If you have any questions, please let me know.
Patricia
(604)376-7653
phoulihan@vancouverviews.ca
Can You Get a Mortgage on a Leaky Condo that Did Not have a Full Fix?
I recently worked on a file where a first time home buyer put an offer on a condo that was leaky. The offer was accepted, so we proceeded to apply for the mortgage. Seven days and 4 lenders later, she was denied. The reason was because the engineers recommended a separate report on the parking slab because there were signs of water ingress. The owners had voted against this fix due to the extra costs involved. As a result, the insurers wouldn't insure the mortgage.
Mortgage lenders want to be certain that leaky condos have been repaired as per the engineer's report and that there aren't any problems outstanding.
What lenders look for when approving mortgages on repaired leaky condos that are still labelled "uninsurable":
- A copy of the Engineer's Report. The report will detail the problems, how to fix them, how to avoid them in the future, and what the cost will be to repair them. In some cases, the engineers recommend a separate report be prepared on a specific part of the building (for example, an underground parkade). If the owners do not follow the recommendation, a lender or CMHC may not grant the mortgage until the report is prepared.
- A copy of the AGM or Special General Meeting in which the owners reviewed the engineer's options and voted for a full repair as per the engineer's recommendation.
- A copy of the Substantial Completion or Completion Certificate.
- A copy of the Warranty Certificate or a current dated letter from National Home Warranty to confirm that either the warranty has been finalized or to confirm that the warranty period has commenced.
- Form B and Property Disclosure Statement.
A full appraisal will be ordered once the above items have been supplied.
The answer to the question is yes, it is possible to get a mortgage on a leaky condo. If the client has 20% or more for a down payment, they won't require mortgage insurance. Because some lenders don't ask for strata minutes, the condition of the building may go undetected. But, if the lender conditions the lawyer to check the status of the building and they find out that there is a problem, they will disclose it to the lender. The lender will then have the right to deny the client their mortgage. In this case, the sale may not complete and the client could lose their deposit.
If an offer is going to be made on a condo that has been repaired, make sure there is plenty of time to remove the financing subject because it often takes time for lenders to review all the documents.
For more information, please contact me.
Katherine Martin
Mortgage Specialist
www.kmmortgages.ca
phone: 604.454.0843
