FHA Condo Approvals – Recent Email Inquiry: Site Condominiums

FHA Condo Approvals – Recent Email Inquiry: Site Condominiums

Here is another recent email inquiry from a gentleman attempting to purchase a Site Condominium with an FHA loan and was encountering troubles.  He asked questions pertaining to the HOA paying for the insurance of the units and if it would make a difference if the unit owner has HO6 insurance.

Eric,

I am going through escrow on a property that is a site condo.   I had questions on one of the requirements.   The HOA currently procures the insurance and organizes landscaping but it is funded through HOA dues.   Does this mean that the maintenance and insurance is not the sole responsibility of the homeowner or are there nuances with the requirement?  

Are there any options if the property does not qualify that can be processed rather quickly? 

My response:

In order for a project to qualify as a “site condominium”, the insurance of each unit must be the responsibility of the respective unit owner. According to HUD's guidelines, it doesn't state that this includes the landscaping but I have learned from HUD that the owner is responsible for everything that is withing the unit boundaries (footprint) including the land.

If the HOA pays for the insurance of the units then the project is not site condos and full project approval is required.

I wish I had better news for you, sorry.