Condo Let Lapse FHA and VA Certification

C.W. from New Haven County writes:

Dear Mister Condo,

Our complex has always maintained FHA/VA certification. This certification certainly can be viewed as either a positive or negative by some. As I understand it, last fall the government separated the two, requiring two separate certifications. My complex let the certification lapse and then chose only to renew the FHA certification. Now, the FHA cert costs about $1800 with attorney’s fees and is only good for a limited time (I believe 2 years), the VA certification is a lifetime certification and a one-time expense of approximately the same amount. There was nothing in our complex financials reflecting payment or budget for either. There was no notification from the board regarding maintaining or dropping either. I only found this out because I had put my unit for sale and was notified of the lack of certification. After going to the Board, they said they were unaware of the separation of certifications. I lost my first buyer because it was during the lapse of either, and then lost my second buyer because of the non-VA renewal. The board originally asked if I would front the cost and they would reimburse me at the closing, which I agreed. They then reneged and asked me to pay half, then they said they would not reimburse me at all but would supply the attorney with the paperwork. I have lost both buyers because of this. I am now 4 months later with no buyers and multiple price drops. Do I have some sort or recourse because of the lapse and non-renewal and no notification or owner vote regarding this? Certainly, I would think that this certification has a reflection on our unit value. Thanks.

Mister Condo replies:

C.W., I am certainly sorry that you have lost a few buyers for your unit while this debacle unfolds. I should point out that I am not an attorney and offer no legal advice in this column. You should speak with qualified counsel to see if you have any type of legal remedy worth pursuing. You are correct to point out that there are differences between FHA and VA certification. Generally speaking, FHA certification is required for the condominium association for any mortgages that are FHA insured (most are these days). VA certification is specific to the VA-backed loan program and has a different set of requirements. If your complex had VA certification at one time, I am not sure how they lost it. FHA certification is a renewable program so it does have to be sought and reapplied for from time to time as required by the FHA. To optimize mortgage opportunities, many condominium associations opt for FHA certification. Not all bother with VA certification as it is a much narrower pool of buyers who require such certification. Neither are required to be carried by the association, which is why I question your ability to claim an association-caused loss because of the lack of the certification. Your pool of potential buyers is certainly smaller without the FHA certification but you are still unencumbered by the association when you do sell. The Board should take the best interests of all unit owners into consideration when deciding to renew or let lapse FHA certification. Ultimately, if the unit owners want it and the Board refuses to get it, it is time for a new Board. All the best!

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