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CAI Applauds New FHA Condo Certification Statement

7/25/2013  -  Falls Church, VA

Community Associations Institute (CAI) is applauding a just-released Federal Housing Administration (FHA) statement that should provide relief to Americans trying to obtain FHA-insured mortgages to purchase condominiums. The FHA guidance allows condominium associations to qualify for FHA certification, thus giving buyers the opportunity to purchase homes in those communities.

CAI had urged FHA to offer another option to condominiums in which owners were unable to sell units due to a recent FHA interpretation of its certifications guidelines.

Under FHA’s new guidance, condominium associations that don’t comply with FHA prohibitions on transient leasing are offered two compliance options:

The association may amend its governing documents to remove bank-owned property exemptions from transient leasing prohibitions.

The association may provide a dated and signed statement on association letterhead affirming that no units within the condominium community are leased for a term of less than 30 days and that tenants are not provided services commonly associated with a hotel.

Condominium governing documents often restrict leasing units for hotel or transient purposes, normally defined as a lease with a term of less than 30 days. It is also common for condominium associations to provide an exception to the transient leasing prohibition to lenders taking possession of a unit after a foreclosure.

It has been reported that Fannie Mae had required this language in condominium governing documents in the mid 1980s. While FHA had previously approved condominium projects with this language, the agency abruptly, and without explanation, started rejecting the language in April 2013, which required the condominium associations to amend their governing documents.  That prevented many condominiums from gaining and renewing FHA certification. The agency interpreted the transient prohibitions as violations of the National Housing Act, which strictly prohibits the use of FHA mortgage insurance to support transient or hotel housing.

The new statement gives condominiums the two ways to comply with FHA regulations.

"I commend FHA for showing regulatory restraint and working proactively to find a solution to an issue that was critical for many CAI members," said Tom Skiba, CAE, CAI’s chief executive officer. "FHA’s new policy preserves the integrity of association governance while ensuring full compliance with federal law."

CAI is working with FHA on standard language that may be used to satisfy the required statement regarding transient or hotel leasing.

Learn more and see the FHA announcement.


With more than 32,000 members dedicated to building better communities, CAI works in partnership with 60 domestic chapters, a chapter in South Africa and housing leaders in a number of other countries. CAI provides information, education and resources to community associations and the professionals who support them. CAI’s mission is to inspire professionalism, effective leadership and responsible citizenship—ideals reflected in communities that are preferred places to call home. Visit or call (888) 224-4321. 

Phone: 703-970-9235