners about shared responsibility for property management.
FHA borrowers new to condominium ownership might not know that the responsibilities of condo ownership include shared duties and costs such as facility maintenance, code compliance, roof repair, sidewalk and driveway upkeep, etc. Condo owners would be jointly responsible in most cases for such issues.
When purchasing a condo, regardless of whether you have a conventional loan, VA mortgage or FHA insured loan, you enter into a group association with your fellow owners.
In some cases, city building codes may require fixes, repairs or upgrades to the property; the condo owners share the expense as agreed upon. The FHA requires such agreements to be spelled out in writing and submitted. The FHA also requires approved condo projects to furnish proof of hazard insurance.
According to the FHA rules, “The insurance policy must be in either the individual homeowners name(s) or the Home Owners Agreement.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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