In the CNN Business article, Why this recent change just made it harder to buy or sell an apartment, Hellmuth & Johnson Partner Nancy Polomis shares her insights on the new rules rolled out earlier this year by Fannie Mae and Freddie Mac.
The new rules are intended to address concerns about aging building infrastructure in the wake of the collapse of Champlain Towers South condominium in Surfside, Florida, last year. In order to protect buyers and lenders, the rules ask condo and co-op boards to disclose any known significant deferred maintenance issues that may impact the safety and structural integrity of the building and the financial plans for addressing them, according to Fannie Mae.
Polomis explains that condo associations say they find the required documentation burdensome and are worried the discussion of reserve funds and building integrity puts them at risk of liability. Critics also object to the one-size-fits-all form that applies to all buildings with five or more attached units without distinctions for the type, location, or age of a building. “It seems like Fannie Mae and Freddie Mac took a big chunk to deal with a small bite problem,” Polomis said. “If I were a homeowner trying to sell my condo and this was preventing me from doing so, I would be furious. I’d be upset with my association, but the association board has a fiduciary duty to do what is best for the entire association. Everyone is doing a dance of balancing the risk and liabilities.”