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CONDO FINANCIAL ISSUES

THE PROPOSED FOURTH AMENDMENT

WILL MAKE IT MORE DIFFICULT TO SELL 

FIREROCK CONDOMINIUMS 

 

To meet the guidelines of government-sponsored Fannie Mae and Freddie Mac for a conventional mortgage, a condominium must be warrantable. Buying or selling a warrantable condo is similar to buying or selling a single-family home. Non-warrantable condos are not as easy to sell.  Non-warrantable condos have been deemed by Fannie and Freddie to be too risky to finance.

 

A condo is not warrantable if there is an ownership restriction requiring membership, such as a membership in a golf club or country club. A condo is also not warrantable if it is a party to a lawsuit. 

 

If the Fourth Amendment passes, because of the ownership restriction requiring membership in the Firerock Golf and Country Club, our condos will not be warrantable, purchasers will not qualify for conventional mortgages and our ability to sell our condos will be affected.  The pool of potential purchasers will be limited to those who do not need conventional financing as well as limited to those who want to join the Firerock Country Club.  There will be a much smaller pool of potential buyers which will likely depress the market values of our condominiums.

 

Further, if the Fourth Amendment passes, there will be litigation challenging it.  The titles to our property will be involved in litigation for perhaps years.  It is always difficult to sell real estate when there are title issues in litigation. It may prevent the purchaser from qualifying for a mortgage, and we likely will have to disclose the existence of the litigation to all prospective purchasers which may dissuade them from buying our properties.

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