How do I know if it’s a Condo?
How do I know if it’s a Condo? I want to say that this is a common question that I get asked a lot, but it is usually asked after a common mistake is made. Because of this repeated mistake, I thought I would share what is a condo, as well as some helpful tips when you are out looking.
What is a Condo?
Before we dive into more, let us start with, “What is a Condo?” A condominium (also commonly called a “condo”) is a form of ownership where units are owned by individuals, but the land and common areas are owned jointly with all owners. Ownership usually includes a nonexclusive interest in certain “common areas” controlled by the condominium management or Homeowners Association (HOA).
Oftentimes, the condominium management is usually made up of a board of unit owners who oversees the daily operation of the complex, such as maintenance and landscaping, etc.
Why it matters if it is a condominium or not?
Condominiums (condos) oftentimes present financing challenges that are better addressed at the beginning of the transaction, as opposed to later.
For example: There’s no point in rushing to go see a property that might or might not be a condo, and having your agent write up an offer at midnight when this project isn’t on an approved list and the project wouldn’t qualify even if it was submitted for review. (Note: Future article coming on FHA, VA and Conventional loans when purchasing a Condo).
Condo tip No. 1
Accepting what you read on the MLS listing or what the current owner says may not be correct and that can cause issues. Sometimes agents or owners have not READ the legal description and as a result list the property incorrectly. #condotip
Condo Tip No. 2
Do NOT rely on the project name for determination. Many projects have misleading names. The developer names the project “Shady Pines Townhomes” some people assume that because the word “Condominium” isn’t mentioned that it’s not a condo and doesn’t require project approval. Townhomes, manufactured homes and even some detached home projects may actually be condominiums. #condotips
Condo Tip No. 3
Read the legal description – Does the legal description of the unit include the lot? If not, you probably have a condominium form of ownership. Check the project documents. #buyingacondo
Condo Tip No. 4
Check online sources – Check available sources to see if it is VA approved condo, or for an FHA approved condo. Both FHA and VA have online sources to see if it is on the “approved” list. #vacondo, #fhacondo
*Note: both VA loans and FHA loans have a process to try to get the condo projected approved. A well-seasoned lender who has done a few of these would be my recommendation. If your lender pauses and gives you that puzzled look, you should probably find a new lender. These submissions take time and require a lot of documents. It is not guaranteed that the project will be approved by VA or FHA, but it is oftentimes worth the time and effort.
If you have any questions about condominiums or any other financing questions, then just give us a call: 520-303-5620.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.