New Questions on Form 1076 A challenge for All

This past December, Fannie Mae updated their “Condominium Project Questionnaire” (Form 1076) to include the following Questions:

·       Are there any outstanding violations or jurisdictional requirements (zoning ordinances, codes, etc.) related to the safety, soundness, structural integrity or habitability of the project’s buildings?

·       Is it anticipated that the project will, in the future, have such violations?

·       Does the project have a funding plan for its deferred maintenance components/items to be repaired or replaced? (If yes, provide schedule)

·       Has the HOA had a reserve study completed on the project in the last three years?

·       Are such repairs done.

·       Is the HOA aware of any deficiencies related to the safety, soundness, structural integrity, or habitability of the project’s buildings?

This is a direct result of the Surfside Condominium collapse in Florida in June of last year.

Lender’s wanting to be certain they limit their exposure due to deferred maintenance or a lack of funds set aside for necessary capital improvements.

A reserve study would be invaluable in demonstrating a board’s fiscal responsibility in determining if their current reserve schedule meets their current and future capital needs.

Failure to have deferred maintenance addressed or to have adequate funding for capital improvements has far reaching effects.

1.     Not having the right answers can result in a loan for a new purchaser not being able to close.

2.     Lenders, to the association for capital improvements, will want a reserve study that is no less than 3 years old.

3.     Property values can suffer if deferred maintenance is not addressed.

4.     Gone are the days of trying to keep the association fees as low as possible so that future expenses can be passed on to subsequent owners.

5.     Transitioning boards, those going from developer to homeowner controlled, will have to ensure adequate fees, vis a vis, sufficient reserves for capital projects.

Challenging times we live in, no doubt. It behooves us to stay ahead of the curve and be prepared now for what needs initial consideration with respect to deficiencies and to plan for the future.