Leasing Limits Conflict with HUD Lending Rules

Today this Connecticut-area condo lender posted some interesting analysis about HUD Lending and Lease restrictions.   The gist of the article is that the lender has seen some situations where the FHA has held that condo leasing restrictions violate HUD’s restrictions on free transfer of property.  Because these HUD guidelines are federal, they would apply across the country, even here in Idaho.

The entire post is worth reading.  It outlines why sometimes a condo association’s leasing restrictions can overstep what is permitted and thereby jeopardize the HUD-financing availability for an entire project.   For that reason, it suggests sticking to the specific limits authorized by HUD, and asserting nothing more:

In 2011, FHA announced that certain leasing restrictions are allowed.  This was made permanent by the Condominium Project Approval and Processing Guide (page 26).  Basically, it allows associations to

  • Set minimum and maximum lease terms
  • Require copies of leases and that they be in writing
  • Request the names of the tenants
  • Require that the leases conform to the legal documents, and
  • Set a maximum number of units that may be leased at any time.

I think I’ll keep an eye out for updates from this blog.  Good post!

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