The new requirements are in response to the Surfside disaster last year in Florida, in which a condo collapsed and nearly 100 people were killed. The property was due for renovations and had been under-reserved.
NAR previously requested a delay in implementation and better marketing/information for homeowners association (HOAs) on the requirements. In its response to NAR's request, the FHFA indicated that it:
- Will not delay the implementation, but
- Offered to facilitate a discussion with the government-sponsored enterprises (GSEs) for better marketing of their requirements and info sessions for HOAs.
We have heard from members in CA, VA, FL, IL, CT, and other states that the following is taking place:
- Lenders are asking HOAs to fill out addendums and provide the safety and reserve documentation.
- The HOAs do not know how to fill out the forms or find the studies.
- Professional management companies will not provide the information.
Furthermore, architectural and engineering reviews for properties will be expensive and take time, while the actual reserves needed for any improvements will add a financial burden. The safety and financial security reforms are clearly needed, but this hasty implementation could negatively impact the ability to finance condos purchases with a disproportionate impact on under served communities.
For questions related to this issue, please contact Ken Fears, NAR's Senior Policy Representative.