Markdown_files/FHA handbook/page_828.md

# II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT

## C. Condominium Project Approval

### 2. Project Eligibility

#### (a) Exceptions for Affordable Housing Units

Legal restrictions on conveyance for eligible government or nonprofit affordable housing programs are acceptable if:

- The government or eligible nonprofit program restriction meets the exceptions defined in 24 CFR § 203.41(c)-(d); and
- The affordable housing units are identified by recorded legal documents, specifying the Units that are covered under the program.

In accordance with 24 CFR § 203.41(d)(1)(ii), FHA considers a reasonable share of appreciation to be at least 50 percent. HUD does not object to affordable housing programs whereby the homeowner’s share of appreciation is on a sliding scale beginning at zero, provided that within two years the homeowner would be permitted to retain 50 percent of the appreciation. If the program sets a maximum sales price restriction, the Borrower must be permitted to retain 100 percent of the appreciation.

#### (b) Exceptions for Private Transfer Fees

Notwithstanding the policy of free assumability with no exceptions contained in 24 CFR § 203.41, properties with private transfer fee covenants are acceptable provided such covenants are Excepted Transfer Fee Covenants as provided in 12 CFR § 1228.

##### (3) Required Documentation

The following documents must be submitted:

- Form HUD-9992; and
- Recorded legal documents.

### d. Construction Types (02/16/2021)

#### i. New Construction

##### (A) Definition

New Construction refers to Proposed Construction, Properties (or Condominium Projects) Under Construction, and Properties Existing Less than One Year as defined below:

- **Proposed Construction** refers to a Property where no concrete or permanent material has been placed. Digging of footing is not considered permanent.
- **Under Construction** refers to the stage from the first placement of permanent material to 100 percent completion with no CO or equivalent.
- **Existing Less than One Year** refers to a Property that is 100 percent complete and has been completed less than one year from the date of issuance of the CO or equivalent. The Property must have never been occupied.

**Handbook 4000.1**

806

**Last Revised: 01/10/2025**