Condominium Warrantability: A Guide for Agents, Homeowners, and HOA Boards

Condominium warrantability refers to whether a condo project meets criteria set by government-sponsored enterprises like Fannie Mae and Freddie Mac. This determines if these entities will purchase or guarantee mortgages for units in the project.

Key Factors Affecting Warrantability

Major litigation within the community
Health and safety of buildings and the grounds
Adequate insurance coverage
Owner-occupancy ratio (at least 50%)
Commercial space (no more than 25%)
Reserve fund contributions (at least 10% of annual budget)
Delinquent HOA dues

Importance of Warrantability

Warrantability significantly affects financing options and down payment requirements for condominium buyers, enhancing property values and marketability when a condo is deemed warrantable. Conversely, non-warrantable condos may face limited financing opportunities, making sales more challenging and potentially decreasing property values. Thus, understanding and maintaining warrantability is essential for the long-term health and stability of the community.

Maintaining Warrantability: HOA Board Responsibilities

Conduct regular financial reviews
Maintain proper insurance coverage
Enforce rental restrictions
Address maintenance issues promptly
Plan budgets carefully

Homeowner Actions

Stay informed about HOA matters
Advocate for warrantability
Pay dues on time
Report health and safety issues promptly

Financing Considerations

Lenders review the community and lending criteria
Single Unit Approval may be possible for non-warrantable condo projects
Partnering with knowledgeable lenders is crucial

Maintaining condominium warrantability is essential for preserving property values, ensuring marketability, and fostering community stability. Both HOA boards and homeowners play vital roles in this process.