Condo Media - September 2013 - 10

N e w s
C A I

FHA Relents, Transient Leasing
Restrictions Reconsidered

R

ecently, there has been an increase in the number of condominium project approval applications submitted with language
that allows use of a unit for hotel purposes or contains mortgagee exception
clauses. The term “hotel purposes” (or
“transient leasing”) is defined to mean
(1) any rental for a period of less than 30
days, or (2) any rental if the occupants
of the housing accommodations are
provided customary hotel services such
as room service for food and beverages,
maid service, furnishing and laundering
of linen, and bellboy service.
To date, condominium legal govern-

ing documents containing the unacceptable language have made the project ineligible for FHA approval unless
the documents have been amended to
remove or revise the language.
The FHA has announced that condominiums providing bank-owned properties limited ﬂexibility from transient
leasing prohibitions are now eligible for
FHA approval. CAI applauds FHA’s decision, which will make it easier for more
condominiums to be certified by FHA.

Two Compliance Options

Under FHA’s new policy, condominium associations in violation of FHA

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10

Condo Media • September 2013

prohibitions on transient leasing are
offered two compliance options:
1) The association may amend governing documents to remove bank-owned
property exemptions from transient
leasing prohibitions; or
2) The association board may provide a
dated and signed statement on association letterhead affirming that no units
within the condominium project are
leased for a term of less than 30 days and
tenants are not provided services commonly associated with a hotel.
If the association determines that they
will not amend the legal governing
documents but will provide a statement, then the originating lender will
also be required to provide an executed
statement that affirms in the event of
a conveyance action to the lender that
they will not rent the associated unit for
less than 30 days and/or provide any
services normally associated with a hotel.
CAI is coordinating with FHA on
standard language that may be used
to satisfy the required statement
regarding transient or hotel leasing
under the new policy. This language,
accompanied by additional guidance,
will be circulated to CAI members. CM
CAI’s Mortgage Matters initiative
is a comprehensive response to critical
challenges at the federal level. The common thread to each of these challenges
is to ensure that potential homebuyers
have access to affordable mortgage
products and that the criteria used to
determine loans in community associations are realistic measures of an
association’s financial health. For more
information, visit www.caionline.org.
http://www.RogersGray.com http://www.caionline.org http://www.RogersGray.com
Condo Media - September 2013

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