Is a temporary Certificate of Occupancy allowed on a new condo project?

To be eligible for Condominium Project Approval, the Condominium Project must be complete and ready for occupancy.

Condominium Projects may be approved in stages as Legal Phases are completed; however, all completed Legal Phases must be evaluated.

Each Legal Phase must be complete as demonstrated by the Certificate of Occupancy (CO) or its equivalent prior to submission of a Legal Phase.
 
Legal Phases may be submitted for New Construction and Conversion (both Gut- and Non-Gut rehabilitation) Condominium Projects.
 
For vertical buildings, legal Phasing is acceptable if:

  • all Units in the phase are built out; and
  • at least a temporary CO, or its equivalent, has been obtained for the Units.
For a detached or semi-detached development, Phasing is acceptable if:
  • all Units in the phase are built out; and
  • at least a temporary CO, or its equivalent, has been obtained for the Units.
For case numbers assigned October 15, 2019 and after, additional information regarding Certificate of Occupancy requirements related to Condominium Projects refer to:  Handbook 4000.1, Sections II.C.2.b. available at:  https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

For case numbers assigned prior to October 15, 2019, information is available in:
  • Mortgagee Letter (ML) 2011-22 Condominium Approval Process for Single Family Housing – Consolidation and Update of Approval Requirements and the attached Condominium Project Approval and Processing Guide provides the requirements and procedures for obtaining FHA condominium project approval.
  • ML 2012-18 Temporary Approval Provisions for FHA Condominium Project Approval provides temporary condominium project approval guideline changes to address current housing market conditions.
  • ML 2015-27 Additional Temporary Approval Provisions for FHA Condominium Project Approval
  • ML 2016-15 FHA Condominium Project Approval – Owner Occupancy Requirements modifies the Condominium Project Approval and Processing Guide, attachment to ML 2011-22, in order to implement the Housing Opportunity Through Modernization Act of 2016 (HOTMA) requirements and establish the required owner-occupancy percentage that must be met for purposes of FHA project approval.
Note: The Temporary Provisions in ML 12-18 and ML 15-27, as modified by ML 2016-15, are effective until HUD publishes and implements the Final Rule of Condominium Project Approval through publication of the Condominium Project Approval Section of HUD Handbook 4000.1, as extended by ML 2017-13.  Mortgagee Letters are available at:  https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee

For more information regarding condominium projects refer to:

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-05130