Question: “Why do so many condo listings say “cash-sale only?”
Chris’s Answer:
Currently many condos on St. Croix must be purchased for cash since they don’t qualify for financing. A condo complex is warrantable if it operates as closely to a residence as possible, is not seen as a “condo hotel”, and complies with Fannie Mae and Freddie Mac Mortgage guidelines. When lenders are considering loans on condos in a specific complex, they look at many factors:
- Some HOAs, while insured, don’t meet the lenders guidelines.
- Have the number of vacation rentals in the complex been increasing?
- Does the condo complex rent office space to agencies which rent condos inside the complex?
After Hurricane Maria in 2017, insurance companies paid claims which were sometimes substantial. Many insurers decided to raise their premiums in subsequent years.
Condo complexes handled those rate increases in different ways. Some passed them along as either increases in the monthly HOA fees, or as special one time assessments.
Some HOAs reduced their premiums by increasing their deductibles or lowering the amount of their insurance coverage.
Many of the condo boards have been reviewing these issues and working with insurers to make adjustments to their coverage so that lenders are satisfied.
Contact us with any questions about real estate on St. Croix!