Calif. Civil Code §5300
Amended and added by A. B. 596
Effective date: July 1, 2016
A common interest development (CID) that is a condominium project needs to include in its annual budget report:
- a statement indicating whether the condominium project is certified by the Federal Housing Administration (FHA); and
- a statement indicating whether the condominium project is certified by the Department of Veterans Affairs (VA).
The FHA statement needs to read in at least 10-point font:
“Certification by the Federal Housing Administration may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.
This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the Federal Housing Administration.”
The VA statement needs to read in at least 10-point font:
“Certification by the federal Department of Veteran Affairs may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.
This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the federal Department of Veterans Affairs.”
Each statement needs to be included in the budget report on a separate sheet of paper.
Editor’s note – Condominium projects need to be approved and certified by the FHA or VA for any condominium unit in the project to be eligible for FHA-insured or VA-guaranteed financing. Homebuyers seeking to achieve small or zero down payments with FHA-insured or VA-guaranteed mortgages will not be able to do so if the condominium project in which the condominium is located is uncertified.
Requirements condominium projects need to meet certification standards include:
- sufficient funds to maintain amenities unique to the condominium;
- a minimum 10% of the budget held for funding of replacement reserves; and
- adequate funding for insurance and deductibles. [See HUD Mortgagee Letter 2012-18; see VA Pamphlet 26-7.]
Condominium projects seeking financing by Fannie Mae and Freddie Mac need to meet similar minimum requirements for certification. Some condominium units, like detached units, may be eligible for limited reviews. [See Fannie Mae Condo Project Review and Insurance Requirements; see Freddie Mac Single-family Seller/Servicer Guide, Chapter 42]
