FHA Condo Approvals – Live/Work Condominium Projects
Prior to HUD’s release of Mortgagee Letter ML11-22, there existed no guidance for Live/Work Condominium Projects. HUD considers Live/Work Projects to be those which have legally-designated units within the project that allow for non-residential use within a primarily residential project.
HUD does allow Live/Work Projects to be eligible for approval given that ALL of the following criteria are met:
- Must be approved using only the HRAP (HUD) processing option.
- The condominium declaration must state that the non-residential (work) space may not exceed 25% of the unit’s total floor area.
- The work space may not exceed 25% of the project’s total floor area.
- The non-residential work use must be subordinate to the units’ residential use and character.
The last requirement is interesting as it is somewhat subjective. What HUD is saying is that the units that have non-residential use must have the look and feel of a residence that also happens to house a business or have an element of non-residential use. The units must not look like a business where someone also lives.