Legal documents from the HOA or project limit the owners` ability to occupy the unit at any time of the year. If the use and characteristics of the property do not comply with the law under applicable zoning and land use laws and regulations: Projects under a recreational lease are also not eligible. A recreational lease is a long-term rental agreement between the HOA and a third party for access to certain recreational facilities for a specific period of time and payment. In these scenarios, the owner of the facilities is often the proponent of the project or has a financial relationship with the proponent, and leases often provide that party with an ongoing profit over the term of the lease. The lease may allow the facility owner to lease the amenities to other parties in addition to the HOA or co-op. The HOA or co-op may have certain financial, insurance, and other legal obligations under the lease that may be onerous over time. These leases may or may not provide the project with long-term access to amenities beyond the initial term of the lease. The unit securing the mortgage represents a single legal entity by virtue of a single deed. Projects that contain apartment buildings are not allowed. These projects allow an owner to hold the property (or ownership in shares and associated rights of use) in a single legal entity divided into several residential buildings within the single legal entity, with ownership of the unit (or shares) being proven by a single deed and financed by a single mortgage (or equity loan). Subdivided units are not separate legal units. This restriction applies regardless of whether the owner maintains one or more of the divided units as rental units or uses one or more of the divided units as accessory or lockout. Valid for mortgage obligations As of March 29, 2021, the legal requirements for non-compliant use have been clarified.
If the property is located and maintained on a community or private road, an appropriate and legally enforceable agreement or obligation to maintain the road is required. The agreement or arrangement must contain the following provisions and be recorded in the land registers of the relevant jurisdiction: the illegal use corresponds to the district concerned and the market. The amenities have a different name than the residential project and may be recognized as a different legal entity than the HOA, the legal documents of the project must have been amended to reclassify the combined units into a single entity in the project. has a legal or common name that includes hotel, motel or resort, unless the use of the hotel, motel or resort is related to the historic use of the building and does not reflect its current use as a residential or cooperative project; the highest and best use of the property as improved (or as proposed according to the plan and specifications), and the use of the property must be lawful or not in accordance with the law (see B4-1.3-04, “Location” section of the assessment report); Individual units must be fully described in the legal description of the mortgage and under a single deed. reasonably expected or known damages and legal costs will not exceed 10% of the funded reserves of the project; The legal documents of the HOA or the project require the owners to make their unit available for rental pooling (daily or otherwise). The HOA or project legal documents require unit owners to share the profits from renting units with the HOA, management company, complex or hotel rental company. For mortgages to be eligible for purchase or securitization, the property`s utilities must meet community standards. If public sanitation and/or water supply facilities provided and regulated by the local government are not available, municipal or private well and wastewater treatment facilities must be available and used by the property in question. The owners of the property in question must have the right to access these facilities, which must be permanently viable.
Private wells or septic tanks must be located on the site in question, unless the property in question has the right to access private off-site facilities and there is an appropriate and legally binding agreement for access and maintenance. The assessment report indicates that the improvements represent a use that does not correspond to zoning (“illegal” use). Fannie Mae only purchases or securitizes mortgages for real estate if the improvements represent a legal use of the land. However, Fannie Mae will purchase or title a mortgage on a property that constitutes a legal and non-compliant use of the property, provided that the appraisal analysis reflects any negative impact that the non-conforming use has on the value and marketability of the property. This requirement applies to all property types. This provision does not apply to condominium or co-operative projects that allow a person to purchase two or more individual legal units with the intention of combining them structurally and legally for use as unitary housing. Mortgages secured by units in this type of project may be purchased and securitized by Fannie Mae provided that all of the following requirements are met: If a lender determines that a project is engaged in pre-litigation activities (such as arbitration or mediation) that can reasonably be expected to result in formal litigation; The lender must apply Fannie Mae`s process policies. Whether the claim is settled through arbitration, mediation or litigation, there is a risk that the project will face significant financial hardship related to the issues addressed in the complaint. Lenders are encouraged to review legal documents, purchase agreement and project budget to determine mandatory memberships and recreational leases. Some red flags indicating that a project may require mandatory membership or be a party to a recreational lease are that amenities may have some of the following characteristics: The site must have a size, shape, and topography that is generally consistent and acceptable in the market area. It must also have competitive utilities, road improvements, adequate access to vehicles and other amenities.
Since amenities, easements and interventions can impair or improve the marketability of a site, the assessor must take this into account in his analysis and assessment. The appraiser must comment on whether the location has adverse conditions or market resistance to a property because the location is not compatible with the neighbourhood or competitive market requirements and, if necessary, assess the impact on the value and marketability of the property. The assessor determines the highest and best use of a site as the appropriate and likely use that justifies the highest present value at the time the assessment takes effect. For improvements to be the best use of a website, they must be legally permitted, financially feasible and physically feasible and generate more profit than any other use of the website would generate. All of these criteria must be met if improvements are to be considered the highest and best use of a site. safe, sound and structurally safe (see B4-1.3-06, condition and quality of construction of improvements); Revenues from the use of recreational facilities or services owned by the HOA, leased for the exclusive use of the owners of the unit in the project or to another project under a common amenities agreement (as specified below), or These are formal agreements between the proponent, the association and/or the individual owners of the entity, that require the owner of the unit to make the property a monthly, weekly or daily season.
