Could Relief for Condo Associations that Seek FHA Approval Be Coming?

Blog Post by David Swedelson, Partner SwedelsonGottlieb; Condo lawyer and HOA Attorney

According to a blog post on The Maintenance Manager , the FHA may be revising the requirements for FHA approval. Maintenance Manager suggests, quoting the LA Times, that “many HOA boards have not sought approval from the FHA because of three major barriers. However, things could be changing. According to the LA times, ‘the Federal Housing Administration is readying changes to its controversial condominium rules that have rendered large numbers of units ineligible for the agency’s low-down-payment insured mortgages.'”

FHA requirements are burdensome, so few associations seek FHA approval. Some experts have suggested that as few as 25% of condo associations have obtained FHA approval.

According to The Maintenance Manager, some of the most criticized limitations are:
• Non-owner occupancy. The FHA requires that no more than 50% of the units in a project or building be non-owner-occupied. In California, this limitation will become more burdensome with the recent implementation of Civil Code Section 1360.2 that prohibits community associations from implementing CC&R amendments that restrict rentals.
• Delinquent condominium association fee payments. The FHA refuses to approve a project where more than 15% of the units are 30 days or more behind on payments of condo assessments to the association.

The Maintenance Manager goes on to say that the “FHA has imposed additional requirements, including those related to insurance and reserves which produce rules that can create harsh legal liabilities for condo board officers if applications for FHA approvals contain inaccuracies. Let’s hope relief is on the way.”

David Swedelson can be contacted at

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