Real Property Notes Blog

FHA Changes Condo Recertification Requirements

The Department of Housing and Urban Development recently released a new mortgagee letter, 15-27, which relaxes the requirements when condominiums seek to be put on, or recertified on, the FHA approved condominium list.

For projects already on the list, they only have to submit documents which have changed substantively since prior approval.

The guidelines for determining whether the condominium meets the 50% owner occupancy has been modified, making it easier to meet the guidelines.

Finally, insurance policies that consist of pooled policies for related projects and those policies that require coinsurance obligations now qualify.

The guidelines are good only for one year, after which time FHA is expected to issue more comprehensive changes to the FHA condominium approval process.

Trial Court Should Have Considered Request for Post-Judgment Attorney Fees

When the parties judgment on a homeowner association lien included a provision to recover additional costs and attorney fees reasonably incurred in collecting on the judgment, the trial court erred in not considering the reasonableness of the requested post-judgment attorney fees.

In Great Lakes Shores, Inc. v. Jevahirian, an unpublished court of appeals opinion, the court of appeals remanded the case to the trial court to consider the reasonableness of the requested attorney fees.  The trial court had denied the request without considering the necessary factors.

Readers of this blog may remember that a prior court of appeals opinion involving Great Lakes Shores held that a summer resort association could recover attorney fees pursuant to its bylaws, even though attorney fees were not provided for in the declaration of restrictions.

This case stands for the proposition that post-judgment attorney fees are recoverable; however, the opinion should be read carefully, because the court held that the bylaw provision which allowed attorney fees was merged with the judgment, and it was only the judgment language which allowed post-judgment fees to be collected which granted the right to recover.

Merger Applies to Mortgagee Who Acquires Property from Condominium

In another case involving mortgagees, condominiums, and unpaid assessments, the Michigan Court of Appeals held that FNMA could not argue that its mortgage was not merged with its acquisition of fee title to the property.  In FNMA v Hsiung, the condominium association foreclosed its condominium lien.  After a dispute arose between FNMA and the condominium association regarding priority, FNMA redeemed from the condominium lien foreclosure and the association executed a quit claim deed to FNMA.

FNMA failed to pay subsequent assessments. The association recorded a new lien and again foreclosed it.  Trademark Properties purchased the property at the sale, late selling it to Hsiung.  FNMA then foreclosed its mortgage and filed suit seeking declaratory relief and quiet title.

The court held that none of the factors which would indicate that the mortgage was not intended to be merged with the quit claim deed were present, and the rights of third parties would be affected if the mortgage were not merged and extinguished.

Although the court kept open the possibility that, given the right circumstances, the mortgage would not have been merged, in this case merger had occurred and FNMA, by not redeeming from the second lien foreclosure, lost all title to the property.

© Steve Sowell 2018