My Florida Condo Won't Sell Because Buyers Can't Get a Loan: What It Means and What You Can Do

If buyers keep losing their financing on your Florida condo, the problem is usually the building, not your unit: Fannie Mae will not buy loans on units in a project it considers ineligible, and a building flagged “Unavailable” in its review system cannot get those loans at all. Lenders often call this a “non-warrantable” condo. It narrows your buyer pool to cash buyers and lenders who keep loans on their own books, and that changes what the unit will sell for.

You did not cause this, and it is not always permanent. Here is what the lender reads, how to see the same documents, and how to plan the sale.

Why lenders turn a building down

Fannie Mae’s Selling Guide topic B4-2.1-03, “Ineligible Projects,” lists the building characteristics that stop an agency loan, and critical repairs are the one most Florida owners run into. The guide says Fannie Mae will not purchase or securitize loans secured by units in projects with those characteristics, and that loans in projects marked “Unavailable” in Condo Project Manager or on the automated underwriting findings are ineligible.

The list includes:

• Critical repairs. Repairs that significantly affect safety, soundness, structural integrity or habitability, including mold or water intrusion, advanced deterioration, a failed mandatory structural inspection, or unfunded repairs costing more than $10,000 per unit that should be done within 12 months.
• Special assessments tied to those repairs. If an assessment is for a critical repair and the issue is not fixed yet, the project is ineligible.
• Litigation. The association named in pending litigation, or a developer in litigation about safety, structural soundness, habitability or functional use, with exceptions for minor matters.
• Concentrated ownership. In a project with 21 or more units, one entity owning more than 20% of them.
• Hotel-style operation, or a project that is terminating or in insolvency.

A separate full project review (Selling Guide B4-2.2-01) adds money tests. No more than 15% of the units may be 60 or more days behind on regular dues, and the budget must fund replacement reserves of at least 10%, or a qualifying reserve study must show adequate funding.

What changed in Florida after Surfside

Florida now requires milestone structural inspections and structural integrity reserve studies, and those reports are exactly what a lender’s project review reads. A building of three habitable stories or more under condominium or cooperative ownership must have a milestone inspection by December 31 of the year it reaches 30 years of age, and every 10 years after that. If the engineer or architect sees substantial structural deterioration in phase one, a phase two inspection is required (Fla. Stat. 553.899).

Separately, a residential condominium association must have a structural integrity reserve study completed at least every 10 years for each building of three habitable stories or higher. The study covers the roof, structure, fireproofing, plumbing, electrical, waterproofing and painting, windows and exterior doors, and other large deferred items (Fla. Stat. 718.112(2)(g)); reserve funding rules sit in 718.112(2)(f). Our condo assessment increase page covers how that funding reaches your monthly bill.

Fannie Mae tells lenders to read structural or mechanical inspection reports completed within three years of the project review, along with reserve studies and board minutes. A report that flags unaddressed critical repairs keeps the building ineligible until the work is done and documented.

What you can do as the owner

1. Get the documents. Ask the association in writing for the milestone report, the latest reserve study, board minutes and the list of planned assessments. These are official records you may inspect and copy, and the association must make them available within 10 working days of a written request (Fla. Stat. 718.111(12)). A buyer is entitled to the milestone summary and the reserve study before closing anyway (Fla. Stat. 718.503(2)), so it is better to know first.
2. Ask the board for a timeline. Find out when the repairs are scheduled, how they are funded, and when the engineer will sign off.
3. Market to the buyers who can close. Cash buyers can close without a project review. Some banks lend from their own portfolio, and some non-QM lenders lend outside agency rules, usually with larger down payments. A buyer’s loan officer is the one who confirms whether a lender will take your building.
4. Price to that buyer pool. A unit that only cash and portfolio buyers can purchase competes on different terms than one any buyer can finance. Get a written market analysis that accounts for the building’s status and the pending assessments rather than last year’s sales.

When a short sale enters the picture

A short sale becomes relevant when what a cash buyer will pay is less than your mortgage payoff plus closing costs and any unpaid association balance. Your lender must then agree to accept less than the full balance before the sale can close. It takes longer than a normal sale, so start while you are current or close to it.

If you can afford the payment and do not need to move, waiting for the repairs may be the better choice. If not, read I owe more than my house is worth and can I sell my house if I am behind on payments. The written release of the remaining balance matters in Florida; our deficiency judgment page explains why.

Your next step

Run the free file checker to see what your loan program requires if a short sale is on the table, or read the free Short Sale Guide. You can also call 855-725-3898 to talk through the building’s status and your numbers.

This page is general information for Florida homeowners and is not legal or tax advice.