FHA Condo Approvals – A Leasing Restriction Exception
Under typical situations, there are circumstances whereby HUD will allow leasing restrictions in 
condominium projects.
Condominium projects can set minimum and maximum lease terms. They can require that the leases include language that the tenants must follow the Association’s rules and regulations.
There are certain restrictions that HUD absolutely will not accept. One of those is it will not allow a requirement that all potential tenants must be approved by the Board. HUD feels that it opens up the HOA to Fair Housing violations but also restricts the unit owners’ rights to free ownership.
Under normal circumstances, HUD will not approve a condominium project that outright restricts the leasing. It requires that at least one unit be allowed to be leased.
However, in the case where a project is 100% Affordable Housing, the CC&R’s can prohibit leasing altogether.
The caveat here is that the Affordable Housing language must be acceptable to HUD’s guidelines.
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