Yesterday, I had a client link me a house they were interested in, but asked me "Why does it say Site Condo on it?"  I often forget that buyers often have never heard of the term and even sellers will say "my house isn't a condo!" when seeing the legal description.  In a nutshell, a Site Condo is a house within a sub that has common areas with some type of annual fee to maintain, while having loose rules on what you can and can't do in your sub.  Hint:  Think along the lines of fences not allowed unless there's a pool, no sheds, etc.

From a financing perspective, purchasing a site condominium in Michigan will offer the same loan options and processes as purchasing a detached single-family residence in a platted subdivision.   But this was not always the case.

A site condominium, for most intents and purposes, looks and acts like a standard single family home within a subdivision.

In the late 1970’s and until recently, designation as a site condo provided developers and builders with a more streamlined option to get approval for a project, as it only required approval at a county level instead of the state and county level required for platted subdivisions.  But given the classification is state specific, and not utilized nationally— the condominium classification and unit numbers assigned to the properties caused confusion in the world of mortgage lending guidelines.   Actual attached or detached condominiums have more restrictive requirements to purchase, than a single-family residence (in this case, site condo).

According to Tricia McFarlane from University Lending, until May 2018, a Veteran utilizing their VA benefits for a mortgage— could not purchase a site condominium unless it was on the VA approved condominium list.  "The process for getting the VA '“condominium”' approved cost a significant amount of money and took time— often too much time, so that a buyer would lose out on purchasing their property of choice.   This created a lot of confusion amongst realtors, home sellers, homebuyers, and lenders working at a national level that we’re not familiar with this Michigan property type.  It is one of the factors that contributed to a fear in the industry that VA Financing was a less than ideal type of mortgage."

She also added that "Fannie Mae also had true condominium/site condominium overlaps until 2018, requiring a site condominium, be treated as a detached condominium, including additional documentation needs from the association, and appraisal reports being completed on a condominium form."

As it currently stands, all of the confusion has been worked out!   Rest assured— if you fall in love with a site condominium for sale in Michigan— you no longer have to deal with the roadblocks that so many buyers prior to 2018 struggled with!

Cheers!