Previously we discussed the issues involving FHA financing for condominium projects. Basically stated, for condominium projects to be financed through FHA the project generally needs to be approved by HUD for FHA financing. There currently exists a plethora of problems involving FHA financing for condominiums. For a more complete discussion of these issues look here.
One notable exception to this rule applies to a property known as a “site condominium”. A general definition of a site condominium is: “A detached single-family dwelling characterized as a site condominium by the way it is platted by the builder, however it is still considered a condominium.” Basically, this describes a single detached home that shares some characteristics of a condominium association, primarily involving certain common areas. These are sometimes found in the golf course and other settings.
The benefit of purchasing a “site condominium” is that these properties are not required to be on the HUD approved list for FHA financing. FHA deals with these as follows:
1.8.1 Site Condominiums
Condominium project approval is not required for Site Condominiums meeting all of the below defined requirements.
Site Condominiums are defined as:
Single family totally detached dwellings (no shared garages or any other attached buildings or e.g. archways, breezeways);
Are encumbered by a declaration of condominium covenants or condominium form of ownership;
The condominium unit consists of the entire structure as well as the site and air space and are not considered to be common areas or limited common areas;
Insurance and maintenance costs are totally the responsibility of the unit owner;
Any common assessments collected will be for amenities outside of the footprint of the individual site.
So if you are running into problems obtaining financing for your single family residence that has the word condo or condominium someplace in the title, it is worth the effort to see if in fact you are dealing with a “site condominium”. For this and other condo related issues and/or if you are having trouble sleeping at night and need to read something that will help. <click here> Just kidding, but seriously this is one long document discussing FHA and condominiums.