4 "Condos" on a single tax parcel?

Question

Hello All,

I am currently under contract on a 4-plex, however I've run into an odd title/lending issue.

In the title report, the property is listed as a condominium, yet all 4 units are associated with a single tax parcel and there is no HOA.  From what I've figured out from my lawyer, the condo association was partially set up in 1980 between our building and several others identical to it in the area, but was never finished.  The seller tried to get the condo association dissolved, however it was going to take a significant amount of time and funds that he was not willing to do it.

I was financing this deal using an FHA loan, however now that the title report says its a Condo, my lender says they cannot lend using the FHA program and that it is possible that I will have to get 4 separate conventional loans.  My agent is also representing several other buyers purchasing a couple of the identical 4-plexes. All of these 4-plexes are identical and for sale by the same owner. The other buyers are doing a 25% down conventional and have no issues with the title report or running into the problem of having to do 4 separate loans.

Again, the trouble is that its on a single tax parcel, and as a results I am getting various lending advice / options.  Any thoughts or advice on other lending possibilities?  Will the FHA work since its a single tax parcel?  Really any advice in this odd situation would be greatly appreciated!

Below is a picture of the property description on the title report and a link to the property.

http://www.zillow.com/homedetails/6116-Glen-Mary-Ln-SE-Lacey-WA-98503/49418368_zpid/

Upen Patel · Answer

@Morgan Bentley Given that these are condo's there could a bunch of issues that might be preventing the FHA loan.

* Condo is not FHA approved

* Condo has a high concentration of investors, i.e. non-warrantable condo

* Condo association might not be putting aside the required 10% to reserves

* Condo association might be defunct

This is not an exhaustive list. It could be anything.

Not every lender knows how to do condo financing. So, make sure the lender you are working with is smart enough for that.

Russell Brazil · Answer

In order for them to have insured the title the last time around, they will have cleared this issue before. The method in which they did so will be attached to that policy.

Also by getting a copy of the policy you will get a discount on your new policy.

Morgan Bentley · Answer

@Russell Brazil

Morgan Bentley · Answer

Thanks for the response! Can you expand a little?  What will be the sellers title insurance policy show to sway my lender one way or another?

Russell Brazil · Answer

Ask the seller for their title insurance policy from their purchase. If you get that into the hands of the title company, it will likely have what they need.

4 "Condos" on a single tax parcel?

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