Site Condominium Definition

[Lil Rhody]

I have been going back and forth with a lender regarding the definition of a Site Condo for an FHA loan. The FHA definition found in the 4000.1 is:

A Site Condominium refers to:
• a Condominium Project that consists entirely of single family detached dwellings that have no shared garages, or any other attached buildings; or
• a Condominium Project that:

• consists of single family detached or horizontally attached (townhouse) dwellings where the unit consists of the dwelling and land;
• does not contain any Manufactured Housing units; and
• is encumbered by a declaration of condominium covenants or a condominium form of ownership.

I bolded the "or" because that seems to be the sticking point. The subject is a detached ranch styled dwelling in a declared condo project with 14 total units, all are similar style and are detached. The project site is one large parcel with no noted subdivisions or designated parcels for the individual units. I have not gotten a copy of the declarations yet, hopefully I will get them soon.

The lender says that this is a site condo and I assume it is because a site condo would not need to be in an FHA approved project and a Single-Unit Approval would not be needed. I told him that a Site Condo includes land ownership and that since this property does not, it is a detached condo not a site condo. He keeps referring to the 1st bullet point in the FHA definition, "a Condominium Project that consists entirely of single family detached dwellings that have no shared garages, or any other attached buildings". The property meets these requirements but I feel that the definition is lacking and does not fully explain the difference between a detached condo and a site condo. Maybe FHA does not recognize the difference either.

I have been looking for a definition of Site Condo that is from a verifiable source and am having problems finding one. I have looked at real estate dictionaries, AI, FHA handbooks and online sources but cannot find anything that would better describe a site condo for the purposes of an FHA loan. The FNMA definition is much more inclusive but when I presented that, the lender said that definition does not matter because it is not a Fannie loan. Like one peer said, it seems like the lender is trying to fit a square peg in a round hole. I think that its to superseded the project approval.

Am I wrong to think that all site condos include some form of land ownership of either a designated parcel for use or even just the footprint of the dwelling? Is the FHA definition complete and accurate? I am going to give FHA a call and see if the Homeownership Department can provide some clarity.

If anyone can point me to a resource with a definition, it would be a huge help.

 

[jay trotta]

How does local zoning interpret the project ? How does the Deed "Legal Description" address the complex/project ?

IMO; each municipality addresses the issue for "approval" under their Zoning compliance requirements. To the best of my knowledge there is No one size fits all and each is approved on their own merits. Somewhere in the Docs. should be an attorney that set up the approval, you could see what their thought process was to gain approval of the project, as a; Condo / PUD / Site Condo OR anything else. It usually is via State & Municipal requirements/guidelines, and if needed, "specific language" is added to address the issue.
Good Luck

 

[glenn walker]

The lender is correct its a site condo- Remember condominium is a form of ownership in common with other attached or detached units, its not a design or style, read the legal on it. And FHA -Fannie-Mae it does not go on a 1004 form any more.

 

[Lil Rhody]

The local zoning is just noted as condominium use approved with no difference between condo types. What is confusing is that FNMA has a definition that includes land ownership to be considered a site condo and FHA doesn't have that same wording in their definition.

I got a copy of the declarations shortly after the initial post. No help there other than the notation that there is no land ownership. I'm pretty confident that this is a detached condo and not a site condo. I'm waiting for FHA to get back to me, they will make the decision of whether or not the project or individual unit would need to get approved or not.

 

[glenn walker]

The local zoning is just noted as condominium use approved with no difference between condo types. What is confusing is that FNMA has a definition that includes land ownership to be considered a site condo and FHA doesn't have that same wording in their definition.

I got a copy of the declarations shortly after the initial post. No help there other than the notation that there is no land ownership. I'm pretty confident that this is a detached condo and not a site condo. I'm waiting for FHA to get back to me, they will make the decision of whether or not the project or individual unit would need to get approved or not.

On a site condo- The owner does not own the lot or area it sits on, his yard area is just fenced in and he never knows he doesnt own the lot--but only he has the rights to use that area. The Title report lays out the form of ownership. As far as the assessor-realist or other data sources they also just uses codes under zoning, those are not what the described zoning is , that has to come from a zoning map or other source . Also unlike attached condominium most Site condo projects do not require approval. If you have a FHA case # you are ready to roll. The Lenders FHA-DE Underwriter, is responsible to see if its approved or not, it's not the appraisers responsibility. If its not attached to any other Home or unit- its a detached site condo. If it looks like a house but lot and land is owned in common with other owners it a Site Condo. You can also go to "mapmy county" on google- select the County and it will usually give you more info than Realist or sites like that. AS FAR AS FHA HOC- the people that answer that phone are rarely licensed appraisers and they just read the same 4000.1 stuff you read.

 

[Lil Rhody]

On a site condo- The owner does not own the lot or area it sits on, his yard area is just fenced in and he never knows he doesnt own the lot--but only he has the rights to use that area. The Title report lays out the form of ownership. As far as the assessor-realist or other data sources they also just uses codes under zoning, those are not what the described zoning is , that has to come from a zoning map or other source . Also unlike attached condominium most Site condo projects do not require approval. If you have a FHA case # you are ready to roll. The Lenders FHA-DE Underwriter, is responsible to see if its approved or not, it's not the appraisers responsibility. If its not attached to any other Home or unit- its a detached site condo. If it looks like a house but lot and land is owned in common with other owners it a Site Condo. You can also go to "mapmy county" on google- select the County and it will usually give you more info than Realist or sites like that. AS FAR AS FHA HOC- the people that answer that phone are rarely licensed appraisers and they just read the same 4000.1 stuff you read.

I work at the State Housing Agency and I conduct the condo project reviews, I am not acting as an appraiser for this. The appraisal was reviewed and appraiser didn't provide an opinion of if this is a site condo or a detached condo.

The FHA HOC isn't just appraisers. Their condo department is pretty helpful and knowledgeable. I've reached out to them many times and they are willing to provide interpretation of the handbooks. They understand that the handbooks are sometimes written pretty vague. They will ultimately make the determination of the type of condo project they consider it to be since it is an FHA loan and that will dictate whether or not a project approval is needed. I don't think that this falls on the appraiser to make the call on project type because it could be considered outside of the typical scope of work to comb through declarations, by-laws or State Law. Another reason to put it on FHA.

The FHA case number is generated according to the ADP code and property eligibility when the loan is originated. That there is an FHA number doesn't mean that it is ready to roll. The originating lender could use the wrong property type and ADP code when originating the loan and gotten an FHA case number. That's is what I feel happened. We have the concern that this is a detached condo that is not currently FHA approved, which means it would need to get a Single Unit Approval and in that case the FHA case number isn't released from Holds Tracking until a review is complete. The project was previously FHA approved and the approval has since expired. This is another reason we feel it may not be a site condo because it would have not had to been approved if it was.

 

[Overimprovement]

OK, I came across this searching for my question to be answered, so I will piggyback...

I do very few condos, there just aren't any in my area. Well a couple, but that is it.

Please help my understanding. If a condo unit owns the dirt underneath it, should it always go on a 1004 form, regardless of what it may be called--detached, site, etc? Seems like the 1073 form was created for the typical apartment building type condo project. As such, there is only a piece of common land ownership. That makes sense. The few condo reports I have done have all been the one building with many units, and have gone on a 1073. That made sense.

But this particular question relates to a large project, of perhaps 100 buildings, each with 2-4 attached units. So if these units own the ground underneath, would that be better suited to a 1004 form? What if there is no parcel ownership, just the typical common land piece?

Thanks for your thoughts, like the OP, it seems trying to get guidance out of what is out there leaves me...

 

[Tim The Enchanter]

I hate these things and all their mutations.
Lately it's "Small Lot Subdivisions" of so called SFRs.
The ones I have seen are allegedly 6" apart with a metal accordion between the units.
They have no yard. These are freaking townhouse style condos.

"mapmy county" on google

Ima have to look at that more. Thx Glenn.

/rant

 

[Overimprovement]

I was interested in the mapmy county thing until I realized its just for riverside county.

These things of mine have small yards, (no john deere needed) but that doesn't mean the unit owners own the dirt. I am calling in the AM, but just for education's sake, am curious about how it would roll whether or not they owned the land.