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d. Construction Types (02/16/2021)
i. New Construction
(A) Definition
New Construction refers to Proposed Construction, Properties (or Condominium Projects) Under Construction, and Properties Existing Less than One Year as defined below:
• Proposed Construction refers to a Property where no concrete or permanent material has been placed. Digging of footing is not considered permanent.
• Under Construction refers to the stage from the first placement of permanent material to 100 percent completion with no CO or equivalent.
• Existing Less than One Year refers to a Property that is 100 percent complete and has been completed less than one year from the date of issuance of the CO or equivalent. The Property must have never been occupied.
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II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT C. Condominium Project Approval
2. Project Eligibility
Complete Condominium Project refers to a Condominium Project consisting of Units that are Existing Less than One Year and that are ready for occupancy, including completion of all the Infrastructure of the Condominium Project, and not subject to further rehabilitation or construction.
Complete Legal Phase refers to a Legal Phase in which all Units are built out and all Units have a CO or the equivalent.
(B) Standard
The Condominium Project, or Legal Phase, as applicable, must be either a Complete Condominium Project or a Complete Legal Phase.
Form HUD-92541, Builder's Certification of Plans, Specifications, and Site, must be signed and dated. The completed form must show any issues noted by the builder/developer and proposed mitigation plans.
(C) New Construction Additional Requirements
(1) Financial Condition
If no Units have closed in the Condominium Project, a proposed budget is required.
All Financial Condition – Required Documentation is required if any Unit has closed.
Financial condition documentation for Condominium Projects operating less than one year must cover the operating period since the sale of the first Unit.
(2) Minimum Insurance Coverage
If no Units have closed in the Condominium Project, a builder’s policy is acceptable in lieu of Hazard Insurance, Liability Insurance, and Fidelity Insurance.
All minimum Insurance Coverage is required if any Unit has closed.
(D) Required Documentation
The following documents must be submitted:
• form HUD-92541, signed and dated;
• additional documentation demonstrating mitigation of any issues noted in form HUD-92541 including the State Licensed engineers’ (soil and structural) reports, designs, and/or certifications to ensure the structural soundness of the improvements and the health and safety of the occupants;
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II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT C. Condominium Project Approval
2. Project Eligibility
• a copy of the builder’s policy or the required documentation in Insurance Coverage;
• a CO or its equivalent; and
• photographs of each building.
ii. Newly Converted
A Condominium Project is considered newly converted if the Date of Conversion is within 24 months of the time of Condominium Project submission.
Date of Conversion refers to the date that the legal documents were recorded.
Newly converted Condominium Projects can only be processed under the HRAP option.
(A) Gut Rehabilitation Conversion
(1) Definition
Gut Rehabilitation (Gut Rehab) refers to the renovation of a Property down to the shell of the structure, including the replacement of all Heating, Ventilation and Air Conditioning (HVAC) and electrical components.
(2) Standard
Gut Rehabs must meet the general FHA Condominium Project approval requirements and New Construction standards.
(3) Required Documentation
The following documents must be submitted:
• form HUD-9992;
• an engineering or architectural inspection, dated within 12 months, evidencing all rehabilitation work/repairs have been completed; and
• a CO or its equivalent.
(B) Non-Gut Rehabilitation
(1) Definition
Non-Gut Rehabilitation (Non-Gut Rehab) refers to rehabilitation work that is not structural and is limited to minor property repairs and improvements.
(2) Standards
Non-Gut Rehabs must meet the standards for Existing Construction.
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II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT C. Condominium Project Approval
2. Project Eligibility
A reserve study must be 36 months old or less and have been prepared by an independent third party that has demonstrated knowledge of and experience in completing reserve studies. The reserve study must include analysis of the Non- Gut Rehab.
All Non-Gut Rehab work/repairs must be completed.
(3) Required Documentation
The following documents must be submitted:
• form HUD-9992;
• reserve study; and
• evidence that all rehabilitation work/repairs have been completed.