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Getting VA Approval on Condominium Projects

I recently secured VA financing on a condominium unit within Sausalito's Marina Vista HOA. The nature of this particular project makes it difficult to secure even conventional financing on -I know from a previous transaction that I was brought in to save in the eleventh hour -and the hurdles one needs to surmount are considerably higher for VA or FHA loans. This is not your typical HOA as it lacks virtually all the standard condominium mandates (common area, budget, master insurance policy, etc.). Compounding the problem, the unit my client wanted to purchase was a separate (non-functional) two-unit HOA within the greater (also non-functional) HOA! The unit exists more as an attached single-family unit or Planned Unit Development (PUD). So it was an interesting and challenging process to secure approval for my client's future home.   

After establishing contact with the VA's Phoenix office and finding the right person to offer guidance on their condo approval process, I was directed to go to the County Recorder's office to secure the following stamped items:

  • Declaration
  • Condominium Plan
  • Plat Track or Parcel Map
  • Exhibit A Legal Description showing percentage of interest

In gathering the above-listed items, I was naturally amused to discover that the County's mico-fiche index for condominium information from the early 70's was completely out of synch. Numerous items were in books or on pages other than those listed. It was a page-by-page thrill to find those needles in the haystack! Once all was assembled, a cover letter describing the project's layout and general functionality was included in the package that I sent off to the VA. (They consider informal condo associations such as my client's to be "cloud condos" and are comfortable extending the VA guarantee to them.) On average, it takes between 60 to 90 days to get a project approved, provided all the components are deemed acceptable. To expedite the process, the buyer can hire an attorney to offer a legal opinion of the property and reduce the review period to around 30 days. Chapter 16B in the VA's Lender's Handbook offers instruction regarding how to handle the legal opinion.

A word to the wise: my client hired an attorney to offer a legal opinion. Unfortunately, even though he was specialized in real estate law, he had never been through the process and dropped the ball. So, if enlisting an attorney, it probably makes sense to find someone well versed at working with the VA, rather than paying someone to learn on the job. Fortunately, the VA was able to work with the package that I sent them and actually issued their approval in just 18 days, which they told me was a record!

So, a bit more work to close on this purchase, but worth it as my client was able to purchase a unit he absolutely loves. To verify if a project is on the VA's approved list, you can go to the following link: https://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch

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