Don't Judge a Book By Its Cover.
Or a Condominium On Its Appearance Alone
Some of my most-read posts concern the topic of Condominiums ...
Those hoping to buy a Condo ... especially young First-Time Home Buyers ... typically have tons of questions regarding the buying of these properties ... and their ownership. Rightfully so. (For a great article from Realtor Bill Gassett on questions to ask prior to buying a Condo, click HERE.)
It's easy to understand why they'd have so many questions. And why there's a bit of confusion about these properties too.
Just an example: Just think of the large number of words used (correctly and incorrectly) to describe a Condo:
- Patio Home
So what differentiates a Condominium from those other commonly-used terminologies or nicknames?
As I've related in prior posts, it's the treatment or handling of the legal rights involved with the land.
Regardless of what a marketplace calls the residence in question: If the land underneath is not deeded or platted individually ... but rather is common ... the property type is legally classified as a Condominium.
In 99% of Condominium Developments, the term Condominium appears in the Legal Description for the property. It's easy to fact-check this, just view the county Assessor's website for clues.
A Seller's Title, Deed, Survey ... any document that hosts a Legal Description upon it ... provides the info you seek and need. Again, if you see the word Condominium within the Description, you're viewing (or Listing) a Condominium.
Here's another clue to look for: A reference to a Unit, as opposed to a Lot, or Parcel.
"Parcel" indicates a specified lot or plat is included in the ownership, likely making it a PUD (Planned Unit Development).
Check resources available to you, such as:
- Online Assessor Records
- Plats of Subdivision
- Survey (if available, likely denotes a PUD with a defined Lot - NOT a Condo)
- Legal Description
- Title Records
- Title Company
It's vitally important to know the distinction between types of properties for several reasons. One of the most important is:
Appraisers have (and must complete) a completely different Appraisal Report form for the property type - Condominiums, versus all other properties that have Lot/Land/Parcel ownership rights.
Transactions can be delayed, should an Appraiser (and real estate professional or LO) involved in the transaction not have performed the needed homework regarding this important distinction. If an Appraisal is completed on the wrong form? Issues are sure to follow.
FHA requires Approval of Condominium Projects in order to accept an FHA Loan from an Originator of a loan. Property uses such as Townhomes, Villas, Patio Homes, Duplexes, Single-Family attached, Single-Family Detached ... DO NOT require any such ongoing review or approval for the development involved.
Those other property types include individually owned lots/land parcels. In the eyes of a Lender, they become an "easier" or "preferred" collateral for a loan.
Bottomline: As an agent you need to educate yourself. Become well-versed regarding the differences between these property types ... and the specifics of selling or buying each.
Assuming that an Appraiser, Attorney, Title Company, or some other professional will know and take proper measures regarding necessary legal transacting requirements can be risky to your transaction, business, and professional reputation.
At minimum: Align yourself with a Mortgage Originator that is educated and well-versed on the needs and requirements of financing these properties. You protect your clients and yourself when you do.
Don't judge a book by its cover. Or a Condominium on its appearance alone ...
Hoping to Buy or Refinance a Condominium or some other type of property in the Greater Chicagoland area? Contact Me now! I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I can be easily found at:
Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed
American Portfolio Mortgage Corp.
Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including:
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL and Wisconsin.