A new FHA requirement ensures that a condominium association must be certified, and must be recertified every two years, in order for its owners to qualify for an FHA-backed loan. Typically, this can be done by a member of the association board of directors, the property manager, the association’s attorney, or a specialist who has experience and for a fee will handle the filing.
What must be certified? According to the FHA, the person signing the approval application certifies that (1) he or she has reviewed the project and it meets all state and local condominium laws and all FHA condominium approval requirements; (2) to the best of his/her knowledge and belief, the information contained in the application is true and correct; (3) he/she has no knowledge of circumstances that might have an adverse effect on the project, and — more significantly — (4) they are under a continuing obligation to inform the U.S. Department of Housing and Urban Development (HUD) if any material information is no longer true and correct.
And, as stated earlier, the penalty for making false statements is extremely harsh.
What should condo boards and managers do about the certification? According to Stephen Marcus, a Massachusetts community association attorney and a member of the CAI College of Community Association Attorneys, “non-lawyers should not provide the legal opinions required by FHA.”
Marcus suggests that the certification process be divided up. Association attorneys should certify compliance with state and local laws; lenders, or the lenders’ attorneys, should certify that the community complies with the FHA regulations.
Furthermore, how can anyone promise under oath to advise HUD immediately of any material information that is no longer factual? Board members do not often remain on the board indefinitely. And property managers also are not permanent fixtures. But if you signed such a certification and did not advise HUD if the facts changed, you could be facing criminal charges. For example, if one unit member loses his job and falls behind on paying the assessment, and the number of delinquencies exceeds 15 percent, will the certifier suddenly face 30 years in prison?
Bottom line: If you are a condominium property manager or a member of the association’s board of directors, consult with your association’s legal counsel before signing any certificates or affidavits for the FHA.
It’s hard enough serving on the board; serving time in a federal penitentiary is probably worse.
Benny L. Kass is a Washington lawyer. This column is not legal advice and should not be acted upon without obtaining your own legal counsel. For a free copy of the booklet, “A Guide to Settlement on Your New Home,” send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036. Readers may also send questions to him at that address or contact him through his Web site, www.kmklawyers.com.