Michigan has a unique home development association to accommodate new home construction without the restriction of the State of Michigan Land Division requirements; splitting a larger acreage no more than ten times in ten years. The Site Condominium, also known as Site Condo, is an association with a legal entity, managing the large parcel of land with multiple single-family homes within the association. Typical management process includes: caring for common areas, road maintenance, and architecture review for new homes and any allowable out buildings for each single-family home. Veterans Affairs (VA) originally required the Site Condo to be approved by the VA and assigned a VA Condominium ID. The Condo ID would be required for a VA Guaranteed Loan.
As of May 24, 2018, the VA Condo ID and approval is no longer required for single-family Site Condo VA Guaranteed Loans. According to the Veterans Benefits Administration Circular 26-18-12, “Effective immediately, site condominiums in the State of Michigan will be processed in the same manner as a single family detached residence.” The VA no longer is required to review the legal entity documents associated with the Site Condo. The lenders, writing the loan for the VA Guaranteed Loan, will be responsible for verifying the site condo meets the requirements for the State of Michigan.
In the past, Site Condominiums followed the same strict requirements as a multi-family condominium approval process. One of the major obstacles during the Site Condo approval process was the minimum percentage build-out. A site Condo needed to be more than 66% sold before a developer could submit the Site Condo for VA Condo ID number. And often times, the lengthy review process discouraged many developers from filing for a VA Condo ID number. This obstacle eliminated many homes for VA Guaranteed Loan recipients from purchasing a single-family home within the Site Condo. In an already challenging home buyer’s market, this placed an unfair burden for our Veterans that sacrificed and earned the VA Guaranteed Loan benefit.
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