Financing is always a challenge and most recently some purchasers have had financing problems because their lenders consider the condominiums at the Plantation as a “condotel” or “condohotel.” However, if the information provided to the lender by the association management is inaccurate or provided in a manner that allows misinterpretation, a sale could be voided due to financing problems.
The major source of confusion is the definition of “second homes” versus “rental units” as it relates to the determination of what is a condotel.
The source of the confusion is how the owner uses his unit. Does the owner use it as a second home but rents it to help offset some of the expenses? If this is the case and, as long as the owner occupies the unit for a minimum period of time annually, it can be classified as a second home. On the other hand, if the unit owner is an investor where the owner is limited or excluded from use of the property by the homeowners association covenants, it puts him in a different status with the lender.
MHI has always considered all of the units at the Plantation as independent entities unto themselves without any revenue sharing among them or having any commercial operations within the condominium complex itself that is operated by the association.
There are many other fine points which must be made to ensure that there is financing available for purchasers. If a condo is not warrantable by Fannie Mae or Freddie Mac, a mortgage broker or lender will not make the loan and will make it more expensive to obtain financing. This has a direct impact on the value of the condominiums.
No comments:
Post a Comment