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16-A.02 Condominium Approval Procedures
Request for VA Approval
For condominium projects, the lender/sponsor must provide the following to the VA Office of Jurisdiction:
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· a written request for VA-approval, and
· a copy of the condominium’s organizational documents.
Note: These documents must be reviewed for compliance with VA regulations, and approved by VA before any lots or units in the project are eligible for VA loan guaranty.
Reference: See Section 16-A.03.
VA Processing of Approval Requests
VA will
· review the condominium’s organizational documents for compliance with VA regulations, and
· notify the requesting lender/sponsor.
Note: The condominium must be approved by VA before any lots or units in the project are eligible for VA loan guaranty.
How to Expedite VA Approval
HUD/USDA Approval
Generally, projects already approved by the Department of Housing and Urban Development (HUD) or the United States Department of Agriculture (USDA) do not need further VA review. Upon receipt of evidence of HUD/USDA approval, such as a copy of the HUD/USDA approved project list or the project approval letter, the VA office of jurisdiction adds the project to the nationwide VA list without issuing a formal VA approval letter.
In rare cases, HUD or USDA may approve a project that VA discovers does not comply with VA regulations. In those cases, VA notifies the lender as soon as practicable that it will not guarantee loans in the project.
Use of Attorney’s Opinion
This is a highly recommended options for condominiums that have not been approved by HUD or USDA.
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Reference: See Section 16-B.
Use of Previously Approved Documents
When the organizational documents being submitted are essentially the same as a set previously approved by VA, the lender/sponsor should include a certification from the declarant or declarant’s attorney which
· states the fact
· specifically identifies the previous set, and
· describes any variation to the previous set.
State Agency Certification of a Condominium
If a state agency certifies that the condominium has been created in compliance with the laws of the state in which it is located, include the certification.
After completing its review of the material submitted with the request for project approval,
VA Decision
the VA office of jurisdiction sends a written notice of its decision to the lender/sponsor.
When … Then the notice will …
the project is approved indicate any special conditions/requirements which must be met prior to VA guaranty of an individual loan in the project, such as
· recording of documents
· pre-sale requirement, or
· completing of common areas.
Note: There is no formal VA approval letter for
projects accepted by VA based on their approval by HUD or USDA.
there were
explain what further documentation is needed.
· missing/incomplete documents
Note: VA will then suspend processing pending receipt of the needed information or material.
· inaccurate/inconsistent information, or
· correctable deviations from VA requirements
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the project is unacceptable state the reason.
Note: When there are objectionable provisions related to unreasonably retained controls or rights of the declarant/developer, and it is difficult to amend the documents, VA may consider a separate recorded agreement from the declarant/developer relinquishing
the objectionable provisions.
Document Amendments After Project Approval
VA recommends that declarants have amendment procedures for the declaration or equivalent document, amendable by an instrument approved by not less than 67 percent of unit owners. The association must request VA approval of proposed amendments prior to recordation.
VA approval of any amendments to the declaration, bylaws, or other enabling documentation is required while the declarant is in control of the homeowner’s association. A written statement signed by an officer of the Association’s Board of Directors and submitted with VA Form 26-1844, is required as evidence of approval.
Changes made by the declarant prior to the first sale in a condominium project may require amendment of the organizational documents.
Note: VA approval is not required for amendments which annex additional phases to the condominium in accordance with a development plan previously accepted by VA.
Mortgagee Rights
The condominium documents may specify the following rights for the holders of first mortgages, provided the lender makes a written request to the Association for the right, and includes
· prior approval by first lienholders before the Association can
- abandon condominium status or partition or subdivide a unit or the common elements
- change the percentage interest of unit owners, or
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- materially amend the legal documents
· timely written notice to first lienholders of
- any condemnation or eminent domain proceeding, and
- substantial damage or destruction to the common elements
· the right to
- examine the association books
- receive annual audited financial statements and record, and
- be given notice of association meetings and be entitled to a representative at such meetings.