Site Condominiums

[Marc Madison]

In the past couple of years I've run across a new description for legal ownership type called a "site condominium". These units have all the characteristics of a PUD (detached construction, private sites of varying size) and none of the characteristics of a condominium (ownership of airspace only; percentage interest in common area). My clients insist their investors require the 1073 condo form be used, while the characteristics of the property seem to dictate the use of the 1004 SFR form. Does anyone have some insight on this issue? Thanks!

 

[Dave Smith]

Straight out of the Fannie Mae Guidelines.

Note sentence two of paragraph two.

Section 301 – Units in Condominium Projects

A condominium project is one in which individual owners hold title to units in the project along with an undivided interest in the real estate that is designated as the common area for the project.

Appraisals for condominium units that secure manually underwritten mortgages are usually documented on the Individual Condominium Unit Appraisal Report (Form 1073) or the Desktop Underwriter Quantitative Analysis Appraisal Report (Form 2055). However, we will accept appraisals of detached condominium units on the Uniform Residential Appraisal Report (Form 1004), if the appraiser includes an adequate description of the project and information about the owners' association fees and the quality of the project maintenance. Desktop Underwriter will specify the level of property analysis and review for Desktop Underwriter-processed mortgages that are secured by condominium units.

The appraisal of an individual unit in a condominium project requires the appraiser to analyze the condominium project as well as the individual unit. The appraiser must pay special attention to the location of the individual unit within the project, the project's amenities, and the amount and purpose of the owners' association assessment since the marketability and value of the individual units in a project depend on the marketability and appeal of the project itself.

Good luck.

 

[Marc Madison]

Thanks Dave for your assistance....

 

[Darrell Hignite]

Always do the form that the client wants, USPAP does not dictate the form, only the right way to do appraisals through the Standards, Rules, etc. So if they want a condo form, by all means,,,,,,do it on the condo form.

 

[Mountain Man]

So if they want a condo form, by all means,,,,,,do it on the condo form.

Don't forget to quote the correct fee for messing with a head ache form. :mrgreen:

 

[Patrick W]

My question, because site condominums have lots often with differing sizes, where on the condo form do you identify the subject's and comparable sales' lot sizes. Also where do you adjust for this factor on the condo form, as this can effect value. I have always used the 1004 for site condos so as not to mislead the reader and to accurately reflect value, just explain what a site condo is in your addendum and why you had to use the 1004.

 

[Dave Smith]

There are over two hundred condo projects and quite a few site condo subdivisions in my market area. I have completed about four hundred condo appraisal in the last three and one half years. I've prepared about a dozen site condo appraisals during that time. Believe me, it is much easier to do a site condo appraisal on a 1004 form than it is on the condo form. The site condo property is usually much more like a typical subdivision that it is a typical condo project.

Just be sure to include all the necessary condo information required by Fannie or Freddie for the site condo subdivision in your addendum section of the 1004. Use the project information on page two of the condo form as your guide. I simply will not prepare a site condo appraisal on the condo form. If I am challended about the use of the 1004 I refer the client to the guidelines that give me the latitude to use the 1004 form for the site condo type property.

My $0.02 worth.