New Construction Condos
In addition to meeting all of the existing condominium requirements, there are a few additional steps required when a condominium is newly built or newly converted.
A condominium is defined as new if it meets any one of these classifications:
- The developer is still in control of the condo association
- Construction is incomplete
- The project is subject to additional phasing or annexation
- Fewer than 90% of the units have been conveyed to purchasers
If a condominium is new, we will therefore need to meet the following requirements…and please note that a new condominium is not eligible for a limited review:
- Legal Documents We must complete a review of the condominium legal documents, including the bylaws and declaration
- Presale Requirements: Fannie Mae requires that 50% of the units be under contract to owner occupants. Freddie Mac requires that 70% of the units be sold and settled to owner occupants, however we are able to apply for a variance to reduce the minimum to 30%
- Condition of the building if it’s a conversion: If the property is a conversion of an existing building, we need the architectural/engineering report. This document describes the condition of the building. If the developer redid all the systems including the electrical, plumbing, heating and cooling, etc, the project will likely be classified as a gut renovation. If the developer did a cosmetic conversion without replacing all the systems, then the property is a non-gut renovation. Gut renovations are eligible with both Fannie Mae and Freddie Mac. Non-gut renovations are eligible with Freddie Mac, and are only eligible with Fannie Mae if the developer submits the project to Fannie Mae for the PERS approval.
- Certificate of Occupancy: The government will need to have issued a certificate of occupancy, which states the building is safe for habitation. This is done once the project is complete and is usually the last step before sales can occur.
The above requirements are in addition to the requirements for an existing condominium.
Questions? Ajaffe@firsthome.com or 240 479 7658
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