Section 108

Shared Use Properties

108.01

Eligibility

Requirements

This section does not apply to

  • CondominiumCondominiumStatutorily established Property ownership regime where Condominium Documents designate: individual units for separate ownership; and common areas for shared use and joint ownership by the unit owners. PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , and
  • CooperativeCooperativeMultifamily residential property owned by a Cooperative Organization. PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). .
Shared Use Property Delivery Eligibility for Essential Elements Not Located on the Property
Topic A Shared Use Property Mortgage Loan is eligible for Delivery if...
Documents

you determine the Shared Use DocumentsShared Use DocumentsAgreements benefiting and/or burdening a Shared Use Property, such as: reciprocal easement agreements (REA); declaration of covenants; conditions and restrictions (CCR); development agreements; shared use agreements; joint ownership agreement or similar agreements governing… do not explicitly prohibit the Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … from being rebuilt or repaired after any casualty or condemnation.
Property

the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). benefits from Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … per Shared Use DocumentsShared Use DocumentsAgreements benefiting and/or burdening a Shared Use Property, such as: reciprocal easement agreements (REA); declaration of covenants; conditions and restrictions (CCR); development agreements; shared use agreements; joint ownership agreement or similar agreements governing… that:

 

  • are perpetual;
  • inure to the benefit of future PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). owners;
  • are recorded in the land records; and
  • if applicable, are insured as beneficial easements under the lender’s title policy.
Split Ownership of Units and Essential Elements

when the BorrowerBorrowerPerson who is the obligor per the Note. owns all units subject to the Shared Use DocumentsShared Use DocumentsAgreements benefiting and/or burdening a Shared Use Property, such as: reciprocal easement agreements (REA); declaration of covenants; conditions and restrictions (CCR); development agreements; shared use agreements; joint ownership agreement or similar agreements governing…, and an AffiliateAffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key… of the BorrowerBorrowerPerson who is the obligor per the Note. or Key PrincipalKey PrincipalPerson who controls and/or manages the Borrower or the Property, is critical to the successful operation and management of the Borrower and the Property, and/or may be required to provide a Guaranty. directly or indirectly owns the Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … that benefit only the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , such AffiliateAffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key… joins the:

 

  • Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. as a joint and several BorrowerBorrowerPerson who is the obligor per the Note. ; or
  • Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. using the Modification to Security Instrument (Joinder and Consent (Affiliate Owned Common Elements)) (Form 6324).

 

Shared Use Property Delivery Eligibility for All Essential Elements
Topic A Shared Use Property Mortgage Loan is eligible for Delivery if...
Financial

all:

 

  • PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). and Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … expenses and charges payable per the Shared Use DocumentsShared Use DocumentsAgreements benefiting and/or burdening a Shared Use Property, such as: reciprocal easement agreements (REA); declaration of covenants; conditions and restrictions (CCR); development agreements; shared use agreements; joint ownership agreement or similar agreements governing… are current;
  • assessments and payments payable per the Shared Use DocumentsShared Use DocumentsAgreements benefiting and/or burdening a Shared Use Property, such as: reciprocal easement agreements (REA); declaration of covenants; conditions and restrictions (CCR); development agreements; shared use agreements; joint ownership agreement or similar agreements governing… are current; and
  • to the extent permitted by law, future assessments owed by the BorrowerBorrowerPerson who is the obligor per the Note. and associated liens, if any, are subordinate to the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. .
Borrower Status

the BorrowerBorrowerPerson who is the obligor per the Note. :

 

  • has no outstanding community violations; and
  • is not involved in a community dispute that may
    • result in litigation, or
    • materially adversely impact the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). .
108.02

Documents
108.02A

Loan Documents

Requirements

You must:

  • ensure the BorrowerBorrowerPerson who is the obligor per the Note. executes the Modification to Multifamily Loan and Security Agreement Shared Use of Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … (Form 6276); and
  • if appropriate per the conditions described in the Estoppel Certificate attached to Form 6276, use reasonable efforts to obtain from the association or other appropriate party:
    • the Estoppel Certificate attached to Form 6276; or
    • other form providing similar representations.
108.02B

Shared Use Documents

Requirements

You must:

  • evaluate the Shared Use DocumentsShared Use DocumentsAgreements benefiting and/or burdening a Shared Use Property, such as: reciprocal easement agreements (REA); declaration of covenants; conditions and restrictions (CCR); development agreements; shared use agreements; joint ownership agreement or similar agreements governing…;
  • document your evaluation in the Transaction Approval Memo; and
  • obtain:
    • an ALTAALTAAmerican Land Title Association title policy per Part II, Chapter 3: Legal Compliance, Section 304: Title Insurance; and
    • ALTA Endorsements (i.e., 5-06, 28-06, and 9-06) if available in the Property’sProperty’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). jurisdiction.

Guidance

Shared Use Document Evaluation
Topic You should review the Shared Use Documents to evaluate...
Ownership and Control
  • if the BorrowerBorrowerPerson who is the obligor per the Note. owns all ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). and the underlying land;
  • if Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … not located on the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). exist, and if ownership is:
    • directly or indirectly by an AffiliateAffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key… of the BorrowerBorrowerPerson who is the obligor per the Note. or Key PrincipalKey PrincipalPerson who controls and/or manages the Borrower or the Property, is critical to the successful operation and management of the Borrower and the Property, and/or may be required to provide a Guaranty. ;
    • by a separate association or governing body;
    • by another community owner or an adjacent property owner; or
    • shared by the community owners; and
  • how association and Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … decisions are made by any
    • developer,
    • declarant,
    • association,
    • community owner, or
    • other governing body.
Responsibilities and Enforcement

how an association or governing body:

 

  • collects fees and assessments;
  • maintains Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, …;
  • obtains insurance;
  • mediates disputes; and
  • enforces covenants, including
    • levying fines or interest, or
    • pursuing liens or foreclosure.
Fees

the assessment fee structure, including

 

  • escalation provisions,
  • special assessments, and
  • if assessments should be escrowed.
Budget

the association’s current

 

  • annual budget,
  • income/expense statements, and
  • reserve accounts.
Mandates

how the association dictates:

 

  • operations;
  • physical appearance;
  • insurance claim proceeds;
  • other restrictions, including limitations or modifications for using the Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, …; and
  • if the cost and maintenance of the Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … located on the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). are not overly burdensome.
Insurance

the association’s coverage for:

 

  • property, including if the Essential ElementsEssential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … not located on the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must be rebuilt or repaired after any casualty or condemnation;
  • liability; and
  • director’s and officer’s.