Highlights of Today’s HUD Industry Call Regarding Condo Approvals
Today’s HUD industry call just concluded. The topic of conversation was HUD’s Bulletin 13-42 regarding clarifications to transient/hotel leasing, Phase I Environmental Site Assessments and mistakes in case number assignments with site condos. Joanne Kuczma from the Headquarters in Washington DC was the facilitator of the call.
The main topic of conversation of the call was the update/clarification to the guideline regarding short-term (aka “transient”) leasing although the question and answer period was open to all topics.
Ms. Kuczma is one of the highest authorities within HUD dealing with condominium project approvals. Despite this, she is not hesitant to answer a question with “we have not considered this and will have to get back to you.” This illustrates that HUD continues to update and modify guidelines as necessary.
From my standpoint, these are the highlights:
· Legal documents that specify minimum lease terms of less than 30 days must either be amended and recorded on the land records or a Board member must execute a letter certifying to HUD that no leases exist for less than 30 days AND that no lessees are receiving hotel-like accommodations. If the documents are not amended, the lender must also provide a certification that it will not provide same if it acquires the property.
An example of this is if the legal documents state that “...there shall be no lease term of less than 7 days…”, or 15 days, etc.
· Legal documents silent regarding minimum timeframe of leasing do not need to amend documents nor provide letter as mentioned above.
· One month is the same as 30 or 31 days even though February has less than 30 days.
· Projects that are approved without amending legal documents can amend documents to remove the offending language and then submit copies of the recorded documents to HUD. This will remove the lender’s responsibility to supply HUD with a letter as mentioned above.
· If the developer is still in control of the HOA it is easy enough to amend the legal documents because it only takes one entity to do so. A letter from the Board is allowed in lieu of an amendment because it can be difficult to get a majority of the unit owners to vote to agree to amend the documents.
[The original question asked if the letter would be acceptable if the developer was still in control of the HOA. Ms. Kuczma said that this had not been considered and that she would bring this to HUD’s attorneys. An update will be provided in the FAQ’s that will be provided after the call.]
· Form HUD-92561 (Borrower’s Contract with Respect to Hotel and Transient Use of Property) should be included with ALL condominium loan packages submitted to FHA for insurance regardless of the language in the legal documents.
I am very appreciative of the time that HUD dedicates to educating lenders, consultants and others who are involved in the project approval process. I know that it makes their jobs easier but their accessibility greatly benefits condominium projects and those who own or are looking to buy condo units.
I would like to thank HUD and Joanne Kuczma for helping all of us to work more effectively with HUD in the condominium project approval process.
The Condominium Project Approval Team at ReadySetLoan is dedicated to helping condominium projects across the nation to obtain their approvals with FHA and the VA or become recertified with FHA. We have assisted nearly 200 condominiums and we can help your association.
ReadySetLoan is an active member of the Connecticut and New England chapters of the Community Associations Institute (CAI) and is a frequent contributor to Common Interest Magazine as an expert in FHA/VA condominium project approvals.
Please contact us with any questions regarding FHA or VA condominium project approvals. You can email me at email@example.com or call me at 404-433-4565. I will be happy to answer any of your questions.
FHA/VA Condo Approval Specialist
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860-644-3772 Fax Phone
Check out our article in Common Interest magazine on page 19!