Many people want to own property in Destin, Florida. It is a scenic beach location with so much to offer. Besides owning a home, condos are a popular way to own a vacation property in Destin. However, there are many things to consider when it comes to condos. One issue is the difference between warrantable and unwarrantable condos in Destin.
If a condo is unwarrantable, it doesn’t meet the FHA standards for financing. If a condo project doesn’t meet these standards, it is not eligible for government-backed loans. That means it might be harder to obtain financing.
This post will cover some of the reasons a condo might be unwarrantable.
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As of May 2023, the average home sale price in Destin, FL, was $834,000, down 11% over May, 2022 Real estate data changes daily. If you need to buy or sell in Destin, Florida, or anywhere on the Emerald Coast, please click here to contact us.
You might consider buying condos that are still in the construction phase. However, a condo project is not warrantable until it is complete. That doesn’t mean it won’t be warrantable upon completion, but you can’t know until the developer finishes the project.
A condo project is unwarrantable if one individual or entity owns too many of the units. No individual or entity can own more than 20% of the units in the community. If the community is 20 or fewer units, no individual can own more than two.
Some condo projects include commercial space. Depending on the project, it can be a benefit to residents. However, it might affect whether the project is warrantable. The current rule is that the project can not have more than 35% of the square footage for commercial space.
Lawsuits against the developer might indicate problems in the future. The developer or HOA will need to resolve all lawsuits before the project can be warrantable.
Another issue is the percentage of owner-occupied units. If over 50% of the units are not owner-occupied, the condos are not warrantable. A low number of owner-occupied units indicates that the condos are mostly investment properties.
Whether condo owners are up to date on their dues can be another factor. A condo community is unwarrantable if over 15% of units are behind on their dues by more than 60 days.
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