The Davis-Stirling Common Interest Development Act was amended by Assembly Bill 596 which modifies Civil Code Section 5300. Effective July 1, 2016, as part of the Homeowners Association’s (HOA) Annual Budget Report required to be delivered to the owners within the community, the Annual Budget Report shall include specific statements indicating whether the Community has FHA or VA approved.
In order for the Federal Housing Authority (FHA) or Veterans Affairs (VA) to provide loans within condominium and certain PUD communities, the community itself must be approved by the applicable agency (as well as Fannie Mae). For some communities a “spot” approval – meaning an approval of the community on a case-by-case or loan-by-loan basis – is not an option and thus the community must be approved in full prior to these lenders providing loans within the community.
For example, if the condominium project is a manufactured home community or if the community is an age restricted community, the community must have full approval. Maintaining community approval assists sellers find available buyers and buyers able to secure loans in a more time sensitive manner. Ultimately, this can help in preserving lender options and ultimately values within the community.
Now is a great time to evaluate whether the Association should seek full community approval from FHA, and VA, as well as Fannie Mae, and its certainly time to update the Annual Budget Report.
Ariel Bedell is an experienced attorney at The Loftin Firm. For questions relating to this blog or any other California real estate, land use, corporate, nonprofit, or estate planning matter, contact Ms. Bedell at 760-814-9649.