HUD released new condo certification policies effective September 13, 2012. These revised regulations benefit associations by loosening some of the more stringent requirements for condo certifications under FHA.
Notable changes include:
1) FHA will now consider projects with up to 50% commercial space on a case-by-case basis and with substantial documentation.
2) Investor/entity owned units changed from a maximum of 10% to 50%, as long as 50% of the units have been conveyed, or are under bona fide contract to be conveyed to owner-occupants
3) Delinquent Assessments- No more than 15% of total units can be in arrears more than 60 days. The former regulation looked at the total delinquencies at 30 days.
4) Fidelity Bond changes for management companies- now either the association can name the management company as an agent or insured on its bond, the management company can have its own policy or the association’s policy can have a covered employee endorsement to cover management company personnel.
5) Slight changes were made to the Project Certification document requirements.
This site and any information contained herein is intended for information purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.
Mira Owners Ass’n v. Lawrence, No. C10-630RAJ, U.S. Dist. Ct., W. Dist. Wash., Feb. 16, 2011.
An association member became delinquent on assessment payments and also failed to pay his federal income tax. In November, 2008, the association brought suit to foreclose on its lien. Subsequently, the IRS filed a federal tax lien on January 16, 2009. The Washington district court determined that the association was a secured creditor and its lien related back to the time that the assessments became delinquent. Additionally, the court also held that the association’s lien was automatically perfected at the time of delinquency; recording the lien was not necessary for perfection. The association’s governing documents provided that the association’s lien was superior to all other liens except “liens for real property taxes and other governmental assessment or charges against the unit.”
Although a tax lien arises automatically when the tax is assessed and tax liens are usually superior to other liens, the court held that there is an exception to the general rule when the IRS and another secured party are battling for lien priority. Priority then turns on when the IRS filed notice of its lien. Because the federal tax lien was filed after the association’s lien became perfected, the association’s assessment lien had priority over the tax lien.
This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.