I just spent a month going through the process and days before the closing the underwriters Fanny Mae discovered the one person owned two units in this five unit building. The person was bound by the by-laws of the condo association (he was actually the pres on the ass.) to owner occupy the properties. As they were separated by a pocket door this was not a problem. He lived in both. We were not cleared to close because that is in violation of the new Fanny Mae rules. He would have to legally combine the two units to make it a 4 unit building. The process would be fairly difficult because all the other mortgage holders would have to agree to the combination of the two units. It seemed that neither the condo association, the seller, the lender nor the lawyers were aware of this rule. The condo has been on the market for two years.
Now the question;
Who is supposed to know if a condo unit is eligible for a particular loan and/or where can these rules be obtained? I called Fanny Mae they were not helpful.
Could you convince him to sell one to his spouse or other person that lives there? Of course you’d have to compensate him for his costs & time. Maybe the sellers could pick that cost up, seeing as how they’ll have trouble selling this unit if it’s impossible to get a mortgage for it.
A regulated tenant is permitted to have multiple apartments, as long as it can be shown that the units are being utilized as that tenant’s principal or “primary” residence.
“Primary” residence can be established in a number of different ways and, to many owners’ chagrin, is a pretty malleable standard. The law requires that tenants have an “ongoing, substantial, physical nexus with the premises for actual living purposes as demonstrated by objective, empirical evidence.”
In other words, the tenant really has to live in (or use) the space.
Do the units have to be connected or even on the same floor? Absolutely not.