April 10, 2014
A reader asks, “How can a person go about proving that a particular development is not a condo development? Realtors and others in our area typically call any attached housing development ‘condos’ when they are looking to sell them.”
“I am specifically looking at a neighborhood of attached sing-story homes that has a HOA, charges fees for common maintenance, but when you buy a unit you also buy the ground under the unit, and an undivided percentage of the common area. The developer declares they are townhomes and not condos.”
This can be a tricky question to answer for a variety of reasons, including the fact that state and/or local laws might come into play in these cases.
FHA loan rules alone may not be enough to get the whole answer. According to HUD 4155.1 Chapter Four Section B:
“A condominium is a multi-unit project that
• has individually-owned units, which may be either
− attached in one or more structures, or
− detached from each other, and
• is essentially residential in use (for FHA purposes).”
If that were the whole answer, we could probably stop here. However, Chapter Four Section B goes on to say:
“A condominium regime is created by state or local law and is characterized by fee simple ownership of a unit which is defined in the condominium documents, together with common areas. The property interest in these areas is both common and undivided on the part of all unit owners, each of whom belongs to the Homeowners’ Association (HOA) that typically maintains the property and collects assessments or dues from each unit owner.”
The reader should contact the FHA directly for further assistance if the above isn’t clear, but should also be prepared to investigate state or local laws that might be applicable to condos and townhomes in that area. Contacting an expert in real estate law may also be quite helpful.
Do you have questions about FHA home loans? Ask us in the comments section.
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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