Condominiums come in all sorts of shapes and sizes and this one is no different. Well, it is a little bit different…
There is a condominium project that wishes to obtain FHA project approval for its unit owners and to allow FHA purchase loans. The sales prices of the units are in FHA’s “sweet spot” so the association is really pushing to get it done.
The project’s composition is acceptable to FHA consisting primarily of residential units with a few commercial components, one of them being a bar/night club. The project’s financials are up to FHA’s standards and the owner-occupancy rate hovers around 100%. Unit owners are nearly perfect in the payment of their common charges. The units are in very high demand and there is a waiting list to move into the community.
All of the major aspects of the condominium meet FHA’s guidelines. However, the condominium is a nudist community. This, on its own, does not present a threat to the condominium’s eligibility for FHA approval. The issue is that all unit owners are required by the legal governing documents to acquire and maintain membership to either a regional or national nudist organization.
This violates the National Housing Act in that it is requiring that the unit owners become members of an outside organization or club. Because of this, the condominium, and, therefore, the units are not eligible for FHA-insured loans. This is akin to a condominium requiring the unit owners to join an affiliated golf club or the Master Association’s boating club.
The community is very disappointed in their ineligibility and have verbalized that they are being discriminated against. First of all, nudists are not a protected class so the accusation is unfounded in that regard. But second, and most importantly, it is the requirement for membership which renders the condominium ineligible. If they were to amend the legal documents to remove this requirement, they would be eligible.
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