Last Friday, David, H. Steven,  Assistant Secretary for Housing – Federal Housing Commissioner, issued a Waiver which clears up some of the confusion related to leasing restrictions in condominium communities.

In the past the local HOC offices across the country have been denying condominium association approvals because of a determination and that all types of leasing provisions violate Section 203.41(a)(3) which prohibits “legal restrictions on conveyances.”  The waiver acknowledges that it is common for condominium declarations to contain restrictions on leasing in order to improve marketability and stability of the entire condominium project.  Therefore, FHA will be waiving Section 203.41(a)(3) as it relates to CERTAIN leasing provisions for one year.

The following provisions will NO LONGER BE GROUNDS FOR REJECTION for the next year at least:

  • A requirement that all leases must be in writing and be subject to the Declaration and Bylaws;
  • A requirement that the association receive a copy of subleases or rental agreements;
  • A requirement that the association receive the names of all tenants;
  • A requirement that the association approve prospective tenants;
  • A prohibition against leases for an initial term of less than 30 days;
  • A requirement that leases can not exceed a maximum lease term (e.g. 6 months, 12 months, etc.);

If your community has previously been rejected by FHA or has been holding off on a submission, now may be the time to reapply or move forward with a necessary amendment to your documents to meet the waiver provisions. If you’d like to discuss these options please give one of our attorneys a call at 303.432.9999.

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