Disclosure or Not Approved ?
I draft organizational documentation for common interest subdivisions (condominium projects and planned developments). The documentation must be approved by the California Department of Real Estate ("DRE") and in compliance with California law.
Each year the Governor of California signs new laws approved by the Assembly and the Senate which must be included in the documentation I prepare for clients.
On August 12, 2015, the Governor signed AB No. 596. The following language was added to Civil Code Section 5300:
(10)?When the common interest development is a condominium project, a statement describing the status of the common interest development as a Federal Housing Administration (FHA)-approved condominium project pursuant to?FHA?guidelines, including whether the common interest development is an?FHA-approved condominium project. The statement shall be in at least 10-point font on a separate piece of paper and in the following form:
“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.”
(11)?When the common interest development is a condominium project, a statement describing the status of the common interest development as a federal Department of Veterans Affairs (VA)-approved condominium project pursuant to?VA?guidelines, including whether the common interest development is a?VA-approved condominium project. The statement shall be in at least 10-point font on a separate piece of paper and in the following form:
“Certification by the federal Department of Veterans 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.
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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.”
The forgoing needs to be disclosed to all the Owners in the Annual Budget Report prepared by the management company.
A lender working with a realtor in the SF Bay Area presented a Certification consistent with the above for a VA client and asked if the Project could not be approved and why not.
I explained the law is a disclosure as to the status of the Project rather than a statement that the project was submitted to VA and the Project was not approved by VA for specific reasons.
I thought this was a good question by the realtor.
I decided to share this information with other realtors to help VA Buyers.